Finance and investment for climate goals

Measuring progress on aligning finance with the Paris Agreement requires developing assessments and indicators for both real economy investments and the financial sector. Such assessments and indicators can help to inform investment and financing decisions, as well as policy actions that can contribute to and drive the climate alignment of finance.

Despite a rapid rise in financial and corporate pledges, commitments and frameworks, there are concerns relating to fragmentation, opacity and greenwashing, as well as evidence of limited real economy impacts and delayed climate action. Climate alignment assessments and indicators must therefore be grounded in robust methodologies and data, and involve co-ordination across policymakers, methodology and data providers, and financial market players.

There is an urgent need for policy makers to provide coherent, whole‑of‑government co‑ordination, and integrated budgetary, financial regulatory and climate policy planning and implementation, to meet climate ambitions. Additional policies are needed to boost the risk‑return profiles of low‑emission and climate‑resilient investments, phase out investment in fossil fuels, create and ramp up pipelines of bankable projects, and provide investors with necessary certainty and unambiguous investment signals to sharply accelerate the low‑carbon transition. 

Mobilising finance and investment for clean energy and industry decarbonisation is critical to deliver just energy transitions and improve access to affordable clean energy, especially in emerging markets and developing economies (EMDEs). The OECD Clean Energy Finance and Investment Mobilisation (CEFIM) Programme helps EMDEs to unlock finance and investment in renewable energy, energy efficiency and industry decarbonisation.  Our work focuses on strengthening domestic enabling conditions for such investment, creating pipelines of bankable projects and catalysing finance for private capital mobilisation, including through the use of blended finance and other financial instruments. 

Closing the climate financing and investment gap will not be possible without more effective use of public finance in mobilising private investment and action to phase out or reorient environmentally harmful subsidies to free up resources for investments in the net‑zero transition.

The OECD provides a platform to help governments evaluate their allocation of budgetary resources to fossil fuels and their alignment with environmental and well-being goals. As part of this, the OECD Inventory of Support Measures for Fossil Fuels documents and estimates government measures that encourage fossil‑fuel production or consumption relative to renewable alternatives.