October 2025 — The Coalition of Finance Ministers for Climate Action has released a major new report under its Helsinki Principle 4 (HP4) initiative, titled “How Ministries of Finance Can Build Capabilities for Economic Analysis and Modeling to Drive Green and Resilient Transitions.” This publication marks a significant step forward in supporting Ministries of Finance (MoFs) worldwide as they confront the urgent challenges and opportunities of the climate transition.
Throughout the Coalition of Finance Ministers for Climate Action’s Helsinki Principle 4 initiative ‘Economic Analysis for Green and Resilient Transitions’, a clear message emerges: MoFs are increasingly engaged, interested, and aware of the transition. They understand that delivering on their core mandates of macroeconomic stability, sustainable growth, and sound public finances now increasingly depends on their ability to account for the risks and opportunities of climate change and the green transition.
However, while awareness is high, many Ministries still lack the capacity to act, and few have an explicit mandate on climate action. According to the Coalition’s global survey of Ministries of Finance, only about one-third consider climate action a core economic issue central to their mission. At the same time, most remain at an early stage in developing the analytical tools, data systems, and institutional capacities needed to effectively support and steer green and resilient transitions.
But change is underway. A growing number of Ministries are applying economic analysis to the pressing climate- and transition-related challenges they face and are building their capacities to mainstream climate action into their core mandate and functions.
The HP4 Capabilities Report provides an overview of strategies, options, and recommendations for how Ministries of Finance can practically enhance their analytical capabilities to drive green and resilient transitions.
Among the report’s key messages are:
- Capability is about more than having access to suitable tools and models. It is about being able to identify, use, and maintain suitable tools to answer relevant policy questions, communicating results (and limitations), and ensuring integration into decision-making processes.
- Ministries of Finance have vastly different levels of analytical capabilities. These have a substantial impact on the type of analysis that could be most suitable and worth investing in, and the priorities and next steps for strengthening local capabilities. Approaches for building capabilities should be pragmatic and consider building on existing capabilities. It is better to ‘start simple’ than wait for more expertise to arrive.
- Ministries of Finance can build or improve their capabilities over time to meet their needs. This typically requires:
- Skills: Building analytical capabilities requires ensuring a few dedicated experts to develop the knowhow in-house with the right mix of skills for conducting or interpreting modeling and analysis are present in the MoF.
- Collaboration: Ministries of Finance require support from a broader analytical ecosystem, including line ministries and governmimprovingncies to share models, data, and experience; universities and research institutes with climate expertise; and technical assistance providers and the wider international community, which can be critical for many in building expertise and improve access to tools and data.
- Governance and Leadership: Clear roles, responsibilities, and institutional structures as well as accountability are crucial for ensuring that climate-related economic modeling and analysis are effectively integrated into the Ministry of Finance's decision-making. Policy-makers’ and management’s leadership and backing within governments and the MoF is crucial in making progress.
There is a strong demand for technical assistance providers to ramp up and reform existing offers and training provision to help MoFs develop and maintain their own internal capabilities. To do this, technical assistance providers can work closely together with universities, research institutions, and partners across government.