The OECD developed a composite indicator to identify green budgeting practices across 14 OECD countries. The indicator assessed countries based on 4 building blocks: strategic framework, tools and methods, accountability and transparency, and enabling environment. Most countries have some practices in place, like strategic plans, environmental impact assessments, and training programs. The OECD will refine the indicator based on country feedback and update it annually to track the evolution of green budgeting over time. The indicator aims to help countries learn from each other's approaches and advance green budgeting.

1. DEVELOPING AN OECD
GREEN BUDGETING
COMPOSITE INDICATOR
7 OCTOBER 2021
Margaux Lelong, OECD

2. CONTENTS
2
1. About the indicator
2. Findings
3. Observations

3. • First green budgeting survey in 2020 (Response rate: 33 out of 38)
• Updated data in 2021 on 14 countries
• Objective:
• Identify up-to-date information on green budgeting practices in OECD countries
• Provide a basis for countries to access resources on cross-country practices
• Help inform future work programmes
• Coverage:
• Status of green budgeting
• Strategic framework
• Tools and methods
• Accountability and transparency
• Enabling factors
Context
Limitations:
• Does not assess effectiveness
• Focus on expenditure
• Pilot to be iterated
3

4. Conceptual Framework
Building Block 1
Strategic
planning
Building Block 3
Accountability
and transparency
Building Block 4
An enabling budgetary governance framework
The OECD
Green
Budgeting
Framework
Building Block 2
Evidence
generation and
policy coherence
OECD Green Budgeting Framework
4

5. Variables and weights
Composite index
of green
budgeting
Strategic
Framework (25%)
Legal Basis
National or Federal Green Strategy
Tools (25%)
Environmental Impact Assessments
Green budget tagging
Environmental Cost Benefit Analysis
Carbon assessment
Other Tools
Accountability &
Transparency
(25%)
Green Budget Statement
Other Public Reporting
Enabling
Environment
(25%)
Modern Budget Framework
Capacity in public administration
Clear Guidance
Coordination mechanisms & Expert
Advisory 5

6. FINDINGS
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7. Building block 1: Strategic framework
Legal basis National and/or
federal strategy
Constitutional
requirement
Budget law Other legislation Administrative
Practice
Yes
Austria •
Canada •
Colombia • • •
Denmark •
France • • •
Ireland •
Italy • • •
Luxembourg • • • •
Mexico • •
Netherlands • • •
Norway • •
Portugal • •
Sweden • •
United Kingdom •
➢ Practices are evolving:
multiple initiatives to
establish a green
budgeting
➢ Most common
frameworks are
administrative practices
and budget laws
➢ Emerging: Constitutional
requirement
➢ In the future, recovery
plans could be integrated
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8. Building block 2: Tools and methods
Austria
Canada
Colombia
Denmark
France
Ireland
Italy
Luxembourg
Mexico
Netherlands
Norway
Portugal
Sweden
United
Kingdom
Environmental
impact
assessments
Ex-ante • • • • • • • • • •
Ex-post • • • • • • • •
Green budget
tagging
Ex-ante • • • • • •
Ex-post • • • •
Environmental
cost benefit
analysis
For some individual budget measures • • • • • • • • • •
For all individual budget measures
Carbon
assessment
For some individual budget measures • • • • • • • • •
For all individual budget measures •
Whole budget • • •
Other tools Biodiversity/Ecosystem service pricing
Carbon pricing instruments including fuel
and carbon taxation, emissions trading
systems
• • • • • • • • • • • •
Using a shadow price of carbon to
evaluate public policies and investment
• • • • • • •
Environmental tax reform • • • • • • •
Regular review of environmentally
harmful tax expenditures and subsidies
• • • •
Inclusion of climate considerations in
long-term fiscal sustainability analysis
• • • •
Green balance sheet
Environmental audit or validation of the
budget
•
Green perspective in performance
setting or performance budgeting
• • •
Green perspective in spending review • • • •
➢ Countries are developing a wide
range of tools
➢ Common tools are green
tagging, environmental impact
assessments and carbon pricing
instruments
➢ Emerging tools: carbon
assessment and green spending
reviews
➢ In the future, the number of tools
could be reduced or merged in
the indicator
8

9. Building block 3: Accountability and transparency
Green budget statement
Other reporting
Environmental effects are discussed
in the country's general tax
expenditure report
Structured dialogue with civil society bodies
and other stakeholders on the climate or
environmental impact of budget decisions.
Austria •
Canada
Colombia •
Denmark •
France • •
Ireland •
Italy •
Luxembourg •
Mexico • •
Netherlands •
Norway
Portugal • •
Sweden
United Kingdom
➢ Focus on the existence of a
green budget statement and
communication to civil society
➢ Most common practices is
dialogue with civil society.
➢ Emerging practice: four
countries have implemented a
green budget statement
➢ In the future, climate-related
disclosures in financial
statements or open portal
could be added
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10. Building block 4: Enabling environment
Modern budget framework Capacity across public administration Inter-agency
group for
coordination
across
government
Performance
budgeting
Programme
budgeting
Training and skills
development for the central
budget authority
Training and skills
development for line
ministries
Austria • • •
Canada • • • • •
Colombia •
Denmark • • • • •
France • • • •
Ireland • •
Italy • •
Luxembourg • •
Mexico • •
Netherlands • •
Norway • •
Portugal • •
Sweden • •
United Kingdom • • • •
➢ Majority of OECD countries are
implementing programme and
performance budgeting
➢ Most common components
supporting the implementation of
green budgeting are training and
skills development within the
central budget authority
➢ An emerging practice is training
for line ministries
➢ In the future, MTEF and fiscal
risk management could be
added
10

11. A composite view of the building blocks

12. • Developments on green budgeting were greater than expected!
– New practices
– Practises had continued to evolve
• A number of countries have indicated they are about to start green budgeting
• Those countries that already practice green budgeting are planning new initiatives
• All respondents have green initiatives in their economic recovery packages
• When preparing the composite indicator, the OECD discussed the material with
ministries of finance to help identify ways the indicator could add value. The main
areas were to:
– Help inform the design of methodologies
– Enable work on case studies
– Support peer-to-peer engagement
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Observations and feedback

13. • Feedback from countries
– Through to the 28 October
• Refining the composite indicator
– Reviewing the contribution of individual variables
• Updating the material
– In 12 months
– New questions and updated data
Next steps
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14. www.oecd.org/environment/green-budgeting
Andrew.blazey@oecd.org
Margaux.lelong@oecd.org