Regulatory and policy uncertainty remains one of the most persistent and complex barriers to mobilizing private climate finance in EMDEs. Investors frequently cite unclear investment regulations, opaque tax regimes and inconsistent climate policy commitments as key deterrents. These uncertainties elevate perceived risk, inflate due diligence costs and undermine investor confidence, particularly in markets with limited institutional depth and legal recourse. Insights from the World Economic Forum’s Climate Finance Innovation initiative 2025 dialogue series reinforce this concern. At the Spring Meetings of the World Bank Group (WBG) and the International Monetary Fund (IMF) in Washington in April 2025, participants noted that fewer than 20 countries had submitted updated NDCs, signalling weak national climate strategies. Similarly, at the 4th International Conference on Financing for Development (FfD4) in Seville, stakeholders stressed the need for sovereign market signals, such as sustainability- linked bonds and transparent governance frameworks, to reduce perceived risks and make transitions financially binding. Domestic tax policies also pose challenges Withholding taxes on interest and dividends, and capital gains taxes on foreign equity investments often discourage foreign direct investment. Though these measures are typically designed to protect domestic revenue bases, they can inadvertently deter foreign direct investment. A more nuanced understanding of how tax policies influence investment behaviour is needed, drawing lessons from jurisdictions such as Ireland, Luxembourg and Singapore, which have successfully driven growth in foreign direct investment. Stronger private investor participation requires a willingness to engage with policy and government. Too often, global investors avoid this interface – whether in contracting or investment – citing policy instability as an excuse to stay on the sidelines. Ankit Todi, Chief Sustainability Officer, Mahindra Group There can often be misalignment between the priorities of commercial banks and those of governments. This highlights the critical need for structured dialogue between the public and private sectors to bridge the gap and align investment strategies. Dana Barsky, Global Head of Sustainability Strategy and Net Zero, Standard Chartered BankThe 2025 updates to NDCs represent a pivotal opportunity to significantly scale up both public and private climate finance. By COP30 in Belém in November 2025, around 190 updated NDCs are expected to be submitted to the United Nations Framework Convention on Climate Change (UNFCCC). These updated commitments are crucial for unlocking the private capital needed to drive climate action at scale. Many of the NDCs currently remain high-level ambitions rather than actionable, finance-ready plans.Investors do not invest directly in NDCs; they focus on countries, companies and projects operating within stable and credible policy environments. However, to unlock capital, NDCs must move beyond headline targets and become detailed, sector- specific and operational investment roadmaps that align with national infrastructure development and emissions reduction priorities. This requires translating NDCs into medium-to-long-term plans with clear financing strategies and implementation pathways. Achieving this demands stronger collaboration among governments, financial institutions and multilateral development banks to create an enabling environment for investment.Translate NDCs into actionable, sector-specific investment roadmaps Asset managers Project developers Corporates Institutional investors EMDE governments BanksImprove policy and regulatory certainty PRIORITY 5 SOLUTIONS: MEDIUM-TERM From Risk to Reward: Unlocking Private Capital for Climate and Growth 36

Risk to Reward 2025