Most finance ministries around the world are concerned about the impact of climate change, a new study by the Coalition of Finance Ministers for Climate Action has found.
At the same time, however, finance ministries are facing challenges when it comes to incorporating climate change into their economic analyses and decision making, the study, which was carried out by the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science, found.
The study gathered responses from 59 countries around the world, including 26 advanced economies and 33 emerging market and developing economies. This included nine members of the G20.
Government expenditure
Some 71% expressed high concern about the impact of climate change on government expenditure, while 58% stated that they were concerned about climate change’s impact on GDP. Notably, finance ministries in developing countries demonstrated a higher level of concern than those in advanced economies.
Elsewhere, 70% expressed high levels of concern about the impact of national transition risks on government expenditure – this time with ministries in advanced economies more concerned – with 61% citing concern about the impact of transition on GDP.
The study also found that most finance ministries are involved in climate-related policy. Two thirds (65%) said that they were involved in shaping climate and development strategies, while 59%.were engaged with the mobilisation of funding. Some 57% were working on green fiscal subsidies.
At the same time, just over a third (35%) said that they have incorporated physical climate impacts into budget projections, while 27% had incorporated climate impacts into macroeconomic forecasting.
‘A growing understanding’
“This survey shows that finance ministries have a growing understanding of the many ways in which climate change is creating economic risks and opportunities,” commented Nicholas Stern, chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science.
“It is vitally important that researchers develop new and better methods and models to help finance ministries understand and analyse how climate change is affecting the global economy, and the opportunities for growth and development that lie in investing in climate action.” Read more here.
