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.

Read the Press Release: The Coalition of Finance Ministers for Climate Action to Strengthen its Work for a Sustainable and Green Recovery

HELSINKI, SANTIAGO and WASHINGTON, 10 July 2020 – In April 2019, the Coalition of Finance Ministers for Climate Action began its work by establishing the Helsinki Principles, with the objective of mainstreaming climate in Finance Ministries’ work. In December 2019, the Coalition released the Santiago Action Plan to define concrete actions in all fields of Helsinki Principles. In just one year, the Coalition has united 52 Finance Ministries and gathered a large group of international financial institutions, multilateral organisations and partnerships.

Since the last Ministerial meeting in December, the Coalition has worked in all areas of Helsinki Principles. Following the breakout of the COVID-19 crisis, and the move to a virtual working format in March, the Coalition intensified efforts significantly. A series of meetings at the level of Sherpas were convened and workshops carried out in key work areas covering green budgeting, carbon pricing, public financial management, financial disclosure, financial preparedness against disasters, green taxonomies, and blended finance (more information available on the Coalition website).

The Coalition is releasing today the following three reports, prepared on the basis of some members’ experiences and analytical support of institutional partners. Such works will be used to advance and inform alternative of work of the Coalition:

1. Report on ‘Better Recovery, Better World: Resetting climate action in the aftermath of the COVID-19 pandemic’ provides inputs about different policy options in the field of economic and financial policies. The aim of the work is to support Finance Ministries to obtain net benefits from a green recovery that is inclusive, resilient, and lower in carbon emissions. The work was motivated by the general uncertainty about the implications of the pandemic on climate policies in the deteriorated economic and fiscal circumstances caused by the COVID-19 outbreak. The central message of this report is the need to reflect on comprehensive recovery and stimulus packages that can help restore the path of economic and social progress, while also securing a safer climate in the context of a major economic downturn. Finance Ministers may need to design and introduce longer time horizon policy strategies to restore confidence and drive green investments. In this context, all areas of the Helsinki Principles are relevant.
2. Report on ‘Long-Term Strategies for Climate Change – A Review of Country Cases’ showcases the experiences of a selection of member countries representing different levels of development and climate challenges. The report reviews different country approaches for the construction of long-term strategies to address climate change. Such comparisons provide useful information about the objectives, approaches, challenges and governance of preparatory work. The report concludes that the choices on the best policy instruments are complicated due to fast-changing technologies, the wide range of possible policy options and the need for strong political buy-in. Thorough impact assessments, cooperation with the various stakeholders and clear monitoring and governance structures seem essential in the process too. For developing countries, the inclusion of adaptation and resilience issues is also crucial to complete the policy picture. The work provides a good basis for deepening analysis and broadening examination to other countries and regions with different characteristics.
3. Report on ‘Ministries of Finance and Nationally Determined Contributions – Stepping Up for Climate Action’ highlights the essential role of Ministries of Finance in climate action and explores avenues for Ministries of Finance to engage in the preparation, update, and implementation of NDCs. The case studies show that Ministries of Finance are contributing to the costing, macroeconomic and macro-fiscal assessments, and the mainstreaming of NDCs into public financial management systems. The report also shows that countries have used multiple entry points and are building on existing capacities to gradually bring climate to the core of economic and financial decisions. To achieve faster progress, public finance systems and economic policy tools, including macro-modelling and fiscal planning, should be improved to better capture climate aspects and integrate them in the designing of long-term strategies, in tandem with the work under NDCs.

All three reports complement each other. Finance ministers are increasingly playing a substantive role in responding to the challenges of climate change and designing strategies that are compatible with economic policy realities. The economic fallout from the COVID-19 crisis has forced a comprehensive strategic approach, linking short- and medium-term recovery efforts with longer-term sustainable growth, by signaling future policy directions. Understanding the effect on macroeconomic stability and fiscal constraints is key to dealing financially with climate change, by selecting the right combination of tools and policies at countries’ disposal. Each country’s individual path to a low-carbon, climate resilient society will look different depending on its own unique characteristics, available technical solutions and economic and social structures.

"While we continue to concentrate our efforts on mitigating the effects of the pandemic on households and firms, we must also prepare for the recovery that follows. Work by the Coalition and its institutional partners provides concrete policy options towards integrating climate action in the recovery to come.” Quote from Finance Minister Ignacio Briones, Chile, Co-Chair of the Coalition of Finance Ministers for Climate Action

“These reports underline the importance of long-term strategies and horizontal approaches in designing climate policies. The Coalition of Finance Ministers has started to deliver useful policy considerations. This reflects the enhanced involvement of Finance Ministers in addressing climate change. I look forward to discussing the priorities with my colleagues in October.” Quote from Finance Minister Matti Vanhanen, Finland, Co-Chair of the Coalition of Finance Ministers for Climate Action

Finance ministers will discuss these reports in October 14 based on further preparatory work. Ministers will provide policy guidance on mainstreaming climate issues in economic and financial policies, as well as on the implications of COVID-19 in the recovery packages and climate policies. In that context, the Coalition will also define further work priorities for period 2020-2021 and strengthen its governance arrangements.

About the Coalition of Finance Ministers for Climate Action:
The Coalition, launched in April 2019, is a group of Finance Ministries that work on a voluntary basis, to share experiences and best practices to integrate climate change in the economic and financial policies. The Coalition currently brings together 52 countries from all regions, each representing different levels of development and climate change challenge. Member countries represent about 16 percent of global CO2 emissions and 30 percent of global GDP (2017).

Further information about the Coalition is available at: www.financeministersforclimate.org

Inquiries:

Co-chairs of Sherpas, Coalition of Finance Ministers for Climate Action

Pekka Morén, Ministry of Finance, Finland
pekka.moren@vm.fi 

Lorena Palomo, Ministry of Finance, Chile
lpalomo@hacienda.gov.cl

Read the Report: Better Recovery, Better World: Resetting Climate Action in the Aftermath of the COVID-19 Pandemic

The Coalition of Finance Ministers for Climate Action (“the Coalition”) is a group of fifty-two finance ministers, engaged in efforts to address climate change through economic and financial policies according to the six Helsinki Principles. Peer learning and knowledge exchange plays a fundamental part in the Coalition’s success.

As part of the core mandate of Ministries of Finance, which is the design and implementation of sound macro-economic, fiscal and financial policies, the economic and social impacts of climate change are becoming increasingly relevant for the wellbeing of our society. This report examines the implications of the COVID-19 pandemic crisis on climate policies from the angle of economic policies and offers a set of policy options for Finance Ministers.

The COVID-19 pandemic has unleashed suffering and economic crises of historic proportions, adding to the urgent existing need for accelerated transitions to low-carbon economies. Concerns were raised about how the economic fallout from COVID-19 would affect climate action. Following immediate action to manage the crisis, policy-makers need to design and implement recovery strategies that support sustainable growth over the medium and long term. The need for sound analysis, in line with the Helsinki Principles, is all the more critical given the challenging financial and economic circumstances.

This Report is a working document. Opinions or points of view expressed are those of the authors and do not necessarily reflect the views of the Coalition or its members. The main findings of the Report will be presented to Finance Ministers at a later stage, after further preparatory work, with a view to gaining political guidance as well as direction for the Coalition’s further work priorities.

The primary audience for this report is policymakers at Ministries of Finance and Economy that are responsible for economic policy and cross-sector coordination. The report will also be of great interest to other ministries, institutions and academia working to support strong, inclusive, and sustainable recoveries that will help address climate change.

Pekka Morén               Lorena Palomo

Co-Chairs of Sherpas, Coalition of Finance Ministers for Climate Action