Introduction

To achieve the goals of the Paris Agreement, countries must rapidly decarbonise and invest in climate resilience. According to recent analysis, 2024 was the warmest year on record, being the first year to exceed the 1.5ºC limit above the pre-industrial average. Estimates from the Independent High-Level Expert Group on Climate Finance (IHLEG) indicate that external finance from all sources needs to cover approximately $1 trillion per year by 2030, rising to $1.3 trillion by 2035, to meet temperature and resilience goals. The total capital required for the net-zero transition is estimated at up to $275 trillion. At present, current Nationally Determined Contributions (NDCs) require an estimated $7.8 trillion to 2030, but many remain uncosted and lack the financial detail required to attract private investment. The gap between the existing market for sustainable debt, approximately $4.4 trillion as of late 2023, and the total addressable transition finance market remains substantial.

NDCs 3.0 and national transition plans

The United Nations Framework Convention on Climate Change (UNFCCC) emphasises that the next iteration of NDCs (NDCs 3.0), due in early 2025, must determine how economies are protected from worsening climate impacts and help unlock finance at scale. For NDCs 3.0 to mobilise investment, countries require an overarching framework such as a National Transition Plan (NTP). NTPs signal to investors the importance of aligning capital with the transition and foster the enabling environment required for long-term policy stability. While current NDCs are often high-level roadmaps for emissions reductions, NTPs convert these priorities into investable plans for infrastructure and economic transformation. This report proposes the development of Climate Investment Prospectuses (CIPs) as a practical tool to bridge the gap between national commitments and the needs of private investors.

Climate investment prospectuses

A Climate Investment Prospectus communicates investment opportunities in a form familiar to financial institutions and professional investors. It can take various forms, including offerings for sovereign bonds linked to NDC 3.0 priorities, direct project finance for infrastructure (such as public-private partnerships), documents for investment funds or vehicles, or a ‘wrapper’ document covering a suite of country-platform opportunities. A standardised format for CIPs enhances credibility and comparability across nations. The proposed standard form includes a country context overview, macro indicators, climate risk outlooks, and an overview of the NTP. It also details the financial and investment governance regime, including investor protections and market access, as well as specific details on use of proceeds, underwriting arrangements, and listing timetables.

Key benefits for transition finance and NDC delivery

CIPs facilitate transition finance and market efficiency by providing investment-grade information. They communicate a country’s transition value proposition and help investors accurately price physical and transition risks. By converting high-level government priorities into specific, identified project opportunities, CIPs present a pipeline of projects that are investment-ready. They create a virtuous cycle where successful capital raising signals an underserved market to other financiers, increasing capital flows to NDC-related investments. Furthermore, the development of a CIP highlights policy and regulatory gaps that need to be filled to attract investors, bringing commercial rigour to national pipelines. Research suggests that credible transition plans can help manage sovereign credit ratings and potentially lower the cost of capital for borrowing countries.

Operationalising CIPs

Countries can prepare CIPs alongside the development of their NDCs 3.0. This process involves the identification and prioritisation of climate investments and the development of a capital raising strategy. External advisors typically support this process, providing legal, financial, and accounting expertise to draft the prospectus and structure deals. The absolute cost of preparing a CIP is usually a small percentage of the offering size, and for lower-income economies, these costs may be subsidised by philanthropies or development partners. The operationalisation sequence involves six key stages: conceptualisation of the future state, pipeline building, gap analysis of investor requirements, facilitation of de-risking instruments, development of a capital raising strategy, and final execution via roadshows and publication.

Conclusions and next steps

To finance climate priorities, countries must mobilise private investment by expressing opportunities in terms the private sector can recognise. CIPs do not interfere with UNFCCC processes but rather create a conduit using a recognisable investment form. Suitable candidates for creating CIPs are typically countries with market access, sufficient financial headroom, and near-term financing needs of more than $100 million. For the least developed economies, other approaches such as concessional funds and debt-swap transactions remain necessary. First-mover governments interested in exploring these benefits can look to recent innovations such as Japan’s national transition finance initiative and the Just Energy Transition Partnerships (JETPs) in South Africa, Indonesia, and Vietnam as proof of concept for this approach.