News: Coalition Meets During Finance Day at COP27
Attendees discussed how finance ministries can help their countries adapt to the increasingly costly impacts of climate change
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Attendees discussed how finance ministries can help their countries adapt to the increasingly costly impacts of climate change
The Coalition of Finance Ministers for Climate Action has launched a consultation process to obtain feedback on the draft of a forthcoming landmark report: Strengthening the Role of Ministries of Finance in Driving Climate Action: A Framework and Guide for Ministers and Ministries of Finance.
At COP27 the Coalition agreed to launch a global public consultation on the role of Ministries of Finance in driving climate action in recognition that they possess critical tools to do this—through economic, fiscal and financial policies—but these are not being sufficiently utilized. Nor is their role in climate action sufficiently understood, recognized, empowered, or operationalized, meaning they often lack the full capability and expertise to drive climate action at the speed and scale required, including by collaborating across government and with other actors.
The guide details the role Ministries of Finance can take in driving climate action, which we hope will benefit Finance Ministers, governments, and actors across the private and third sectors who work closely with them. The aim is not for the guide to be prescriptive, but to provide a comprehensive ‘menu of options’ to help Ministries of Finance to mainstream climate action within their core functions and capabilities.
The Co-Chairs would very much welcome and value views on this consultation draft before moving to finalisation in early 2023.
This is part of a collaborative effort involving more than 30 contributors, including Coalition member countries, an expert advisory group, institutional partners, and other experts.
The Coalition aims to publish the report in April 2023.
The report will be released in three formats. The consultation drafts of each of these is below:
The Coalition is seeking feedback from the following groups:
We request that feedback is provided via this webform. Alternatively, feedback can be emailed to email@example.com.
The consultation period will run from Wednesday, November 9, 2022, until Friday, February 3, 2023.
Please note: The summary and synthesis were updated on December 14 to reflect changes made to the full report.
The Coalition of Finance Ministers for Climate Action met on November 9 during the UNFCCC COP27 conference in Sharm el-Sheikh, Egypt. The meeting—one of the central events of Finance Day at COP27—brought together Finance Ministers, heads of international organizations, and other senior officials to discuss how finance ministries can help their countries adapt to the increasingly costly impacts of climate change.
Lead speakers at the event included Egyptian Finance Minister Mohamed Maait, Dutch Finance Minister Sigrid Kaag, World Bank President David Malpass, IMF Managing Director Kristalina Georgieva, UNDP Administrator Achim Steiner, World Resources Institute President Ani Dasgupta, and Grantham Research Institute Chairman Nicholas Stern. The meeting was opened by Suahasil Nazara, Vice Minister, Indonesia Ministry of Finance, and moderated by the Coalition Co-Chair Sherpas, Pekka Moren (Finland) and Masyita Crystallin (Indonesia).
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Participants noted that climate change impacts will have a major effect on economic growth and public welfare over the long term, even if emissions reduction targets are reached—therefore making it critical to ramp up adaptation efforts. Speakers emphasized that finance ministries have a key role to play in boosting adaptation investments using the economic and fiscal policy levers at their disposal.
In this context, attendees stressed the vital importance of improving access to adaptation financing—particularly for low-income and climate-vulnerable countries—and discussed the role of multilateral development banks and the private sector in providing adaptation finance. The need to further develop national financial systems to mobilize public and private finance was also highlighted. Participants welcomed the public release of the report, Climate Change Adaptation and Role of the Coalition of Finance Ministers for Climate Action, which was prepared as a key input into the meeting.
Launch of Consultation Process on Role of Finance Ministers in Climate Action
In addition to the adaptation discussion, the meeting also marked the launch of a consultation process with stakeholders and partners on the role of finance ministries in climate action. The dialogue and consultation will feed into a forthcoming guide, Strengthening the Role of Ministries of Finance in Driving Climate Action, that is expected to be endorsed by Ministers in April 2023.
Above: Participants at the meeting of the Coalition of Finance Ministers for Climate Action at COP27
Felipe Larraín, Former Minister of Finance, Chile
Annika Saarikko, Minister of Finance, Finland
The Coalition Co-Chairs Published a Meeting Summary following the 8th Ministerial Meeting
Read what we've accomplished in the past year, and our plans for the coming year
Members and partners provided video statements, and the Co-Chairs issued a Meeting Summary and press release
Märt Kivine has been appointed as the new Secretary of the Coalition of Finance Ministers for Climate Action. Mr. Kivine joins the Coalition Secretariat from the European Bank of Reconstruction and Development, where he served as a Board member. Prior to this assignment, Mr. Kivine worked in the Development Economics Vice Presidency and in the Nordic and Baltic Executive Director’s office at the World Bank. He also served as a senior official in the Estonian Ministry of Finance, and as a Deputy Finance Minister acted as the EU Presidency’s Chief Negotiator for the EU's 2018 Budget.
The Coalition of Finance Ministers for Climate Action hosted a roundtable discussion on June 16 around the recently published Helsinki Principle 4 report, “Driving Climate Action through Economic and Fiscal Policy and Practice”, prepared under the leadership of U.S.A. and Denmark. The event highlighted the importance of robust action towards mainstreaming climate into economic and financial policies —and the potential consequences of inaction—by ministries of finance. The peer discussions centered around integrating climate change into fiscal sustainability analysis and mainstreaming climate change across public investment and asset management processes.
The event also showcased the importance of the Coalition to enhance the role of ministries of finance and why these ministries have a central role to play in unlocking the required investment and innovation to combat climate change. Country experiences were shared by Costa Rica, Denmark, Ethiopia, and Switzerland. The World Bank, International Monetary Fund, and Grantham Institute also provided key interventions throughout the event. The discussion highlighted the importance of developing a step-by-step approach to ensure steady progress and the need to raise awareness across ministries of finance about issues discussed in the report.
As immediate next steps, the work will continue under Helsinki Principle 4 on modeling and adaptation as well as Helsinki Principle 2 on guidance to support mainstreaming efforts.
On June 7, the Helsinki Principle 5 (HP5) workstream hosted a workshop to discuss the findings from the recently published Coalition report, An Overview of Nature-Related Risks and Potential Policy Actions for Ministries of Finance: Bending The Curve of Nature Loss.
One of the priorities for the Coalition is to improve Members’ understanding of climate- and nature-related risks, as well as opportunities that will arise with the transition to net-zero, nature-positive economies. Nature loss and climate change are interrelated and neither crisis can be successfully resolved unless both are tackled together. As the understanding of the impacts of climate change become clearer, concern about nature loss among Ministries of Finance (MoFs) is growing. Hence, following the publication of the 2021 Coalition report on climate-related risks, the Coalition deemed it crucial to produce a report on nature-related risks. This report was prepared by the HP5 workstream, however it covers considerations relevant to all Helsinki Principles.
In the workshop, one of the report’s authors and the HP5 Workstream Coordinator, Samantha Power, presented some of the key findings. She discussed the report’s focus on the economic and financial risks of nature loss, particularly those with fiscal implications. She presented a framework that maps the potential transmission channels of nature-related risks. Finally, she discussed a range of potential policy actions MoFs can take to bend the curve of nature loss. She explained that while the roles and responsibilities of MoFs differ across countries, they all control levers that can make a significant contribution to reducing nature loss and the resulting risks. She noted that at the same time, many of the policy recommendations in the report can be most effectively implemented through a coordinated approach with other relevant ministries and possibly with supervisor, regulator, or central bank counterparts.
Next, two Coalition Members provided feedback on the report and shared how they are managing nature-related risk in their countries. Serina Ng (Deputy Director, Global Issues and Governance at HM Treasury, UK and Lead of HP5) discussed the UK’s strategy to manage nature-related risk and ways the Coalition can continue to advance the nature agenda for the benefit of all its Members. Afterwards, Masyita Crystallin (Special Advisor to the Minister of Finance, Coalition Sherpa Co-chair, Indonesia) spoke about how Indonesia has developed Natural Capital Accounts and how this information is used in decision-making and planning, including for the MoF. She talked about the importance of understanding and managing nature-related risks in Indonesia.
Following these interventions, Erlan Le Calvar (Nature-related Risk Taskforce support, the Central Banks and Supervisors’ Network for Greening the Financial System (NGFS) Secretariat) spoke about how MoFs, supervisors, and central banks can coordinate to manage nature-related risks. He discussed NGFS work on this topic, including its most recent report, statement, and plans for next steps – including the development of nature loss scenarios. He discussed where NGFS sees a role for governments to act and where there is a role for central banks and supervisors to mitigate and manage these risks.
Next, Basile Van Havre (Co-chair Open Ended Working Group for post-2020 Global Biodiversity Framework, CBD, Ministry of Environment and Climate Change, Canada) spoke about the state of finance in the Convention on Biological Diversity (CBD) COP15 negotiations. He shared details related to draft text of the agreement on the alignment of public and private financial flows with the goals of the Global Biodiversity Framework. He also pointed to the important role for MoFs in ensuring an ambitious agreement and supporting effective implementation.
Finally, Sonya Likthman (Manager, Federated Hermes Limited and co-chair of the Public Policy Advocacy working group of the Finance for Biodiversity Pledge) spoke about financial sector action to manage nature-related risk. She gave an update on the work of the Finance for Biodiversity Pledge and their various working groups. She discussed the group’s engagement with the CBD process and its position paper on alignment of financial flows with the goals of the Global Biodiversity Framework.
Fiona Stewart (Coalition Secretary) moderated an engaging Q&A session. Finally, the Sherpa Co-chairs noted that the publication of this report is an important step to help Coalition Members better understand nature-related risks and possible fiscal implications, as well as to initiate a discussion about policy challenges and how to best address them.