New report lays out feasible path to mobilising external finance of US$1.3 trillion annually by 2035 for climate investments in developing countries

BELÉM, BRAZIL, 12 NOVEMBER 2025 – There is an “entirely feasible path” to mobilising US$1.3 trillion by 2035 from external sources of public and private finance to boost economic development and climate action in developing countries other than China, according to a new report published today (12 November 2025) by the Independent High-Level Expert Group on Climate Finance.

The report explains that emerging market and developing economies (EMDEs) other than China will need to invest US$3.2 trillion per year by 2035 to meet the goals of the Paris Agreement and to accelerate progress towards the Sustainable Development Goals.

It lays out how the US$3.2 trillion in investment can be financed by US$1.9 trillion from domestic sources and US$1.3 trillion from external sources.

The Group, co-chaired by Amar Bhattacharya, Vera Songwe and Nicholas Stern, has been supporting the deliberations on the climate finance agenda under successive COP Presidencies since COP26.

The Group was asked by the COP29 and COP30 Presidencies to provide an analytical foundation for the “Baku to Belém Roadmap to 1.3T”, which was a commitment made by countries at the COP29 United Nations climate change summit in Baku, Azerbaijan, in November 2024.

The report notes that the Group “has been privileged to work closely with the COP30 Presidency and has benefited enormously from the engagement with and the work of the Circle of Finance Ministers”, a group of finance ministries from 37 countries that were convened by the Brazilian Ministry of Finance.

This is the fourth report by the Group, and focuses on the investment priorities in EMDEs other than China. It explains the practicalities of mobilising the domestic and external finance for these investments, showing in more detail than before how a scaling up of the different sources can be achieved, and how they can mutually reinforce each other.

The Group’s report concludes that “with a concerted and coordinated effort, there is an entirely feasible path to deliver on the $1.3 trillion goal for external finance that is necessary to underpin the expansion of climate-related investments in developing countries to $3.2 trillion per annum by 2035”.

It states: “This investment in EMDEs other than China is critical to generate the sustainable economic development and growth required to meet the goals of the Paris Agreement and to advance the Sustainable Development Goals.”

Of this US$3.2 trillion in investment, delivering the energy transition away from fossil fuels would require US$2.05 trillion a year by 2035, and promoting natural capital and sustainable agriculture would need US$350 billion per year. Strengthening adaptation and resilience would require investments of US$400 billion, while US$350 billion should be spent on coping with loss and damage. A further US$50 billion would be needed to ensure a just transition. The report notes that these investment areas will require a range of different sources of finance, recognising that they have different risks and revenue potentials.

The US$3.2 trillion per year of investment by 2035 will need to be financed from a range of sources. US$1.9 trillion could be provided by domestic finance. Half of the US$1.3 trillion in external finance could be provided by private investors, with the other half provided by development finance institutions, including the multilateral development banks, and other sources of concessional finance, such as grants, low-cost loans and carbon markets.

These different sources would reinforce and support each other, and together would represent a significant scaling up of external finance compared with current levels of about US$190 billion a year.

The report notes that concessional finance will be particularly important as the investment needs for adaptation and resilience, loss and damage, and natural capital increase, particularly in low-income and vulnerable countries.

It also points out that concessional finance and the involvement of development finance institutions is also important to reduce and share the risks for private investors, thus decreasing the cost of capital and unlocking private finance at scale.

Bilateral climate finance from governments would need to increase from current levels of US$42 billion per year, which is much less than one-tenth of one per cent of the collective GDP of high-income countries, to about US$80 billion per year by 2035.

The report emphasises that the higher investment would boost economic development and growth in EMDEs, supporting the fight against poverty and hunger, while also advancing efforts to avoid the worst impacts climate change.

It notes: “Investment growth rates in EMDEs have been declining since the mid-2010s, continuing a trend that began well before the COVID-19 pandemic. After averaging almost 10% per year in the 2000s, investment growth in EMDEs fell to around 5% in 2010–24, with both public and private investment weakening amid rising debt, tighter financial conditions and global uncertainty.

“This slowdown has eroded the foundations of growth in human, physical, social and natural capital, leaving many countries less able to seize technological opportunities or withstand intensifying climate and geopolitical shocks.”

The report warns: “One major consequence has been that progress towards many of the Sustainable Development Goals has been deeply inadequate. The latest assessment by the United Nations concluded that progress has been insufficient on just under-two-thirds of the targets for 2030 accompanying the Goals. One in 12 people still experience hunger, and billions lack access to safe drinking water, sanitation and hygiene. Growing impacts from climate change, such as more intense and frequent extreme weather events, are also hampering progress towards the Goals.”

The report states: “The case for decisive action is clear: investing in development in ways that take careful account of climate and nature unlocks low-carbon and inclusive prosperity; delay drives escalating risks and costs; and accelerated action is an effective and attractive growth strategy, generating jobs, productivity and resilience.”

It also states: “Now more than ever the world needs the spirit of collaboration and implementation that is so well conveyed by the word ‘mutirão’, which the COP30 President has used to describe the theme for the summit in Belém”.

Lord Stern will be taking part in a press conference with the COP30 Presidency at 13:15 on Wednesday 12 November in Press Conference 1 in the Blue Zone at the COP30 venue.

Notes to editors 

• The Independent High Level Expert Group (IHLEG) on Climate Finance has been supporting the deliberations on the climate finance agenda under successive COP Presidencies since COP26. This independent group was tasked by the Presidencies to help develop and put forward policy options and recommendations to encourage and enable the public and private investment and finance necessary for delivery of the commitments, ambition, initiatives and targets of the UNFCCC Paris Agreement, reinforced by the Glasgow Climate Pact, the Sharm el-Sheikh Agenda, the COP28 Global Climate Finance Framework, and the Baku to Belém Roadmap to 1.3T. The secretariat for the Group is hosted by the Brookings Institution and the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science.
• The Brookings Institution is a nonprofit organisation devoted to independent research and policy solutions. Its mission is to conduct high-quality, independent research and, based on that research, to provide innovative, practical recommendations for policymakers and the public.
• The Grantham Research Institute on Climate Change and the Environment was established in 2008 at the London School of Economics and Political Science. The Institute brings together international expertise on economics, as well as finance, geography, the environment, international development and political economy to establish a world-leading centre for policy-relevant research, teaching and training in climate change and the environment. It is funded by the Grantham Foundation for the Protection of the Environment, which also funds the Grantham Institute – Climate Change and the Environment at Imperial College London www.lse.ac.uk/grantham/.