Investors Await Investment Plans for UK NDC
Sector roadmaps are the “crucial missing layer” for reaching climate and nature transition targets.
While the UK has been widely applauded for putting forward an ambitious nationally determined contribution (NDC), there remains a pressing need for clear investment plans.
Under the UK’s NDC, the country plans to cut greenhouse gas emissions by at least 81% in the next 10 years, excluding international aviation and shipping emissions.
NDCs are national climate action plans and targets, outlining each signatory country’s plans to decarbonise their respective economies, including a set of intermediate targets and the steps to reach net zero, as well as policy action required to enforce compliance. Introduced under the Paris Agreement in 2015, all signatory countries must deliver more ambitious plans every five years, with last month the deadline for the third round of NDCs.
Just 13 countries, including the UK, made last month’s deadline to submit their NDCs, while 182 countries – representing 83% of global emissions and nearly 80% of the world’s economy – had not filed plans by the deadline. Last week, the UK also submitted its National Biodiversity Strategy and Action Plan (NBSAP) for 2030 at the reconvened COP16 in Rome.
The success of the UK’s NDC now hinges on the country’s ability to flesh out a net zero investment plans. These plans include outlining capital needs and time horizons for capital deployment, identifying current funding gaps, defining the expected public-private split and instruments potentially to be used to attract investment.
Tackling transition
Bruno Gardner, Head of Climate and Nature at Phoenix Group, told ESG Investor that transition finance remains a “grey area where there is quite a lot of subjectivity”, but that sector roadmaps and targets created under the NDC would heighten objectivity around transition assets for investors.
“A national transition plan, net zero investment plan, sector roadmaps, whatever way you want to refer to them, are the crucial missing layer,” he said.
Speaking at an event hosted by the Transition Pathway Initiative (TPI) Centre last week, Thomas Dillon, Head of Sovereign ESG, Aviva Investors, said that NDCs require certain features to make them “credible and investment relevant”, such as sector pathways, indicative policy frameworks and investment plans.
The UK’s Clean Power 2030 Action Plan is one example of a detailed sector roadmap that partially fills that gap. However, Gardner said that an investment plan component remains absent, as it does for most sectors in the UK.
“The progress that has been made in relation to the power sector over the last six months with Clean Power 2030 Action Plan is brilliant, but that still needs to go that one step further in developing that clear investment plan,” he added.
More than 500 financial institutions representing US$29 trillion in assets previously called on governments to unlock public and private capital flows for the net zero transition, including through suitably robust NDCs.
“Investors crave policy certainty because that allows them to understand, manage, and mitigate risk, as does specificity,” said Gardner. “The NDC is not enough in itself, but it provides that foundation on which certainty can be built. The certainty and specificity make it so much easier for investors to direct their thinking and align their resources behind whichever assets or technologies need to be prioritised over the next five or ten years.”
Also speaking at last week’s TPI Centre, Mark Manning, Visiting Senior Fellow at the London School of Economics, said that governments “should start viewing NDCs as strategic national transition plans that mobilise the whole of government towards a collective goal and guide their investment decisions for the future”.
By linking to private sector transition plans, NDCs can “help to steer a whole-of-system response – unlocking not only sovereign transition finance, but transition finance across the whole economy”, he added.
Antonina Scheer, Research Project Manager at the TPI Centre, noted that sectoral breakdowns of NDC emissions reduction targets containing greater granularity are likely to be outlined in forthcoming government plans. The NDC stated that the UK “will deliver an updated cross-economy plan to meet our climate targets in due course, with full detail of policy packages for all sectors”.
The Energy Transitions Commission previously estimated that approximately US$3.5 trillion a year of capital investment will be needed on average between now and 2050 to transition to a global net zero economy.
Nurturing NBSAPs
While the UK submitted its NBSAP four months late, it becomes one of fewer than 50 countries to submit its plan, with only 44 countries and the EU having submitted NBSAPs to the UN as of 24 February 2025.
“The UK’s NBSAP provides a comprehensive overview of its nature targets,” said Charlie Dixon, Nature Associate Director at the Green Finance Institute. “The government should build on this framework to clearly define the role of the private sector in achieving these targets, alongside the policy instruments that support their implementation.
“To deliver on national nature targets, the private sector requires both a clear roadmap and an enabling environment,” he added. “Clear sectoral goals, supported by appropriate policy incentives, are crucial to unlocking private capital for nature restoration and the broader nature transition. This is true not only for the UK, but globally.”
Countries have been urged to integrate their NDCs and NBSAPs as they are developed and updated, ensuring they are mutually reinforcing.
NBSAPs outline how governments will implement the goals and targets of the Global Biodiversity Framework (GBF). Adopted by 196 countries in 2022, the framework‘s ultimate goal is halting and reversing nature loss by 2030, comprising 23 action-oriented global targets under four overarching goals.
At last week’s reconvened COP16 in Rome, negotiators agreed on a resource mobilisation strategy to raise the estimated US$200 billion a year needed to achieve the objectives of the GBF, including US$20 billion flowing from rich to developing nations in 2025, rising to US$30 billion in 2030.
The UK government is set to publish its industrial strategy aligned with net zero goals, alongside sector plans for the growth-driving sectors, in spring 2025. The market will be carefully watching to see how Westminster plans to attract private capital to support its ambitious aims.
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