Croatia’s Ministry of Finance is constructing the institutional, fiscal, and market architecture for a climate‑aligned economy. Croatia has started a process of integrating climate considerations into financial policymaking.

By Croatia’s Ministry of Finance

Croatia’s Strategic Commitment to Climate Finance

Croatia’s recent trajectory reflects a broader shift underway in public finance: climate risk is no longer a peripheral environmental concern, but a material determinant of macroeconomic stability, sovereign risk, and long‑term growth.

The country has made substantial economic progress since the 1990s, and is increasingly recognizing the importance of strengthening resilience to climate impacts, given the growing fiscal pressures associated with extreme weather events and the broader costs of the green transition. Heatwaves, droughts, water scarcity, floods, and wildfires are already creating tangible fiscal pressures, while also reinforcing the need for forward-looking investments and adaptive policies. In a high‑income EU economy deeply integrated into tourism, agriculture, and coastal infrastructure, these challenges highlight the importance of resilient public finances, climate-smart infrastructure, and long-term sustainable growth planning. In this context, Croatia has taken a strategic decision to progressively integrate climate objectives into its fiscal governance framework.

Reframing Climate Action as Economic Strategy

Since joining the Coalition of Finance Ministers for Climate Action in late 2022, Croatia has increasingly viewed climate policy not only as an environmental necessity, but also as a strategic economic and fiscal opportunity. Inspired by the Coalition’s work and peer learning platform, Croatia made a strategic decision to apply for the Coalition’s Co-Chairmanship, which formally began in April 2026. In its candidacy for the Co-Chair role, Croatia emphasized the importance of reframing climate investments as opportunities for growth, competitiveness, resilience, and modernization of the economy. This approach now anchors Croatia’s role as Co-Chair of the Coalition and is reflected in the three guiding principles.

First, climate investment is treated as a long‑term driver of competitiveness rather than discretionary spending. Climate measures are increasingly framed as structural investments that strengthen productivity, resilience, energy security and sustainable economic growth.

Second, the Ministry of Finance is positioned at the center of the transition. Climate considerations are progressively being integrated into budgeting, fiscal planning, and public investment frameworks, reinforcing the role of fiscal institutions in delivering climate and economic policy objectives.

Third, mobilizing private capital is recognized as indispensable. Given limited fiscal space and growing investment needs, public budgets alone cannot finance the scale of investment required, making stronger cooperation with financial institutions and private sector essential.

The Scale of the Investment Challenge

Croatia’s updated Integrated National Energy and Climate Plan 2021-2030 highlights that achieving climate and energy objectives will require significant long-term investments across the economy, underlining the importance of mobilizing both public and private finance to support the transition.

The Ministry of Finance has been clear that public spending can finance only a fraction of these needs. As Ana Zorić, Director at the Ministry of Finance and Climate Coalition Deputy, has noted: “If we rely solely on public sources, we will not reach our targets. Mobilizing private capital is essential.”

This assessment has driven a focus on supply‑side reforms: reducing investor uncertainty, strengthening sustainability reporting, creating pipelines of bankable projects, and systematically integrating climate considerations into fiscal rules and public financial management. The objective is to build the enabling environment required for large‑scale private investment.

Building the Institutional Infrastructure for Sustainable Finance

A defining feature of Croatia’s approach is its emphasis on institutional infrastructure.

Within the Ministry of Finance, a Sustainable Finance Support Sector was established in 2023 to anchor the green agenda.  This structure supports integrating climate considerations into budgeting, financial regulation, macroeconomic and fiscal modeling, and public investment planning.

This internal capacity is complemented by the Sustainable Finance Support Forum, a national coordination mechanism that brings together various institutions, including regulators, financial institutions, public authorities, academia, and private‑sector bodies. The Forum’s 2025-2026 Action Plan prioritizes support for businesses with EU corporate sustainability reporting, strengthening ESG skills, improving data availability, and advancing green procurement. In practice, it helps align regulatory, supervisory, and market‑building efforts around a shared national framework.

Croatia is also introducing green budgeting, with support from the European Commission and the World Bank, which will provide a unified framework for classifying, tracking, and assessing climate‑related public spending. This is expected to improve expenditure prioritization and support medium‑term fiscal planning.

Finally, the modernization of the financial reporting infrastructure includes the re-engineering of the Register of Annual Financial Statements, the central platform for business reporting. The upgrade will integrate sustainability data and incorporate corporate sustainability reports into the public disclosure system alongside financial statements.

The reform aims to simplify sustainability reporting, reduce reporting burdens, improve the availability and comparability of ESG data, and strengthen transparency in sustainable finance, benefiting regulators, SMEs, and investors alike.

Capital Market Momentum

Croatia’s capital markets are already responding. Several recent ESG‑linked issuances have been oversubscribed, indicating strong investor appetite for climate‑aligned assets. This demand signal reinforces the Ministry’s diagnosis: financing capacity is not the binding constraint. Where clear rules, transparent data, and credible institutions are in place, private capital is ready to engage.

Adaptation and Resilience

Croatia is strengthening climate adaptation and disaster resilience by combining long-term strategies with practical reforms and predictable financing. The National Climate Change Adaptation Strategy to 2040 and the Disaster Risk Management Strategy to 2030 provide an important policy framework for strengthening resilience and supporting adaptation efforts across key sectors of the economy. The focus is now increasingly on implementation, including stronger coordination and integration of climate considerations into planning and policy processes.

The 2025 Law on Climate Change and Ozone Layer Protection represents an important step in strengthening Croatia’s climate governance framework by clarifying institutional responsibilities and reinforcing mechanisms for climate policy coordination, planning, and reporting.

Croatia is also working to strengthen the financial resilience of households and businesses. Reforms to the Insurance Act and stronger supervisory powers for the financial regulator (HANFA) are improving climate risk stress testing and oversight, while financial literacy initiatives aim to increase awareness and uptake of disaster insurance, which remains low.

These efforts are supported by the World Bank’s Catastrophe Deferred Drawdown Option (CAT DDO). The instrument links policy reforms with rapid, predictable post-disaster financing, ensuring liquidity is available immediately after major shocks. Given Croatia’s experience with earthquakes and increasing exposure to heatwaves, droughts, floods, and wildfires, this added financial buffer is importa

Governance, Collaboration, and Small‑State Leadership

Croatia’s experience also challenges assumptions about scale. While small states often face administrative constraints, strategic coordination and institutional clarity can offset limited capacity. A Conference on promoting sustainable finance in early 2025 brought together policymakers, regulators, financial institutions, and the private sector to align on transition pathways and implementation challenges.

This collaborative model underpins Croatia’s vision for the Coalition of Finance Ministers for Climate Action: more structured peer learning, targeted technical assistance, and stronger alignment among finance ministries in translating climate commitments into operational fiscal and financial systems.

Implications for Finance Ministries

Croatia’s experience highlights four lessons. Climate and fiscal policy are converging; ministries of finance need tools to manage and disclose climate‑related fiscal risks. Institutional infrastructure is decisive; strategies require systems to deliver results. Private capital mobilization is essential, particularly where fiscal space is constrained. And finally, small states can lead when strategic clarity, coordination, and political commitment are present.

Croatia’s green transition is progressing steadily, with increasing focus on sustainability and resilience. By embedding climate objectives into fiscal systems, modernizing financial infrastructure, and crowding in private investment, the Ministry of Finance is moving from strategy to sustained implementation.