Climate finance is a critical requirement for achieving the goals of the Paris Agreement, with global needs estimated at around US$7.4 trillion annually. To effectively implement Nationally Determined Contributions (NDCs), countries must first understand their total climate finance requirements and identify how to mobilize funding from both domestic and international, public and private sources. In response to this need, UNDP developed a methodology to help countries assess investment and financial flows required to address climate change based on their national circumstances, capacities, and resources.
The methodology works by helping countries systematically analyse their climate priorities and financial needs. It guides governments in identifying planned climate actions across key sectors, mapping current investment flows, and determining the additional financing required to meet national climate targets. It also helps assess which policies and incentives are needed to shift financial flows toward low-carbon and climate-resilient development pathways.
Countries begin by translating national climate plans such as NDCs, National Adaptation Plans, and long-term low-emission strategies into concrete mitigation and adaptation measures. They then build two financial scenarios, one reflecting current business-as-usual climate spending and another outlining the investment required to achieve national climate goals. This comparison helps identify funding gaps and reallocation needs.
The methodology also provides structured guidance across 10 key sectors, enabling countries to evaluate where investments should be increased, reduced, or redirected. It supports governments in identifying appropriate financing sources and designing policy measures to unlock additional investment. The approach is flexible and can be adapted to national priorities, including integration with broader sustainable development strategies and considerations such as biodiversity and land use.
The expected outcomes of using the methodology include stronger public financial planning, improved mobilization of climate finance, and better alignment between national budgets and climate goals. Governments can more effectively determine the roles of public and private finance, prioritize investment policies, and strengthen fiscal planning for climate action.
It also supports more informed policymaking by helping countries develop national climate strategies, integrate sectoral standards into legal frameworks, and manage climate risks more effectively. In addition, it enables governments to build stronger business cases for climate finance, supporting proposals to international funding mechanisms such as the Green Climate Fund and Adaptation Fund.
The methodology further improves long-term planning by allowing countries to track climate finance flows, monitor progress on NDC implementation, and identify additional sectors where investment analysis may be needed. It is primarily designed for governments but encourages collaboration across ministries, private sector actors, academia, and civil society to ensure robust data collection and analysis.
Since its introduction in 2008, the methodology has been applied in around 60 assessments worldwide. It can be used at an economy-wide level or through sector-specific modules depending on national priorities. The framework includes detailed guidance materials and training resources, and it was most recently updated in 2026 to reflect evolving climate and financing needs.
