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 75 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

Align our policies and practices with the Paris Agreement commitments
Read More

Helsinki Principle 2: Share Experiences & Expertise

Share our experience and expertise with each other in order to provide mutual encouragement and promote collective understanding of policies and practices for climate action
Read More

Helsinki Principle 3: Promote Carbon Pricing Measures

Work towards measures that result in effective carbon pricing
Read More

Helsinki Principle 4: Mainstream Climate in Economic Policies

Take climate change into account in macroeconomic policy, fiscal planning, budgeting, public investment management, and procurement practices
Read More

Helsinki Principle 5: Mobilize Climate Finance

Mobilize private sources of climate finance by facilitating investments and the development of a financial sector which supports climate mitigation and adaptation
Read More

Helsinki Principle 6: Engage in NDC Development

Engage actively in the domestic preparation and implementation of Nationally Determined Contributions (NDCs) submitted under the Paris Agreement
Read More

80

Member countries

40%

of global carbon emissions

66%

of Global GDP

Member Countries

 

The Secretariat

Partners

Events

View recent and upcoming Coalition events, including workshops, webinars and meetings

Finance Ministries, Central Banks and Supervisors Recognize Nature-Related Risks and Commit to Deepening Their Understanding

December 05, 2022

 

This blog is authored by Masyita Crystallin and Pekka Moren, Sherpa Co-Chairs of the Coalition of Finance Ministers for Climate Action, and Jean Boissinot, Head of Secretariat, Network for Greening the Financial System.

Please note: this blog has been cross-posted on the NGFS website.


The Coalition of Finance Ministers for Climate Action (the “Coalition”) and the Network for Greening the Financial System (the “NGFS”) have both recently taken significant steps to advance their understanding of nature-related risks, recognizing the significant economic, financial, and fiscal implications associated with nature loss. Following the publication of reports acknowledging the roles of their respective members in addressing nature loss and related risks, the two groups have agreed to collaborate and share information on this important topic. Engagement on this issue from the members of these two groups will be important during the expected implementation of the post-2020 Global Biodiversity Framework following the Convention on Biological Diversity (CBD) COP15.

There is growing evidence that our collective impact on the environment has surpassed several critical thresholds. Human-induced demands on ecosystem services significantly outstrip nature’s ability to supply and threaten their continued provision. And because environmental degradation often follows a nonlinear pattern—compounding, reaching tipping points, and sometimes resulting in rapid ecological collapse—continual nature loss could have severe and sudden impacts on the economy, and hence on the financial system. This is exacerbated by the fact that, in contrast to the case of low-carbon alternatives to fossil fuels, few human-made substitutes for ecosystem services exist. Moreover, science is providing clear evidence that climate change and nature loss are deeply interconnected and mutually reinforcing. As a result, we will not be able to meet global climate goals without meeting global nature goals, and vice versa.

In response to this growing evidence, Coalition and NGFS representatives in their COP26 Chairs’ Joint Statement argued that addressing nature loss is critical for a successful transition to net zero, and agreed to better reflect crosscutting issues related to agriculture, forests, and other land uses in their upcoming work.

Following a joint research project on ‘biodiversity and financial stability’ initiated in April 2021, the NGFS and the International Network for Sustainable Financial Policy Insights, Research, and Exchange (INSPIRE) published in March 2022 a report, titled Central banking and supervision in the biosphere: An agenda for action on biodiversity loss, financial risk and system stability

The NGFS followed up with a statement on nature-related financial risks highlighting that nature-related risks are relevant for central banks and supervisors, given their macroeconomic, macroprudential, and microprudential materiality, and as such should be adequately considered for the fulfillment of their mandates. While primary responsibility for addressing environmental damages such as biodiversity loss rests with governments, the financial sector has an important complementary role to help identify and address nature-related risks.

The NGFS has therefore launched a Task Force on Biodiversity Loss and Nature-Related Risks (the “NGFS Taskforce”) as part of its 2022-2024 workplan, with the objective of mainstreaming the consideration of these risks across NGFS workstreams.

Figure 1: Bending the Curve of Nature Loss

pic 1

Source: International Institute for Applied Systems Analysis (IIASA), 2020 (Credit: Adam Islaam) via NGFS report: Central banking and supervision in the biosphere: An agenda for action on biodiversity loss, financial risk and system stability

Following in the NGFS’ footsteps, the Coalition published its first report on nature in June 2022, titled An Overview of Nature-Related Risks and Potential Policy Actions for Ministries of Finance: Bending the Curve of Nature Loss. The report shows how nature loss could pose substantial risks for Ministries of Finance, and lays out potential policy actions they can consider in order to ‘bend the curve’ of nature loss, including by:

  • Enhancing their understanding of nature-related risks and promoting awareness across government
  • Taking steps to integrate nature-related criteria into their strategies and decision-making
  • Coordinating nature-related risk management with relevant ministries, as well as with their regulator, supervisor, and central bank counterparts
  • Developing and applying valuation, metrics, and decision support tools in their analysis and decision making
  • Supporting economic policy reform to align market incentives with sustainable practices and pursuing a whole-of-economy approach to reversing nature loss Integrating nature-related risks and opportunities into the sectors exerting the greatest pressure on nature
  • Mobilizing finance from both public and private sources for projects and programs that contribute to nature conservation, restoration, and sustainable use

 

Figure 2: Coalition Nature-Related Risk Overview

Pic 2

Source: Coalition report: Overview of Nature-Related Risks and Potential Policy Actions for Ministries of Finance: Bending the Curve of Nature Loss

Both reports acknowledge the many complexities involved in managing and reducing nature-related risks and underscore the critical role of financial and economic policymakers in this area. They also outline a range of potential policy levers, tools, and approaches for finance ministries, central banks, and supervisors to consider and build capacity on. In doing so, they stress the leading role of governments to overcome the market, institutional, and policy failures driving nature loss, and the importance of alignment across policies – including those that finance ministries, central banks, and supervisors are responsible for.

In the near-term, the NGFS Taskforce has stated its intention to provide its members with a comprehensive conceptual framework of nature-related risks, contribute to further developing nature loss and policy scenarios, and formulate recommendations for how the various NGFS Workstreams should integrate nature-related risks into their respective work on supervision, financial stability oversight, monetary policy, etc. Alongside NGFS workshops and stakeholder dialogues, these activities should strengthen NGFS Members’ understanding of nature-related financial risks and improve their ability to manage them.

For its part, the Coalition foresees a need to assess how nature could be integrated across the six Helsinki Principles. Additionally, it plans to organize workshops and stakeholder dialogues that boost Members’ understanding of this issue, advance the design of decision support tools, and initiate further research on specific recommendations in its report to support members in prioritizing, sequencing, and optimizing policy actions.

The NGFS and the Coalition both recognize the need for increased coordination between them on nature-related risks and have agreed to share progress and challenges on this work. In particular, the NGFS will share with the Coalition, its progress in developing a framework for the identification and assessment of nature-related risks and nature loss scenarios for economic and financial modeling. Such modeling can feed into a variety of planning, budgeting, regulation, supervision, and risk management functions for members of both groups.

As countries work toward new global agreements on nature through international fora such as the CBD COP15, Coalition and NGFS members (in complement to other relevant policymakers) have a critical role to play in contributing to their successful implementation – notably that of the Post-2020 Global Biodiversity Framework. Members can work towards ensuring that economic activity and associated financial flows become increasingly aligned with a sustainable, nature-positive future. It is only by working together and driving a whole-of-economy, and ultimately a global, approach that nature-related risks (together with climate-related risks) can effectively be mitigated and managed.


The Coalition of Finance Ministers for Climate Action is a group of 80 Finance Ministries that have committed to aligning their economies with the goals of the Paris Agreement through implementing the six Helsinki Principles. The Coalition was established in April 2019 and is Co-chaired by Finance Ministers of Finland and Indonesia. Read more about the Coalition here.

The NGFS, launched at the Paris One Planet Summit on 12 December 2017, is a group of central banks and supervisors, which on a voluntary basis are willing to share best practices and contribute to the development of environment and climate risk management in the financial sector, and to mobilize mainstream finance to support the transition toward a sustainable economy. The NGFS brings together 121 central banks and supervisors from 87 jurisdictions and 19 observers. Together, they represent five continents and more than 85% of global greenhouse gas emissions, and are responsible for the supervision of all of the global systemically important banks and 80% of the internationally active insurance groups. The NGFS is chaired by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore. The Secretariat, headed by Mr Jean Boissinot, is provided by Banque de France. Read more about the NGFS here.

 

 

HP6 Publishes Report on MoFs and NDCs: Raising Ambition and Accelerating Climate Action

November 30, 2022

 

report cover

View/download the report

The Helsinki Principle 6 workstream has published its second report for the Coalition, Ministries of Finance and Nationally Determined Contributions: Raising Ambition and Accelerating Climate Action. This report follows the first HP6 paper released in 2020, Ministries of Finance and Nationally Determined Contributions: Stepping Up for Climate Action.

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.

 

 

HP5 Publishes Report on Supporting Private Sector Net Zero Targets

November 17, 2022

 

Report cover

View/download the report

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.

 

 

Coalition and WMO Co-Host COP27 Panel Discussion on Climate Data Gaps

November 10, 2022

 

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.

Above: Video recording of the event

 

 

Launch of Consultation Process on the Role of Finance Ministers in Climate Action

November 09, 2022

report images

The Coalition 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.

Recognizing the need to continue to transform the role of Ministries of Finance, the report sets out a practical framework for finance ministries to galvanize action and drive investment in the zero-carbon, climate-resilient future by mainstreaming climate action into their core functions and capabilities. 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:

  1. Summary for Ministers and Policymakers (7 pages)
  2. Synthesis Report (approx. 50 pages)
  3. Full Report (approx. 200 pages) - coming in late November

The Coalition is seeking feedback from the following three groups:

  • Ministries of Finance (Members and Non-Members of the Coalition)
  • Organizations who support finance ministries directly or indirectly
  • Civil society organizations and research institutes

We request that feedback is provided via this webform. Alternatively, feedback can be emailed to coalitionsecretariat@financeministersforclimate.org.

The consultation period will run from November 9, 2022, until January 20, 2023.

 

 

Coalition Meets During COP27

November 09, 2022

COP27 banner

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).

--> PRESS RELEASE (PDF | Word)

Adaptation Discussion

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.

COP27 collage

Above: Participants at the meeting of the Coalition of Finance Ministers for Climate Action at COP27

Video Statements

Felipe Larraín, Former Minister of Finance, Chile

 

Annika Saarikko, Minister of Finance, Finland