New research from the Organization for Economic Co-Operation and Development (OECD) and the United Nations Development Program (UNDP) finds that strong climate action will not only protect the planet but also increase economic growth worldwide, dispelling long-standing claims that cutting emissions would harm national economies. The report highlights that a decisive shift toward net-zero policies will result in net gains to global GDP by 2040, while failure to act could cause irreversible economic downturns and, in some regions, a permanent recession.
Despite mounting scientific consensus on the benefits of bold climate policies, governments around the world remain hesitant to enact the necessary measures, citing concerns about economic harm. However, the OECD and UNDP analysis warns that these fears are unfounded—and delaying climate action could lead to catastrophic consequences for the global economy.
The OECD-UNDP study projects that by 2040, the global economy will see a 0.23 percent net gain in GDP from strong climate action, with even greater growth expected by 2050. The benefits will be particularly significant in lower-income nations, where investing in emissions reduction could lift 175 million people out of poverty by 2030.
Advanced economies will also see long-term economic expansion under ambitious climate policies. The report predicts that by 2050, per capita GDP will rise by 60 percent in wealthier nations compared to 2025 levels, while lower-income countries will experience a 124 percent increase.
Achim Steiner, executive secretary of the UNDP, emphasized the importance of these findings during the Europe 2025 Conference in Berlin, stating:
“The overwhelming evidence that we now have is that we are not regressing if we invest in climate transitions. We actually see a modest increase in GDP growth, that may look small at first… but quickly grows.”
While the study outlines the economic benefits of tackling climate change, it also warns of the dire consequences of inaction. If emissions continue to rise unchecked, a third of global GDP could be lost by 2100.
Simon Stiell, executive secretary of the UN Framework Convention on Climate Change, issued a stark warning about the economic consequences of climate inaction in a speech in Berlin on Wednesday:
“From unprecedented storms hitting Europe’s west coast and heatwaves, to droughts in Sicily and floods across central Europe, climate-driven disasters are slashing food production and destroying infrastructure, businesses, homes and communities. And the climate crisis could carve up to 2.3 percent off Europe’s GDP by mid-century—a recipe for permanent recession, meaning continuously shrinking economies, failing businesses, and significantly increased unemployment.”
Stiell stressed that the impact of these declines would be cumulative and far more severe than previous financial crises. He noted that the 2008-09 economic crash caused a 5.5 percent contraction in the EU economy—but recovery began within years. In contrast, climate-driven GDP losses would continue indefinitely, making economic recovery impossible.
“The climate crisis is an urgent national security crisis that should be at the top of every cabinet agenda,” Stiell added.
Despite overwhelming evidence supporting climate action, many governments remain slow to update their policies. Under the Paris Agreement, nations were expected to submit more ambitious Nationally Determined Contributions (NDCs) by last month, yet only 19 countries met the deadline.
The OECD report warns that this failure to act will weaken economic resilience, delay critical investments, and exacerbate climate-related damages. It also points to increasing geopolitical tensions, public debt, and economic uncertainty as reasons why governments are hesitant to commit to large-scale climate policies.
However, the study emphasizes that postponing action will only make economic conditions worse:
“Any slowdown in climate action risks delaying much-needed investments, weakening economic resilience and increasing climate damages. The cost of insufficient action is clear: it could threaten future development, economic stability and long-term prosperity.”
One of the strongest arguments for immediate climate action is the rapid expansion of the renewable energy sector. The International Renewable Energy Agency (IRENA) reported a 15% increase in renewable energy capacity in 2023, with nearly two-thirds of this growth driven by China’s aggressive push for green energy investment.
Francesco La Camera, director general of IRENA, highlighted the economic potential of renewable energy:
“The continuous growth of renewables we witness each year is evidence that renewables are economically viable and readily deployable.”
However, fossil fuel investment remains a significant barrier to progress. While the clean energy sector created 1.5 million new jobs in 2023, nearly 1 million new jobs were also added in the fossil fuel industry, indicating that many countries continue to prioritize short-term economic stability over long-term sustainability.
The OECD and UNDP findings make it clear: nations that accelerate climate action will prosper, while those that delay will suffer economically. The upcoming 2025 NDC cycle represents a pivotal opportunity for countries to align their economic policies with climate commitments.
Achim Steiner urged governments to recognize the long-term benefits of bold climate strategies:
“The 2025 NDC cycle is an opportunity to build collaborative approaches around climate, development and growth priorities, broaden and strengthen ownership of development-enhancing mitigation strategies, and inform effective investment plans and strategies to mobilize public and private sources of finance to deliver action.”
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