Beyond “Least-Cost” allocation: Optimising sectoral contributions for Paris-compatible mitigation targets over multiple SDG trade-offs

Abstract Limiting global warming to well-below 2°C necessitates profound decarbonization, but how to distribute mitigation efforts over sectors remains a widely debated issue. While Integrated Assessment Models (IAMs) traditionally rely on "Least-Cost" optimization to answer this question, the resulting sectoral allocations vary widely and ignore impacts on other potential policy objectives. Connecting an IAM with portfolio analysis, this study applies a novel methodology to evaluate how sector-specific mitigation actions impact key indicators from Sustainable Development Goals (SDGs) related to poverty, health, water, economy, and land, and to identify Pareto-optimal and Paris-compliant mitigation portfolios that reveal the trade-offs between other sustainable development priorities. Furthermore, we define "SDG-balanced" portfolios that outperform standard least-cost scenarios across all five SDG indicators for an equivalent carbon budget. Our findings demonstrate that the simultaneous evaluation of a broader set of policy priorities is crucial to provide truly policy-relevant guidance for the climate transition.