Governments are striving to address the twin challenges of responding to the COVID-19 pandemic while taking action in response to the threats posed by climate change. Today, we are given a unique opportunity to bring these agendas together by developing robust recovery packages that restore economic growth in the short term and helping to re-orientate economies towards the low-carbon transition in the medium to longer term. However, navigating this pathway requires countries to take bold action. Governments need to show leadership and develop innovative ways of working to ensure that the decisions we take support forward-looking policies and foster greater resilience in the future. In this context, Green Budget Tagging Guidance and Principles looks at how to design and implement an approach to green budget tagging; one that helps each country identify budget measures that will help achieve climate and environmental objectives.
Green budgeting and its component tools, such as green budget tagging, offer a new way for governments to ensure that budget decisions help advance our common goal to tackle climate change, and better protect biodiversity and the environment. The OECD continues to be a leader in supporting the development of green budgeting. In December 2017, we launched the Paris Collaborative on Green Budgeting at the One Planet Summit, to introduce innovative tools to assess and drive improvements in the alignment of national expenditure and revenue processes with climate and other environmental goals. The development of this introductory guidance represents a crucial step forward in helping countries equip themselves with tools that can form the central pillars of an effective approach to green budgeting.
Green budget tagging is a particularly helpful tool in raising awareness of how budget decisions are linked to national objectives. It also provides information that can be used to improve the effectiveness of government action in achieving these objectives. By increasing the visibility of government action, green budget tagging can help both mobilise resources and improve the transparency and accountability of government policy by facilitating better monitoring and reporting. This process also helps countries make progress on their international commitments, such as the National Determined Contributions as part of the Paris Agreement.
This guidance has been developed by the OECD, with the participation and collaboration of the broader community of institutions working in the area of green budgeting. These include the World Bank, the United Nations Development Programme, the Inter-American Development Bank and the International Monetary Fund, all of whom are partners under Principle 4 of the Coalition of Finance Ministers for Climate Action. Furthermore, because the guidance was developed in consultation with Coalition countries, it also reflects and illustrates practices grounded in experiences to date. It does not aim to stipulate a single set of practices, but instead sets out the options for embedding a coherent approach – as a first step. The reader is provided a valuable and useful tool, serving as an introductory guide for basic questions and crucial issues in designing and implementing an effective approach to green budget tagging. We very much hope that this Guidance helps governments take the budget decisions necessary to advance toward both their national and international climate and environmental objectives.
Angel Gurría
Secretary-General, OECD