About the Coalition
Finance Ministers hold the keys to accelerating climate action. They know most clearly the risks posed by climate change, and recognize how taking action could unlock trillions in investments and create millions of jobs through 2030.
The Coalition of Finance Ministers for Climate Action brings together fiscal and economic policymakers from over 80 countries in leading the global climate response and in securing a just transition towards low-carbon resilient development.Learn More
The Helsinki Principles
The six Helsinki Principles guide the Coalition's commitment to #ClimateAction
Helsinki Principle 1: Align Policies with the Paris Agreement
Helsinki Principle 2: Share Experiences & Expertise
Helsinki Principle 3: Promote Carbon Pricing Measures
Helsinki Principle 4: Mainstream Climate in Economic Policies
Helsinki Principle 5: Mobilize Climate Finance
Helsinki Principle 6: Engage in NDC Development
of global carbon emissions
of Global GDP
View recent and upcoming Coalition events, including workshops, webinars and meetings
April 14, 2023
9th Ministerial Meeting
Global Event | From Guide to Action: Strengthening the Role of Ministries of Finance in Driving Climate Action
- Read more about Global Event | From Guide to Action: Strengthening the Role of Ministries of Finance in Driving Climate Action
We are pleased to invite you to our featured global event "From Guide to Action: Strengthening the Role of Ministries of Finance in Driving Climate Action," on Thursday, June 15, 2023, (Virtual: 08:00 Washington/14:00 The Hague/19:00 Jakarta).
Taking Stock of Nature - Insights from Institutional Partners Workshop
HP2 Publishes Summary of the Report on Strengthening the Role of Ministries of Finance in Driving Climate Action
View/download the draft report
A new policy brief summarizes a forthcoming flagship report and guide from the Coalition of Finance Ministers for Climate Action. This is the culmination of an extensive global consultation process launched at COP27 on the role of Ministries of Finance in driving climate action.
By taking bold climate action to accelerate the transition to a zero-carbon economy, it is possible to tackle escalating risks, achieve macro stability, enhance resilience, create growth and development opportunities and deliver clean, secure and affordable energy.
Here we present a framework for mainstreaming climate action into the core functions and capabilities of Ministries of Finance. Following the framework can help ensure climate action is synonymous with sound economic policy, support implementation of the Helsinki Principles and send a strong signal that the world economy is poised to follow a low-carbon, climate-resilient path.
Strengthening the role of Ministries of Finance in Driving Climate Action will be available in full in June, including further detail on the framework and case studies demonstrating the leadership already taking place.
HP3 Publishes Report on International Coordination Mechanisms for Climate Change Mitigation
This is the first report of the Coalition published under the HP3 workstream. The report explores the main instruments available to countries wishing to pursue carbon pricing and builds on the discussions held in 2022 at Ministerial and Sherpa level.
Key observations from the report include:
• Carbon pricing is a key economic policy tool to address climate change; it can be part of each country’s policy mix - depending on country-specific circumstances and transition strategies.
• Multilateral and regional approaches to climate mitigation policies and ways to assess carbon leakage risks should be open, collaborative, and inclusive.
• National and international implications - such as carbon leakage and potential negative spillover effects - and distributional impacts should be carefully considered in designing such reforms.
• The political challenges of introducing carbon pricing and subsidy reforms, as shared by Member Countries in the discussions, underlined the importance of a comprehensive and adaptive approach, the need for different tools to be taken into account in designing reforms, and the importance of analyzing distributional and equity impacts involving relevant stakeholders.
Many thanks to all who contributed to the report and a special thanks to Tatiana Falcão for coordinating the release of the document.
HP5 Workshop - Net Zero Data Public Utility (NZDPU), its relevance to MoFs, and challenges with respect to private sector commitment tracking
Supporting private sector net zero commitments – the role of Ministries of Finance
This blog is authored by Olha Krushelnytska, Sustainable Finance Specialist in the Finance, Competitiveness, and Innovation Global Practice at the World Bank Group.
Please note: this blog has been cross-posted on the WBG website.
Ministries of Finance play a critical role in driving progress toward private sector net zero commitments. They have levers of influence that are more effective in bringing about change than companies’ voluntary actions .
Incentivizing the private sector to adopt net zero alignment—a commitment to bring net carbon emissions from their activities as close to zero as possible—is urgent. The financial services industry could have outsized influence in meeting the global climate goal and transforming economies. Yet only a little over 500 private financial institutions, representing around 30 percent of private financial sector assets, have made net zero commitments to date. And with about $469 trillion total assets under management (AUM), private financial institutions are large enough to shape investment decisions and bring significant progress.
Not only do the remaining 70 percent of private financial institutions need to set net zero targets. Existing commitments vary in coverage with respect to the share of AUM covered by commitments, and thus lack the comparability that would make them useful for making decisions. Moreover, the credibility of some existing commitments are questionable, as many of those who have committed have yet to set interim, short-term targets, to ensure implementation.
To improve understanding of the voluntary commitments to date, a recent report by the Coalition of Finance Ministers for Climate Action Supporting Private Sector Net Zero Targets examined voluntary financial sector alliances that coordinate climate commitments. Most, if not all, private financial institutions that made net zero commitments are members of various net zero alliances, such as Net Zero Banking and Insurance alliances. Mostly have arisen in the last few years, these alliances are a suitable proxies of private sector behavior.
The analysis found gaps in commitment comparability and credibility, suggesting the voluntary alliances, as helpful as they can be, do not have the right tools for setting credible net zero targets. Governments, especially the Ministries of Finance, can play a bigger role in supporting private sector net zero alignments – using soft and regulatory power. Soft power methods include persuasion and incentives, while regulatory power methods cover law and regulatory enforcement (Figure 1).
Figure 1. Soft and regulatory power levers available to the Ministries of Finance to support private financial institutions net zero commitments
Adapted from the report Supporting Private Sector Net Zero Targets, Coalition of Finance Ministers for Climate Action, 2022.
The report also examined the actual levers that Ministries of Finance use to promote greener investment in countries who are members to the Coalition of Finance Ministries for Climate Action. These proved to be more effective than incentives within voluntary alliances to date.
For example, in Rwanda, the Ministry of Finance together with the Rwanda Green Fund (FONERWA) applied soft power on the private sector by holding a series of capacity building training sessions and outreach efforts in 2018 and 2020 to promote climate action. These dialogs culminated in establishment of private sector committees led jointly by FONERWA and the Rwanda Private Sector Federation to discuss options for reaching net zero targets - and laid a strong foundation to boost the credibility of the private financial sector’s involvement in addressing climate change.
In Indonesia, the development of Green Taxonomy 1.0 in 2022 was an exercise in soft power as it brought together various financial service actors into a Sustainable Finance Task Force, which will formulate policy and facilitate capacity building for private financial institutions. Although the green taxonomy is currently used mainly as voluntary guidance, the Ministry of Finance plans to make it a standard in the formation of national initiatives including the decarbonization of state-owned enterprises. It could also be expanded into mandatory disclosures of taxonomy-relevant investment portfolios from the private sector, becoming an exercise in regulatory power.
In Switzerland, the government conducted voluntary assessment of private financial institutions’ climate alignment using the Paris Agreement Capital Transition Assessment (PACTA) methodology in 2017, 2020 and 2022. The program has been well-received by the financial industry but in terms of driving change the results have been mixed, with financial institutions still falling behind their stated climate goals and strategies. These climate assessments may nonetheless be having an impact; more than half the institutions that participated in the 2017 pilot decreased their exposure share with respect to coal power generation and increased their share in renewable power generation, relative to their overall exposure to the power sector. Many stated that they took measures because of their 2017 PACTA results.
Using existing soft and regulatory levers by the Ministries of Finance proves to be effective.
Transition to a net zero future will require increasing government involvement - and understanding of its role is a first important step for supporting private sector commitments and achieving global climate goals.
Coalition Puts Forward its Work Programme for 2023
View/Download the 2023 Work Programme
The Coalition’s Work Programme for 2023 identifies key priorities under each Helsinki Principle workstream, taking into account the guidance provided by Finance Ministers at the Ministerial Meetings in April and October 2022, the meeting at COP27 on 9 November 2022, survey responses collected from Members and Institutional Partners, and other feedback received from workstreams. The Programme builds on the Annual Report of 12 October 2021, proposals for further work priorities from a nine Coalition Reports released and workshops performed in 2022.
While this Work Programme sets out key priorities for 2023, activities and deliverables may be adjusted throughout the year to reflect evolving circumstances, country-specific factors, and further guidance from Finance Ministers. Every effort will be made to ensure usefulness and practicality of the deliverables to Members, efficient use of resources, and synergies through close collaboration with IPs. The delivery of the Work Programme will be possible with adequate staffing of the Secretariat as well as sufficient resourcing of planned activities. The staffing plan will be prepared by the Co-Chairs and the Secretariat, as well as financial plan of activities as new elements, and where necessary, funding will be sought in the first possible instance. Moreover, in the 2023 Work Programme, more focus is put on the scheduling of key activities to ensure timely preparations, as well as the engagement with Institutional Partners.
Event: 9th Ministerial Meeting
The Coalition meets during the WB/IMF Spring meetings on April 14, 2023 in Washington, D.C.