Centered around the critical themes of the recent Climate Action Statement and COP28 goals, the meeting delved into the pivotal role of Finance Ministers in driving public and private climate finance, ...
Event: Nature Investments Workshop - November 14, 2023
The workshop was organized jointly by Nature and HP5 workstreams to discuss the challenges and opportunities of mobilizing finance for nature and potential policy actions for the Ministries of Finance ...
We are excited to share our first Climate Action Statement (CAS) during the Coalition's 10th Ministerial Meeting on October 11, 2023 in Marrakesh. This deliverable represents over 170 climate-related ...
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 90 countries in leading the global climate response and in securing a just transition towards low-carbon resilient development.
The report details the status of work towards Helsinki Principle 6—supporting the active engagement of Ministries of Finance in the development, update, and implementation of NDCs submitted under the Paris Agreement. The paper further explores the enhanced engagement of Ministers of Finance in NDC formulation, and examines how they can best contribute to successful outcomes aligned with the Paris Agreement through leadership and coordination with other sectors.
The private finance sector is critical to supporting net zero-aligned change in the real economy, contributing to meeting the global climate goals that governments and many financial institutions have committed to, and reducing climate change-related risks. As of mid-2022, 547 private financial institutions with holdings of USD 129 trillion—a sum equal to nearly 32 percent of global financial assets—have made commitments to reach net zero emissions by 2050.
Nonetheless, there are several gaps: private financial institutions representing the remaining 68 percent of global financial assets have yet to commit to net zero by 2050; many of those who have committed have yet to set interim, short-term targets; and targets that have been set vary significantly in their credibility.
Ministries of Finance are well-positioned to support the private sector on this path. They can help create an enabling environment to encourage adherence to net zero targets, support the implementation of those targets, and establish tools to help determine the credibility of commitments.
The Helsinki Principle 5 Workstream has produced a report discussing various soft and regulatory power methods to improve the understanding of commitments, progress, risks, and opportunities domestically, which can also be used to set expectations for best practices internationally. The potential government actions outlined in the report function as both an incentive and as guidelines to encourage private financial institutions to consider climate action and climate-friendly investments. This enables finance ministries to evaluate progress towards climate goals, support sustainable economic development, and monitor climate-related risks.
This research was led by the Climate Policy Initiative (CPI) network, under the direction of the Coalition.
The Coalition of Finance Ministers for Climate Action and the World Meteorological Organization (WMO) co-hosted a panel discussion on "Science Day" at COP27 titled Closing the Weather and Climate Data Gap for Effective Economic Decision-Making.
Weather and climate data is essential for both finance ministries and the climate-science community to model the future, assess physical risks, and formulate climate strategies and policies. Yet serious data gaps exist, which severely affects the quality of weather and climate prediction globally and undermines the effectiveness of climate-related decision making. To address this long-standing problem, a new financing approach has been developed and a newly created financing mechanism will be presented at this event: the Systematic Observations Financing Facility (SOFF).
The event brought the finance ministry and climate-science communities together for the first time at a COP to discuss the urgency of closing the weather and climate data gaps and how Ministers of Finance can support this endeavor, as well as how climate data can be used by finance ministries to create more effective economic policies.
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 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).
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
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 Deputy Finance Minister in Estonia and 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.