Above: screenshot from the joint workshop on March 25, 2021.

On March 25th, 2021, the Coalition of Finance Ministers for Climate Action organized a high-level workshop on green budgeting in co-operation with the OECD Paris Collaborative. Green budgeting is a key priority area on the Coalition’s agenda, and this is the third joint green budgeting event since the Coalition’s inception. The work builds on the various findings and discussions that have taken place at previous workshops and the efforts of the Institutional Partners (e.g. OECD, WB, IMF, UNDP), and provides a way forward for the Coalition’s work and all its member countries. 

The first session highlighted the latest developments on green budgeting, including the results from the 2020 OECD and European Commission – Joint Survey on Emerging Green Budgeting Practices. This was followed by a presentation to emphasize the importance of green recoveries and how green budget tagging can help identify relevant investments for long-term climate and environment objectives. The second session focused on the importance of macro-economic modelling in providing an analytical basis for policy designs and the assessment of economic, environmental, and climate effects. The third and final session looked at how countries can use different sets of approaches to build resilience to address national and global commitments, including Nationally Determined Contributions (NDCs), with highlights from Colombia and Grenada.

Presentations:

• Agenda
• Session 1: Latest Developments in Green Budgeting - Andrew Park (OECD)
• Session 2: The OECD Green Recovery Database - Andrew Prag (OECD)
• Session 2: Denmark Presentation - Mads Dalum Libergren (Denmark Ministry of Finance)
• Session 3: Grenada Presentation - Kelvin George (Grenada)
• Session 3: Colombia Presentation - Leonardo Buitrago (Colombia Ministry of Finance)
• Session 3: Climate Change Mainstreaming in Planning and Budgeting - Tom Beloe (UNDP)

Background Documents:

• Green Budgeting in OECD Countries
• Integrating Climate into Macroeconomic Modelling: Drawing in the Danish Experience

On March 16th, 2021, the Coalition of Finance Ministers for Climate Action co-organized an online event with the Nordic Investment Bank (NIB) titled “Debate: Path to Sustainable Recovery”.

The two-hour virtual debate addressed how countries can pursue a sustainable recovery in light of the ongoing pandemic and climate change challenges and was attended by over 350 people. The event included discussion on COVID-19 response in the Nordic-Baltic region and the role of International Financial Institutions (IFIs) and Multilateral Development Banks (MDBs) in sustainable recovery in a global context.

The event was opened by Mr. Matti Vanhanen, Finance Minister of Finland and Co-Chair of the Coalition.

Please find a link to the recording of the event here.

The Final Report of the Independent Review on the Economics of Biodiversity, led by Professor Sir Partha Dasgupta and commissioned by the UK government, was published in February 2021. The landmark report, which is also known as the Dasgupta Review, spans more than 600 pages and draws on public policy, science, economics, finance, and business.

The Review “calls for changes in how we think, act and measure economic success to protect and enhance our prosperity and the natural world. Grounded in a deep understanding of ecosystem processes and how they are affected by economic activity, the new framework presented by the Review sets out how we should account for Nature in economics and decision-making.” The Final Review comprises the Full Report, an Abridged Version, and Headline Messages, all of which are available here.

On Friday, March 12, 2021, the Coalition of Finance Ministers for Climate Action hosted Ant Parham and Emily McKenzie from Her Majesty’s Treasury, UK – both members of the Dasgupta Review team – who presented key findings from the Review.

The findings are of great relevance for Ministries of Finance, as they take steps to address the climate and biodiversity crises. Members of the Coalition discussed approaches Ministries of Finance can take to integrate biodiversity considerations into policy and practice based on experiences from mainstreaming climate change into economic and financial policies. They also discussed the need to explore potential actions at the nexus of climate and biodiversity, as well as how to manage the conservation of critical biodiversity and ecosystem services that are global public goods. Coalition Members agreed to explore how to integrate biodiversity in the workstreams of the six Helsinki Principle workstreams and determined that the Coalition can create value for its Member countries by providing an overview of the economic relevance of biodiversity loss.

Today the Coalition of Finance Ministers for Climate Action hosted Lee White, Executive Director of the International Financial Reporting Standards (IFRS) Foundation, and Sam Prestidge, Adviser on Governance and Strategic Policy at the IFRS Foundation, for the Coalition’s first ‘Stakeholder Dialogue’. This event was organized by the Helsinki Principle 5 Workstream on ‘mobilizing private finance'.

Mr. White presented on the IFRS Foundation’s consultation on the harmonization of sustainability reporting standards and the next steps the IFRS plans to take towards establishing a Sustainability Standards Board. Following this presentation, Coalition Members asked questions related to scope, implementation, and proportionality of the proposed sustainability standards.

The participants agreed that it was a very informative session and that the Coalition will be in touch with the IFRS Foundation as it takes the next steps on this initiative.

The Coalition will aim to support Members by raising awareness of the technical and political aspects of sustainability reporting standards and supporting global collective action, including the IFRS where possible.

On February 24th, 2021, the Coalition of Finance Ministers for Climate Action organized a workshop on integrating climate into economic modelling in co-operation with the OECD and the Paris Collaborative. At the Fourth Ministerial Meeting of the Coalition in October 2020, Ministers tasked the Coalition to explore ways to integrate climate in economic modelling. This workshop is the first event under Helsinki Principle 4 dedicated to economic modelling.

In the first session, the World Bank provided a brief overview of how the development of macroeconomic modelling can support the mainstreaming of climate and environmental effects into economic policies. This was followed by a presentation of the Danish Ministry of Finance’s new macroeconomic model, GreenREFORM. The model’s purpose is to provide assessments of the environmental and climate effects of economic policies, as well as the economic effects of environmental, energy, and climate policies.

The Swiss Federal Department of State and Colombia’s Deputy Minister of Finance led a panel discussion after the presentation to present their feedback based on their own experience in integrating climate considerations in economic modelling. They also highlighted benefits, requirements, challenges, and lessons learned.

The discussion was then opened to all participants and Coalition member countries, where valuable feedback and insights were exchanged. This work will continue; similar events will be organized regularly to ensure progress, taking into account the high importance of modelling in mainstreaming climate to economic policies.

The Coalition’s Work Programme for 2021 outlines the main priorities and planned activities under each Helsinki Principle workstream and key cross-cutting themes, based on the Santiago Action Plan and guidance provided by Finance Ministers. Activities and deliverables may be adjusted to adapt to changing circumstances.

The main objectives of the Coalition in 2021 are to deepen our understanding of climate-related economic and financial policies, boost the engagement of Finance Ministries on climate change, support a green and inclusive recovery/growth from the COVID-19 crisis, and increase collaboration among workstreams and institutional partners.

Some highlights of our planned activities for 2021 include efforts on: long-term strategy development, carbon pricing, macro-modeling, green budgeting, climate- and biodiversity-related financial risks, greening financial system roadmaps, and NDC enhancement. The Work Programme also includes a report on the cross-cutting theme of green and inclusive recovery/growth policies.

With growing global commitment to combatting climate change, 2021 is poised to be a pivotal year for action on climate change. Through its ambitious 2021 Work Programme, the Coalition seeks to build on increasing momentum and help accelerate climate action.

• View the 2021 Work Programme

View/Download the 2022 Work Programme

The 2022 Work Programme of the Coalition of Finance Ministers for Climate Action outlines the main priorities and planned activities under each Helsinki Principle workstream and key cross-cutting themes. The Work Programme is based on guidance provided by Finance Ministers at the Sixth Ministerial Meeting on 12 October 2021, the Coalition-COP26 event on 3 November 2021, survey responses collected from Members and Institutional Partners, and other feedback received. Activities and deliverables may be adjusted to adapt to evolving circumstances, country-specific factors, and further guidance from Finance Ministers.

Some highlights of the Coalition's planned activities for 2022 include:

• Providing guidance and technical assistance on macroeconomic modeling and decarbonization strategies
• Launching a tailored training program for Finance Ministry staff on issues at the intersection of climate change and economic policy
• Exploring various carbon pricing proposals in both theoretical and practical terms
• Developing tools for identifying and reducing government fiscal risks from climate change
• Facilitating peer exchange on financing the green transition
• Identifying approaches for Finance Ministries to manage nature-related risks
• Deepening understanding of the economic and financial policy interlinkages of Nationally Determined Contributions (NDCs)

Additional work is planned in key cross-cutting areas such as green recovery from the COVID-19 pandemic and climate adaptation and resilience. The 2022 Work Programme also signals the Coalition's intention to coordinate activities closely with the G20, G24, V20 and other international bodies, and to be actively engaged in the COP27 process.