16th Ministerial Meeting of the Coalition of Finance Ministers for Climate Action

Brazil’s Ecological Transformation Plan (ETP) outlines a strategy to align climate objectives with social and economic development, aiming to support the country’s transition toward a low-carbon economy.

By Raquel Nadal, Ministry of Finance, Brazil.

Brazil’s energy profile provides a strong basis for decarbonization: 92% of electricity generation comes from renewable sources (a global average of 27%), and biofuels account for 21% of transportation fuels (a global average of 4%). Additionally, Brazil has ample land suitable for renewable energy expansion and reserves of critical minerals, including nickel, rare earths, and uranium. These factors create opportunities, but they do not eliminate the complexity of the required transition ahead.

Recognizing these challenges, the Brazilian government launched the Ecological Transformation Plan(ETP) as a comprehensive framework to decarbonize the economy, improve productivity, and reduce regional and social inequalities. With many Brazilians still living in poverty, the plan aims to integrate climate action with inclusive and equitable development.

The ETP is organized around six strategic pillars, each with a specific policy agenda:

1- Sustainable finance: This pillar focuses on redirecting capital flows toward sustainable investments. Initiatives include a green taxonomy and Eco-Invest, a mechanism designed to attract private capital for long-term green projects. Eco-Invest also offers currency hedge facilities to reduce risks for international investors. The goal is to create financial conditions that make sustainability-oriented projects more viable.

2- Technological modernization: This pillar aims to modernize industrial processes and promote low-carbon technologies. The objective is to enhance productivity and competitiveness, enabling Brazilian industries to participate in global low-carbon value chains.

3- Bioeconomy and agro-food systems: Land use and agriculture account for over 70% of Brazil’s greenhouse gas emissions, making this sector central to a low-carbon economy. Policies focus on restoring degraded pasturelands, reducing deforestation, and enhancing the value of forest-based products. The aim is to turn the sector into a source of climate solutions while supporting biodiversity and rural livelihoods.

4- Energy transition: This pillar seeks to accelerate renewable energy deployment and expand electrification in transport.

5- Circular economy: The focus here is on improving resource efficiency through recycling and reuse, reducing demand for raw materials, lowering emissions, and creating new business opportunities.

6- Green infrastructure and adaptation: This pillar promotes climate-resilient infrastructure, linking investments in areas such as urban mobility and flood protection with job creation and improved quality of life.

Expected Outcomes and Associated Risks

Two studies — one conducted with the World Bank using a dynamic stochastic model and another led by UNEP’s Partnership for Action on Green Economy using an input-output model — estimate that full implementation of the ETP could:

· Increase Brazil’s potential GDP by up to 1 percentage point by 2050

· Create 2.3 million new jobs

· Boost per capita income and investment

· Reduce inequality

·        All while meeting the net-zero emissions target.

These projections, however, depend on effective implementation and risk management. Brazil must navigate several critical risks:

· Agricultural emissions and deforestation: Stronger and more inclusive growth could increase demand for agricultural products, raising emissions and deforestation risks. Productivity improvements and regulatory enforcement will be critical.

· Labor market adjustments: Skills may not match demand, and some sectors — such as oil and automotive — could lose jobs. Policies for training, mobility, and regional development will be needed to mitigate these impacts.

· Fiscal constraints: While revenues from carbon markets and selective green taxes may emerge, Brazil’s fiscal framework limits public spending to stabilize debt and control inflation. This could restrict public investment unless innovative financing solutions are adopted.

· Climate shocks: Extreme weather events, such as floods and droughts, have already affected crops and livestock, contributing to food inflation and monetary tightening. These shocks can increase financing costs and slow progress.

· Political continuity: If mandates are unclear or the costs of inaction are not well communicated, key initiatives — such as the green taxonomy and carbon market — could face discontinuity. Broad-based support and institutional stability will be essential.

The Ecological Transformation Plan represents an effort to integrate climate policy with economic and social priorities. Its success will depend on careful coordination, robust planning, and sustained political commitment. A transition to a low-carbon economy presents opportunities for growth and inclusion, but it also entails significant trade-offs and risks that necessitate proactive management.

Read the Executive Summary of the MODELING THE IMPACTS OF BRAZIL’S ECOLOGICAL TRANSFORMATION PLAN.

Watch the YouTube video about the Ecological Transformation Plan.

Coherent climate policy packages are essential to achieving climate and development objectives, with Ministries of Finance playing a key role in their design and implementation.

Ministries of Finance (MoFs) face increasingly complex questions about the direct and indirect implications of the green and resilient transition. Recent geopolitical developments in key energy-producing regions have added to volatility in global energy markets and reinforced concerns about energy security. At the same time, shifting towards low carbon economies offers transition and resilience enhancing economic opportunities to boost growth, create jobs, and enhance energy security. Building effective climate policy packages requires robust and credible answers—grounded in sound economic analysis—that clearly set out the risks and opportunities of different policy pathways. As governments seek to accelerate decarbonization while maintaining growth and fiscal stability, MoFs are uniquely positioned at the center of this challenge, shaping economic strategy, allocating public resources, and mobilizing finance at scale.

Against this backdrop, the Coalition of Finance Ministers for Climate Action recently published its report “How Ministries of Finance Can Support Coherent Climate Policy Packages”, highlighting how coordinated, multi-instrument approaches can deliver both climate and economic outcomes. To bring these insights into practice, the Coalition convened a public webinar bringing together senior officials from ministries of finance, international organizations, and research institutions. The discussion explored how coherent policy packages can drive investment, strengthen fiscal resilience, and support economic competitiveness, while underscoring the pivotal, yet still underutilized, role of finance ministries in climate action.

(Read the full report here.)

Event overview

The webinar focused on how Ministries of Finance can operationalize coherent climate policy packages under conditions of fiscal constraint and rising climate risk. Climate change was framed as a macroeconomic and fiscal challenge, with implications for public finances, economic stability, and long-term growth. Delivering effective outcomes was linked to aligning fiscal, regulatory, financial, and investment measures within a coherent policy framework, with Ministries of Finance playing a central role in managing trade-offs and ensuring consistency across government. Emphasis was placed on the use of analytical tools to inform policy design, support sequencing, and enable adjustment over time.

Keynote

Patrick Lenain (Council on Economic Policies), lead author of the report, highlighted that climate change remains insufficiently integrated into the core mandate of many Ministries of Finance, despite its material implications for fiscal sustainability and economic performance. He emphasized that Ministries of Finance already possess a broad set of policy levers and analytical tools, and that delays in engagement are often driven more by perceived constraints than by actual limitations.

He underscored that effective climate action depends on well-coordinated, multi-instrument policy packages rather than reliance on single measures. A pragmatic and iterative approach was emphasized, with policy development proceeding alongside ongoing evaluation and refinement. The importance of sequencing reforms and aligning climate and economic objectives was also highlighted.

Country Perspectives

Uganda

June Nyakahuma (Ministry of Finance, Planning and Economic Development, Uganda) highlighted the role of institutional and legal frameworks in supporting coherent climate policy, including the Climate Change Act. Coordination between the Ministry of Finance, the National Planning Authority, and the Ministry of Water and Environment enables the integration of climate considerations into planning and budgeting. Fiscal instruments, including fuel taxes and environmental levies, are used to support climate objectives. Analytical capacity is strengthened through collaboration with international organizations, while the Climate Finance Unit supports the development and management of climate finance frameworks.

Ecuador

Paula Suarez (Ministry of Economy and Finance, Ecuador) emphasized the need for a pragmatic, adaptive approach to climate policy in the context of fiscal constraints and structural economic conditions. The use of a diverse set of policy instruments, strengthened coordination within and across government, and attention to distributional impacts were identified as key elements in advancing reform. The importance of understanding private sector exposure to climate risks was highlighted, alongside the role of international support, including from the IMF and World Bank, in enabling major reforms such as fossil fuel subsidy reform.

Nigeria

Temitope Akinyemi (Ministry of Finance, Nigeria) highlighted the fiscal and economic implications of climate change, including impacts on agriculture, infrastructure, and energy systems. Climate-related disruptions increase pressure on public expenditure, while transition risks affect revenues from oil and gas. The Ministry of Finance plays a central role in coordinating climate-related investments and mobilizing finance, including through instruments such as green bonds and carbon finance mechanisms, supported by international partnerships.

Link to video.

Link to discussion overview.

Coalition Co-Chairs’ Statement

As we convene at the Spring Meetings, we, the Co-Chairs of the Coalition of Finance Ministers for Climate Action, underscore a central message: the shift toward green and resilient economies is not only one of the defining challenges of our time, but also a major economic opportunity. It is giving rise to transition-related and resilience-enhancing economic opportunities: where mitigation and adaptation pathways can drive growth, strengthen fiscal stability, enhance energy security, and create more and better jobs in the near term. The opportunity is clear, and the time to act is now.

On the other hand, increased volatility in global energy markets has underscored energy security risks, with related price shocks hitting low-income, import-dependent countries the hardest, fuelling inflation, external imbalances, food insecurity, and rising debt. This provides a strong argument for investing in more diversified and clean energy systems.

These dynamics underscore a broader reality: climate change is a macro-critical threat to growth, fiscal stability, and poverty reduction. Even with only partial impacts captured in current economic models, it is projected to significantly reduce economic output in many countries by mid-century, if we do not act decisively now. Physical risks, including extreme weather events and slow-onset changes, are already damaging infrastructure, disrupting economic activity, and placing growing pressure on public finances. The transition also creates macro-fiscal risks, with substantial upfront investment needs, that can place pressure on public deficits, interest rates, and debt burdens. In addition, policy changes, technological shifts, and declining demand for fossil fuels may reduce revenues in carbon-intensive sectors, create stranded assets, and require new public spending to support affected workers, regions, and industries.

Many of the benefits of mitigation and adaptation accrue over the longer term, a dynamic often described as the “tragedy of the horizon.” This can reinforce the perception that climate policy involves significant near-term fiscal costs for more distant gains, alongside concerns about competitiveness, adjustment costs, and distributional impacts.

But the macroeconomic case has changed, with key tipping points now being crossed. Many net-zero investments generate net economic benefits, and evidence suggests that many mitigation and adaptation policies have costs lower than the value of the co-benefits they generate, meaning they can effectively pay for themselves over time. Well-designed climate policies can thus drive a whole-of-economy transformation, unlocking transition-related and resilience-enhancing economic opportunities.

In terms of transition-related opportunities, rapid technological progress and falling costs, especially in renewable energy, storage, and electric mobility, are transforming markets and investment flows. Costs have declined sharply, making renewables cheaper than fossil fuel alternatives in many markets, and private capital increasingly moving toward low-emission and resilient investments. Clean energy investment now significantly exceeds fossil fuel investment globally, reflecting a structural shift in capital allocation, while electric vehicles are reaching cost parity in major markets and are becoming an increasingly significant share of global car sales.

These transition opportunities are also central to jobs and inclusion. Renewable energy employment has expanded significantly, with solar accounting for a large share of new jobs. Per dollar invested, clean energy and energy efficiency generate more jobs and economic activity than fossil fuels. Without action, projected climate impacts are expected to result in substantial job losses across developing and global economies. By contrast, low-emission and resilience investments could generate or protect a large number of jobs globally by mid-century.

Adaptation investment supports a range of important resilience-enhancing opportunities. Climate impacts will intensify, even with strong mitigation action. Investing in resilience across infrastructure, agriculture, ecosystems, and water systems reduces risks, protects growth, and strengthens fiscal stability. These investments deliver high returns and can significantly reduce projected economic losses, especially in highly exposed countries. They are also job-rich, with resilience investments expected to generate or protect additional and better-paid jobs across developing economies.

Much as there is this progress, we are cognizant that there are areas that need critical support. Scaling these opportunities requires a step change in investment. Public resources are limited, so most financing must come from the private sector – but unlocking this requires greater investment in enabling infrastructure, often driven by public spending, meaning countries must secure access to low-cost capital. Finance ministries have a central role to play by providing clear policy direction, strengthening fiscal and regulatory frameworks, improving public investment management, and deploying tools that crowd in private finance and reduce the cost of capital. We recognize that countries face different starting points and capacities, and that international and regional cooperation and support are essential to ensure a just and inclusive transition.

Through the Coalition, over 100 Finance Ministries are working together to advance these priorities. We are sharing practical experience, strengthening policy frameworks, and building capacity to integrate climate considerations into macroeconomic and financial decision-making. The Coalition is launching its new three-year Strategic Work Program, which sets out an ambitious agenda to support Finance Ministries in identifying, scaling, climate action as economic opportunities. Through our strong collaboration, we will continue to support Finance Ministries in turning ambition into effective implementation on the ground.

We are clear: climate action and economic prosperity go hand in hand. Therefore, by taking climate action that is economically sound and effective, we can support growth, strengthen resilience, and improve fiscal and macroeconomic outcomes. In doing so, we can ensure that climate action delivers tangible and durable benefits for people, especially the poor and vulnerable, measured in stronger livelihoods, more and better jobs, and more resilient communities and economies.

To learn more about the Coalition's work, visit: https://www.financeministersforclimate.org/

Read:

• 15th Ministerial Meeting Press Release
• Ministerial Summary
• Strategic Work Program 2026-2028

By Singapore's Ministry of Finance

Blended finance has long been positioned as catalytic, but its ability to mobilize capital at scale remains unproven. Singapore’s Financing Asia’s Transition Partnership (FAST‑P) initiative provides an important test case for finance ministries and MDBs seeking to operationalize private capital mobilization for green and transition infrastructure.

A Structural Financing Gap in Asia’s Transition

Asia is at the heart of the global climate challenge. The region accounts for roughly half of annual greenhouse gas emissions, is still expanding its coal capacity, and faces rapidly rising energy demand as incomes grow. To align with global climate goals, Asian economies need to invest trillions of dollars annually in climate resilience and adaptation mechanisms.

Despite being categorized as technically viable and economically promising, many such projects are still perceived by commercial investors as too risky due to domestic monetary and governmental capacity issues.

This is where blended finance comes in. By combining concessional public or philanthropic funding with private capital, projects can be de-risked and structured to appeal to institutional investors. The model has long been heralded as a potential breakthrough, but its track record in mobilizing large-scale flows has been mixed.

The FAST‑P Initiative: A New Blended Finance Architecture

The Financing Asia’s Transition Partnership (FAST‑P) initiative, announced at COP29, represents Singapore’s most ambitious commitment to mobilizing private capital for the region’s transition. The Singapore Government has committed US$500 million in concessional public capital as an anchor allocation, to be matched on a dollar-for-dollar basis, with concessional capital from other partners, with the objective of crowding in up to US$5 billion in total investable capital.

A distinguishing feature of the Singaporean model is the degree of executional agility embedded into the structure. The Ministry of Finance supported the set-up of the FAST-P Office by MAS to facilitate the deployment of concessional capital into partnerships managed by commercial managers without the need for project‑by‑project approvals. This allows the FAST‑P initiative to be implemented more efficiently, better aligning with private‑sector investment processes. In addition, the FAST-P initiative serves as a broader ecosystem platform, bringing together asset managers, banks, and commercial and concessional investors, to promote innovative blended finance solutions for sustainable infrastructure in the region. This approach leverages Singapore’s role as a regional financial hub, helping connect deal origination, risk mitigation instruments, and commercial investment at scale.

Equally important is the market‑signaling function of Singapore’s own public‑sector commitment. By integrating a “first‑loss” position, MAS is signaling its interest in Asia’s transition and helping reduce the perception of asymmetric risk among private investors.

Lessons for finance ministries

For ministries of finance, particularly those participating in the Coalition of Finance Ministers for Climate Action, the FAST‑P initiative provides an instructive example for the potential and limitations of blended finance. When strategically deployed, relatively modest volumes of concessional public capital can unlock additional commercial capital for projects that would otherwise remain stalled due to currency risk, political uncertainty, or insufficient project maturity. This demonstrates the mobilization potential of well‑designed risk‑sharing mechanisms.

Singapore’s approach offers a useful counterpoint precisely because it seeks to resolve structural bottlenecks through delegated decision‑making, an ecosystem‑level design, and strong signaling effects from public capital, demonstrating how countries can assume a catalytic convening role, shape market conditions, and mobilize private capital without incurring unsustainable public‑finance obligations.

The timing of Singapore’s move is particularly relevant. International climate finance negotiations continue to struggle as concessional resources from MDBs remain limited. Investors' appetite for green and transition assets continues to grow, signifying substantial demand. Thus, the central challenge is not the availability of capital but the absence of investable, risk‑adjusted pipelines in emerging Asia.

Finance ministries sit at the center of this structural mismatch. They are responsible for establishing regulatory frameworks that enable private capital investments. Blended finance alone cannot resolve systemic constraints, but as Singapore illustrates, it can form a critical component of a broader policy architecture that includes green budgeting systems, climate‑tagging methodologies, carbon‑pricing instruments, and regulatory reforms to strengthen market integrity.

Croatia’s Ministry of Finance is constructing the institutional, fiscal, and market architecture for a climate‑aligned economy. Croatia has started a process of integrating climate considerations into financial policymaking.

By Croatia’s Ministry of Finance

Croatia’s Strategic Commitment to Climate Finance

Croatia’s recent trajectory reflects a broader shift underway in public finance: climate risk is no longer a peripheral environmental concern, but a material determinant of macroeconomic stability, sovereign risk, and long‑term growth.

The country has made substantial economic progress since the 1990s, and is increasingly recognizing the importance of strengthening resilience to climate impacts, given the growing fiscal pressures associated with extreme weather events and the broader costs of the green transition. Heatwaves, droughts, water scarcity, floods, and wildfires are already creating tangible fiscal pressures, while also reinforcing the need for forward-looking investments and adaptive policies. In a high‑income EU economy deeply integrated into tourism, agriculture, and coastal infrastructure, these challenges highlight the importance of resilient public finances, climate-smart infrastructure, and long-term sustainable growth planning. In this context, Croatia has taken a strategic decision to progressively integrate climate objectives into its fiscal governance framework.

Reframing Climate Action as Economic Strategy

Since joining the Coalition of Finance Ministers for Climate Action in late 2022, Croatia has increasingly viewed climate policy not only as an environmental necessity, but also as a strategic economic and fiscal opportunity. Inspired by the Coalition’s work and peer learning platform, Croatia made a strategic decision to apply for the Coalition’s Co-Chairmanship, which formally began in April 2026. In its candidacy for the Co-Chair role, Croatia emphasized the importance of reframing climate investments as opportunities for growth, competitiveness, resilience, and modernization of the economy. This approach now anchors Croatia’s role as Co-Chair of the Coalition and is reflected in the three guiding principles.

First, climate investment is treated as a long‑term driver of competitiveness rather than discretionary spending. Climate measures are increasingly framed as structural investments that strengthen productivity, resilience, energy security and sustainable economic growth.

Second, the Ministry of Finance is positioned at the center of the transition. Climate considerations are progressively being integrated into budgeting, fiscal planning, and public investment frameworks, reinforcing the role of fiscal institutions in delivering climate and economic policy objectives.

Third, mobilizing private capital is recognized as indispensable. Given limited fiscal space and growing investment needs, public budgets alone cannot finance the scale of investment required, making stronger cooperation with financial institutions and private sector essential.

The Scale of the Investment Challenge

Croatia’s updated Integrated National Energy and Climate Plan 2021-2030 highlights that achieving climate and energy objectives will require significant long-term investments across the economy, underlining the importance of mobilizing both public and private finance to support the transition.

The Ministry of Finance has been clear that public spending can finance only a fraction of these needs. As Ana Zorić, Director at the Ministry of Finance and Climate Coalition Deputy, has noted: “If we rely solely on public sources, we will not reach our targets. Mobilizing private capital is essential.”

This assessment has driven a focus on supply‑side reforms: reducing investor uncertainty, strengthening sustainability reporting, creating pipelines of bankable projects, and systematically integrating climate considerations into fiscal rules and public financial management. The objective is to build the enabling environment required for large‑scale private investment.

Building the Institutional Infrastructure for Sustainable Finance

A defining feature of Croatia’s approach is its emphasis on institutional infrastructure.

Within the Ministry of Finance, a Sustainable Finance Support Sector was established in 2023 to anchor the green agenda.  This structure supports integrating climate considerations into budgeting, financial regulation, macroeconomic and fiscal modeling, and public investment planning.

This internal capacity is complemented by the Sustainable Finance Support Forum, a national coordination mechanism that brings together various institutions, including regulators, financial institutions, public authorities, academia, and private‑sector bodies. The Forum’s 2025-2026 Action Plan prioritizes support for businesses with EU corporate sustainability reporting, strengthening ESG skills, improving data availability, and advancing green procurement. In practice, it helps align regulatory, supervisory, and market‑building efforts around a shared national framework.

Croatia is also introducing green budgeting, with support from the European Commission and the World Bank, which will provide a unified framework for classifying, tracking, and assessing climate‑related public spending. This is expected to improve expenditure prioritization and support medium‑term fiscal planning.

Finally, the modernization of the financial reporting infrastructure includes the re-engineering of the Register of Annual Financial Statements, the central platform for business reporting. The upgrade will integrate sustainability data and incorporate corporate sustainability reports into the public disclosure system alongside financial statements.

The reform aims to simplify sustainability reporting, reduce reporting burdens, improve the availability and comparability of ESG data, and strengthen transparency in sustainable finance, benefiting regulators, SMEs, and investors alike.

Capital Market Momentum

Croatia’s capital markets are already responding. Several recent ESG‑linked issuances have been oversubscribed, indicating strong investor appetite for climate‑aligned assets. This demand signal reinforces the Ministry’s diagnosis: financing capacity is not the binding constraint. Where clear rules, transparent data, and credible institutions are in place, private capital is ready to engage.

Adaptation and Resilience

Croatia is strengthening climate adaptation and disaster resilience by combining long-term strategies with practical reforms and predictable financing. The National Climate Change Adaptation Strategy to 2040 and the Disaster Risk Management Strategy to 2030 provide an important policy framework for strengthening resilience and supporting adaptation efforts across key sectors of the economy. The focus is now increasingly on implementation, including stronger coordination and integration of climate considerations into planning and policy processes.

The 2025 Law on Climate Change and Ozone Layer Protection represents an important step in strengthening Croatia’s climate governance framework by clarifying institutional responsibilities and reinforcing mechanisms for climate policy coordination, planning, and reporting.

Croatia is also working to strengthen the financial resilience of households and businesses. Reforms to the Insurance Act and stronger supervisory powers for the financial regulator (HANFA) are improving climate risk stress testing and oversight, while financial literacy initiatives aim to increase awareness and uptake of disaster insurance, which remains low.

These efforts are supported by the World Bank’s Catastrophe Deferred Drawdown Option (CAT DDO). The instrument links policy reforms with rapid, predictable post-disaster financing, ensuring liquidity is available immediately after major shocks. Given Croatia’s experience with earthquakes and increasing exposure to heatwaves, droughts, floods, and wildfires, this added financial buffer is importa

Governance, Collaboration, and Small‑State Leadership

Croatia’s experience also challenges assumptions about scale. While small states often face administrative constraints, strategic coordination and institutional clarity can offset limited capacity. A Conference on promoting sustainable finance in early 2025 brought together policymakers, regulators, financial institutions, and the private sector to align on transition pathways and implementation challenges.

This collaborative model underpins Croatia’s vision for the Coalition of Finance Ministers for Climate Action: more structured peer learning, targeted technical assistance, and stronger alignment among finance ministries in translating climate commitments into operational fiscal and financial systems.

Implications for Finance Ministries

Croatia’s experience highlights four lessons. Climate and fiscal policy are converging; ministries of finance need tools to manage and disclose climate‑related fiscal risks. Institutional infrastructure is decisive; strategies require systems to deliver results. Private capital mobilization is essential, particularly where fiscal space is constrained. And finally, small states can lead when strategic clarity, coordination, and political commitment are present.

Croatia’s green transition is progressing steadily, with increasing focus on sustainability and resilience. By embedding climate objectives into fiscal systems, modernizing financial infrastructure, and crowding in private investment, the Ministry of Finance is moving from strategy to sustained implementation.