This report is a joint effort by the OECD, UN Environment and the World Bank Group, supported by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety. It focuses on how governments can move beyond the current incremental approach to climate action and more effectively align financial flows with climate and development priorities.
The report explores six key transformative areas that will be critical to align financial flows with low-emission and resilient societies (planning, innovation, public budgeting, financial systems, development finance, and cities) and looks at how rapid socio-economic and technological developments, such as digitalisation, can open new pathways to low-emission, resilient futures.
● Plan infrastructure for a low-emission and resilient future, by rethinking planning at all levels of governments to align current infrastructure project plans with long-term climate and development objectives, avoid carbon lock-in and make resilience the norm in infrastructure decisions.
● Unleash innovation to accelerate the transition, by deploying targeted innovation policies and accelerating the deployment of existing technologies, business models and services, swiftly moving the next generation of solutions from the lab to the market, and promoting international technology diffusion to make sure innovation benefits all.
● Ensure fiscal sustainability for a low-emission, resilient future, by diversifying sources of government revenue to reduce carbon entanglement, aligning fiscal and budgetary incentives with climate objectives and harnessing the power of public procurement and public institutions’ spending while ensuring an inclusive transition along the way.
● Reset the financial system in line with long-term climate risks and opportunities, by fixing biased incentives, capability gaps and inadequate climate risk disclosure and pricing that are hindering the allocation of finance to low-emission, resilient infrastructure.
● Rethink development finance for climate, by ensuring that development finance institutions have the resources, mandates and incentives to deliver transformative climate action, attract new investors and sources of finance by using concessional finance strategically, and help countries advance their climate agendas and build enabling environments and “climate markets”.
● Empower city governments to build low-emission and resilient urban societies, by developing capacity to more effectively plan and finance the right infrastructure, aligning national and local fiscal regulations with investment needs, and building climate-related and project finance capacity at the city level.