Green Budgeting Virtual Meeting - 5 October 2020

1. PUSHING THE BOUNDARIES
FOR GREEN BUDGET
TAGGING
Green budget tagging: introductory guidance & principles

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Background
• 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
current practices.
• IADB report (forthcoming) Climate Change Public Budget Tagging: Connections across
Financial and Environmental Classifications Systems.

3. WHAT DOES THE NEW INTRODUCTORY
GUIDANCE PROVIDE?
A SET OF CONSIDERATIONS FOR GREEN BUDGET TAGGING
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4. Developing green budget tagging
Decide what budget
measures to tag
Take decisions in relation to
what will be tagged:
• Sectors
• Type of budget items
• Administrative level
Develop a
classifications system
• Linked to the definition
of “green”
• Clear definitions of each
category
• Accompanying guidance
Define what is
“green”
Consider emerging public
and multilateral definitions
and identify scope:
• Existing international
definitions
• National green objectives
Identify information
needs
• Develop a weighting
system (i.e. binary
versus scaled
approach)
Why do green budget tagging?

5. 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
Ireland
Activities relevant to 11 climate
change categories are classified along
three categories:
• Highly relevant (>60% relates to
climate activities)
• Relevant (20-60% of budget)
• Neutral (less than 20% of budget)
Nepal
Expenditure tagged according to its
impact on six environmental objectives:
• Very favourable
• Favourable
• Favourable but controversial
• Neutral
• Unfavourable
France

6. Implementing green budget tagging
Strategic
framework
What supports effective implementation?
Clear roles &
responsibilities
Quality
assurance
Roadmap for
implementation
Capacity across
government
Internal budget
systems
Linkages with
international
standards

7. Key challenges
Appropriate level of
granularity
Categorising disaster
risk management and
adaptation
Ensuring consistency
and quality of tagging
Balancing
environmental, social
and economic
objectives
Common challenges

8. End goal: using the information from green budget
tagging in policy and budget decision-making

9. 9
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
goals.
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
and responsibilities.
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
budgetary framework.
9. Information and analysis from tagging can
support greater transparency and
accountability.
10. Complementing budget measures with wider
reforms, e.g., regulatory reforms, will help
speed progress towards green objectives.

10. QUESTIONS FOR
DISCUSSION
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11. Questions for Discussion
What are the main benefits and costs of green
budget tagging?
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?

12. THANK YOU
More information: http://www.oecd.org/environment/green-budgeting/
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