PUSHING THE BOUNDARIES
FOR GREEN BUDGET
Green budget tagging: introductory guidance & principles
• Increased political support – Growing interest in green budgeting approaches across the Paris
Collaborative on Green Budgeting and the Coalition of Finance Ministers for Climate Action.
• To capitalise on this, the OECD has led a project with other international organisations (IADB, IMF,
UNDP, World Bank) to develop Introductory Guidance for Green Budget Tagging, based on:
• Technical engagement with:
• Paris Collaborative members (e.g. France and Ireland)
• Roundtable discussions with Coalition members in Africa, Asia, Latin America and Caribbean
and Central Asia.
• Guidance on Climate Budget Tagging by UNDP,(2019) Knowing what you Spend
• Recent outputs from Principle 4 of the Coalition of Finance Ministers:
• World Bank report (forthcoming) Climate Change Expenditure Tagging: an overview of
• IADB report (forthcoming) Climate Change Public Budget Tagging: Connections across
Financial and Environmental Classifications Systems.
WHAT DOES THE NEW INTRODUCTORY
A SET OF CONSIDERATIONS FOR GREEN BUDGET TAGGING
Developing green budget tagging
Decide what budget
measures to tag
Take decisions in relation to
what will be tagged:
• Type of budget items
• Administrative level
• Linked to the definition
• Clear definitions of each
• Accompanying guidance
Define what is
Consider emerging public
and multilateral definitions
and identify scope:
• Existing international
• National green objectives
• Develop a weighting
system (i.e. binary
Why do green budget tagging?
Country examples of different approaches
Conservative approach to
classification: tag programmes where
it is evident that all, or at least the
majority of investment in question
supports emissions reductions
Activities relevant to 11 climate
change categories are classified along
• Highly relevant (>60% relates to
• Relevant (20-60% of budget)
• Neutral (less than 20% of budget)
Expenditure tagged according to its
impact on six environmental objectives:
• Very favourable
• Favourable but controversial
Implementing green budget tagging
What supports effective implementation?
Clear roles &
Appropriate level of
risk management and
and quality of tagging
End goal: using the information from green budget
tagging in policy and budget decision-making
Bringing it all together: Ten principles underpinning
an effective approach to green budget tagging
1. Foster national ownership, the decision to start green
budget tagging should be driven by national priorities.
2. In designing the tagging system, categories should
align with country-specific climate or environmental
3. A weighting system can help to address the reality that
some budget measures only partially contribute
towards climate or environmental goals.
4. Countries should work towards tagging both positive
and negative measures across the whole budget or at
least in specific priority sectors.
5. Green budget tagging efforts benefit from political
commitment, strong leadership and clarity of roles
6. Tagging is subjective, clear guidance and a
process for review and validation is necessary.
7. Green budget tagging is just one of a number of
tools to support green budgeting.
8. Green budget tagging is supported by a modern
9. Information and analysis from tagging can
support greater transparency and
10. Complementing budget measures with wider
reforms, e.g., regulatory reforms, will help
speed progress towards green objectives.
Questions for Discussion
What are the main benefits and costs of green
How important is it for green budget tagging to cover
harmful budget items as well as the positive ones?
How do countries ensure information from green
budget tagging feeds into budget decision-making?
More information: http://www.oecd.org/environment/green-budgeting/