Global progress on the Sustainable Development Goals (SDGs) is stalling, despite significant ambition, knowledge and policy action. This mainly stems from governance systems that remain structurally ill-equipped to manage linkages across the SDGs - particularly those under review in 2026 focused on water, energy, industry and cities. As climate shocks, water stress, energy transitions, industrial transformation, and rapid urbanisation intensify, policies designed and implemented in silos increasingly undermine one another. This chapter sets the context of the situation and issues a call for coherence to better manage interactions across water, energy, industry, and cities to ensure SDG delivery. Drawing on OECD analysis, the chapter first explains why coherence matters and why it often fails in practice, then illustrates how coherence works in practice through systemic interlinkages across the SDGs under review in 2026.
Bridging the Gaps for Sustainable Development
Abstract
This Chapter provides the analytical foundation for the report by framing the coherence challenge as a central constraint on achieving the 2030 Agenda. As climate, resource and urban pressures intensify, fragmented or siloed policy responses are creating systemic risks and inefficiencies.
The chapter is organised in three parts:
The first part, “A Call for Coherence,” explains why coherence matters for sustainable development – particularly for those under review by the 2026 High-Level Political Forum (HLPF) – and why fragmented responses persist despite growing recognition of interlinkages. It introduces Policy Coherence for Sustainable Development (PCSD) as a governance capability, highlights political and institutional barriers that keep coherence aspirational, and situates these challenges within global trends and international commitments calling for integrated approaches.
The second part, “Systemic interlinkages across water, energy, industry and cities for coherent action,” explores how interdependencies among these domains shape SDG outcomes. It analyses resource flows, infrastructure choices, and governance arrangements to show how fragmentation amplifies costs and risks, and why integrated approaches are essential to unlock synergies, manage trade-offs and strengthen resilience.
The third, “Key systemic incoherences slowing progress on SDGs 6, 7, 9, 11 and 17” zooms in on specific impacts that incoherent implementation of policy is causing in the underperformance within these five key SDGs.
The analysis in this chapter underscores that coherence is not a normative aspiration, but a key condition for designing strategies that are co-ordinated, durable, and capable of managing systemic risks across sectors and borders. Fragmented policy frameworks generate misaligned incentives, cross‑sectoral spillovers and investment lock‑ins that weaken long‑term sustainability.
Global SDG progress: A critical low point
Global progress on the SDGs has reached a critical low point. Only around 36% of targets are on track or making moderate progress, while 48% show insufficient progress and 15% are regressing (United Nations, 2026[1]). Across OECD countries, only 11 of 114 measurable targets have been achieved, and just 28 are close to being met by 2030 (OECD, 2025[2]). These figures indicate systemic weaknesses in policy design and implementation. Although policies are in place, their lack of alignment prevents them from generating cumulative progress at scale. Climate shocks, pandemics, and geopolitical fragmentation further widen these gaps. Modelling exercises, for example, indicate that unco-ordinated climate and resource policies can reduce long-term growth prospects and increase exposure to systemic risks (OECD, 2022[3]).
Regional SDG assessments confirm that progress remains fragmented and insufficiently cumulative. In Africa, progress has been recorded on 12 of the 17 SDGs, yet current trajectories remain inadequate to achieve the Goals by 2030 (ECA, 2026[4]). In Latin America and the Caribbean, only 19% of SDG targets are on track to be met by 2030, while 42% are progressing too slowly and 39% have stalled or regressed relative to the 2015 baseline (ECLAC, 2026[5]). In Asia and the Pacific, the region is not on track to achieve any of the 17 SDGs, and 88% of measurable targets are expected to be missed by 2030, with only 14 targets currently on track (ESCAP, 2026[6]). In the UNECE region, despite comparatively strong institutional capacity, only around 15% of SDG targets are on track, with particularly weak performance on sustainable cities, consumption and production, climate action and partnerships (UNECE, 2026[7]). Across regions, weak alignment between policy domains, financing frameworks and levels of government limits the translation of sectoral advances into sustained, system‑wide progress.
In particular, there are significant gaps in the implementation of the SDGs under review in 2026. For example, despite global electricity access reaching 92% of the population, and internet connectivity growing to 68% by 2024, progress on SDGs 6, 7, 9, 11, and 17 remains uneven and insufficient (United Nations, 2025[8]). For SDG 6 (Clean water and sanitation), 2.1 billion people lack safely managed drinking water, 3.4 billion lack safely managed sanitation, only 56 % of wastewater is treated, and freshwater ecosystems continue to deteriorate. Under SDG 7 (Affordable and clean energy), while electricity access is high, 645 million people remain unserved, 85 % of them in sub‑Saharan Africa, and 2.1 billion still rely on polluting cooking fuels. SDG 9 (Industry, innovation and infrastructure) faces structural challenges: global manufacturing employment declined from 14.3% in 2015 to 13.7% in 2024, while industrial CO₂ emissions from fuel combustion reached 37.6 billion tonnes in 2024, and digital divides persist, especially outside high-income regions. For SDG 11 (Sustainable cities and communities), an estimated 1.16 billion people live in slums, only half of urban residents have convenient access to public transport, and affordable, climate-resilient infrastructure investment falls far short. Finally, the enabling environment for SDG 17 (Partnerships for the Goals) has deteriorated: ODA fell to USD 174.3 billion in 2025, down 23.1% from 2024 (OECD, 2026[9]), while the external debt of low‑ and middle‑income countries reached USD 8.4 trillion in 2024 and the annual financing gap for developing countries remains around USD 4 trillion. (United Nations, 2026[1]) (DESA, 2025[10]) (United Nations, 2025[8]).
Cities are making progress on many SDGs, but performance remains uneven across goals. Between 2017 and 2022, cities improved on average in 8 of the 13 goals with available data – most notably in SDGs 11 (Sustainable cities and communities), 14 (Life below water) and 17 (Partnerships for the goals), driven by better Internet speed, stronger coastal protection and cleaner air. In contrast, cities have stalled or regressed on SDGs 8 (Decent work and economic growth), 12 (Responsible consumption and production) and 13 (Climate action). Most cities remain far from the 2030 suggested end values. As of 2022, 11% of cities in OECD countries had not reached any of the suggested SDG end values, and no city had achieved more than 5 (OECD, 2024). These disparities across essential services, infrastructure, finance and partnerships underline the need for more integrated, placed-based and transformative policy approaches, supported by strengthened multilateral co-operation and co-ordinated action.
Why fragmented responses fail
These implementation gaps reveal a structural challenge. Fragmented policy responses fail to match the systemic nature of the 2030 Agenda. Without integrated strategies that align different targets, the 2030 Agenda and SDGs will remain out of reach. Continued SDG underperformance stems from a mismatch between the systemic nature of today’s challenges and the fragmented policy responses applied across policy areas, despite clear interactions among them. OECD analysis shows that decision making frameworks across countries remain largely siloed, with focus on individual sectors rather than managing system-wide interactions. Consequently, these arrangements often result in policy incoherence, rather than policy inaction, where advancements in one area undermine outcomes in another.
The report’s guiding question in turn is how can national and sub-national governments design and implement coherent policies across SDGs, including those under review by the 2026 HLPF? In a world marked by climate shocks, pandemics, geopolitical fragmentation, and supply chain disruptions, PCSD has become a foundational enabler of the 2030 Agenda, allowing governments to navigate complexity and respond to interconnected crises with integrated, forward-looking solutions.
Policy coherence, a boost for sustainable development
The urgency of this report’s contribution is underscored by recent global trends. The financing gap for developing countries has widened to USD 4 trillion annually, representing a 60% increase since 2015, driven by rising climate-related costs and mounting debt burdens (OECD, 2025[11]). At the same time, current national pledges remain insufficient to meet the Paris Agreement targets, and progress on net-zero pathways has slowed since 2021 (UNFCCC, 2025[12]). OECD analysis confirms this slowdown. Among 52 assessed countries, only 30 have adopted legally binding net-zero pledges, covering just 17.7% of country-based global greenhouse gas emissions, while emissions would need to fall by around 63% by 2035 to keep the 1.5°C goal within reach. Climate policy expansion increased by only 1% in 2024, reinforcing signs of stalled momentum since 2021 (OECD, 2025[13]). These dynamics intersect with the accelerating triple planetary crisis – climate change, biodiversity loss, and pollution – which are mutually reinforcing and expose the limitations of fragmented policy responses (OECD, 2025[14]). International processes increasingly reflect this shift by calling for coherence through concrete commitments and frameworks. The outcomes of several recent global processes, including the UN Summit of the Future (2024), the Sevilla Conference on Financing for Development (2025), the UN Social Summit (2025) and the COP30 (Belém, 2025), suggest a growing consensus that fragmented responses are insufficient and that coherence across sectors, governance levels, and financing systems is indispensable for achieving the 2030 Agenda (United Nations, 2024[15]) (DESA, 2025[16]) (UNFCCC, 2025[17]). The theme of the 2026 High-Level Political Forum – “Transformative, equitable, innovative and co-ordinated actions for the 2030 Agenda” – captures the essence of the challenge ahead. Achieving this ambition requires coherence as the foundation for transformative action.
PCSD, as articulated in the OECD Recommendation on Policy Coherence for Sustainable Development (OECD, 2019[18]), refers to a governance capability that enables governments to anticipate interactions across policies, manage trade-offs, and align objectives across sectors, levels of government, and time horizons. The Recommendation calls on countries to strengthen whole-of-government co-ordination, adopt long-term strategic visions, and consider transboundary and intergenerational impacts. Importantly, policy coherence does not eliminate tensions between objectives, but makes them explicit and governable, helping governments sequence reforms, manage distributional impacts, and sustain policy outcomes over time.
In practice, sustainable development policymaking increasingly involves tensions between affordability and decarbonisation, speed and participation, local impacts and global benefits. Such competing objectives cannot be addressed through technical co-ordination alone, as this can undermine legitimacy and policy durability. Managing these tensions requires the capacity to clarify priorities, identify distributional effects (winners and losers), and design sequencing or compensation mechanisms that maintain political and social support.
Coherence further requires aligning policies across interconnected sectors such as water, energy, industry, and urban development to maximise synergies and manage trade-offs, while ensuring that national objectives translate into coherent actions across levels of government. It also depends on effective partnerships that engage government, business, and civil society to develop and implement integrated solutions. Given the cross‑border effects of many domestic policy decisions, enhancing coherence also implies a strong role for international co-operation and co-ordinated.
Effective multi‑level governance is central to policy coherence, as cities and regions are responsible for a substantial share of SDG‑relevant policies and investments and play a key role in implementation. In OECD countries, subnational governments account for almost 60% of public investment and close to 40% of public expenditure, including a substantial share of climate‑related investment, and around two‑thirds of SDG targets cannot be achieved without effective engagement at local and regional levels. Coherence therefore requires strong vertical co-ordination to align national objectives with local delivery capacities and timelines (OECD, 2020[19]).
Finally, coherence depends on a forward-looking assessment of long‑term and intergenerational impacts, as many policy decisions – particularly in infrastructure and land use – shape sustainable development pathways for decades. Infrastructure assets often have lifecycles of 30 to 100 years, meaning that investment choices made today influence climate and development trajectories far into the future (OECD, 2020[20]). Persistent under-investment in areas such as water infrastructure weakens resilience, raises long‑term economic and fiscal costs, and increases exposure to climate-related risks such as floods and droughts (OECD, 2025[21]). As drought risk becomes more frequent, severe and prolonged across regions, short‑term responses are increasingly insufficient, and delayed investment amplifies cumulative impacts across sectors and generations (OECD, 2025[22]). Assessing these long-term impacts helps ensure that current decisions do not lock in unsustainable outcomes or constrain future generations.
Addressing transboundary impacts and global spillovers
Among these dimensions, coherence entails considering the consequences of policy decisions beyond borders. In an interconnected global economy, decisions taken domestically often have significant impacts elsewhere, making international co-operation and co-ordinated action essential. Many of the most pressing challenges – especially those related to the SDGs under review by the 2026 HLPF – such as water scarcity, energy transitions, industrial decarbonisation, and urbanisation are shaped by global flows of resources, including trade, finance, technology, and environmental flows. As a result, policies implemented in one country can generate significant spillovers that affect other countries’ ability to achieve the SDGs. These spillovers may be positive or negative, depending on policy design and the degree of international co-ordination (OECD/EC-JRC, 2021[23]).
For example, fossil fuel subsidies may lower domestic energy costs but exacerbate global climate risks; carbon-intensive production in one region can undermine competitiveness and decarbonisation efforts in others; poorly managed upstream water resources can threaten access and resilience downstream; and unco-ordinated carbon pricing can lead to carbon leakage. Conversely, greater alignment among countries can accelerate the diffusion of renewable energy technologies and other clean innovations.
Global value chains are an engine of economic growth and development, but they are also associated with adverse impacts on people and planet, usually spanning jurisdictions. In OECD countries, companies account for around 85% of technology investment, and globally, approximately 70% of trade takes place within global value chains (OECD, 2025[24]). Policies on sustainable supply chains and responsible business conduct (RBC) seek to mitigate adverse transboundary impacts — yet their implementation can in turn generate their own challenges, including sharing compliance costs, risk of market fragmentation, and uneven effects across trading partners. As a result, regulatory choices made in one jurisdiction can significantly shape production practices, investment decisions and market access conditions elsewhere. Together, these examples show why transboundary impacts cannot be treated as an “external” add-on to domestic policy.
Sustainable development is inherently systemic. The SDGs under review at the 2026 HLPF – SDG 6 (Clean Water and Sanitation), SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation and Infrastructure), SDG 11 (Sustainable Cities and Communities), and SDG 17 (Partnerships for the Goals) – are deeply interdependent, and progress in one area often depends on decisions made in another. Yet policies in these domains are frequently designed and implemented in isolation, creating inefficient investment patterns, contradictory incentives, avoidable risks and missed opportunities for sustainability and resilience. This report’s focus is on achieving policy coherence across water, energy, industry, and urban development through an emphasis on their systemic interactions. Moving beyond separate policy silos requires recognising the multiple intersections in resource use, infrastructure planning, and governance.
Urbanisation illustrates the systemic interlinkages across water, energy, industry and cities. Decisions on land use, infrastructure and service provision in cities shape resource demand, emissions and exposure to climate risks, with implications that extend beyond urban boundaries. Where urban development is not aligned with water and energy planning, costs and vulnerabilities can increase, particularly under conditions of climate stress (OECD, 2017[25]) (Botta, Griffiths and Kato, 2022[26]). These dynamics are explored in greater detail in the discussion on SDG 11, which examines how integrated urban policies can better manage these interdependencies and align local action with national and global sustainability goals.
Industrial development provides a further illustration of these interdependencies. Industrial strategies interact with energy systems, innovation policies and urban development, shaping emissions trajectories, competitiveness and long-term investment pathways. Without alignment between industrial policy, clean-energy transitions and STI frameworks, economies risk reinforcing unsustainable pathways. These issues are examined in the section on SDG 9, which focuses on how policy coherence can link industrial transformation, innovation and decarbonisation while managing uncertainty and systemic risks.
Socio-economic drivers of the triple planetary crisis and the coherence gap
Environmental pressures compound the coherence challenge. Climate change, biodiversity loss and pollution form a triple planetary crisis that continues to intensify under current policies. These interconnected crises are driven by shared socio-economic trends and drivers, such as resource demand and population growth, and they interact in ways that amplify systemic risks. Climate change is projected to become the main driver of biodiversity loss by 2050, while nitrogen and plastic pollution continue to rise, further degrading ecosystems and human health (OECD, 2025[14]). Fragmented responses risk shifting environmental burdens across sectors, territories or lifecycle stages, illustrating a common failure mode of policy fragmentation, where policies designed in isolation, unintentionally exacerbate pressures elsewhere.
This dynamic is directly relevant to the SDGs under review at the 2026 HLPF. Progress on climate mitigation, resource efficiency, industrial transformation and sustainable urban development is increasingly shaped by how well policies manage interactions across systems rather than by sector‑specific advances alone. Where these interactions are not anticipated, well‑intended measures can generate new trade‑offs, increase transition costs or undermine long‑term resilience.
Data shows that integrated approaches that align climate, biodiversity and pollution policies can reduce the risk of burden‑shifting, improve resource allocation and strengthen resilience and equity, while also supporting public trust in transition pathways (OECD, 2025[14]). The mechanisms through which integrated policy packages can unlock synergies and make trade‑offs explicit are examined in detail in Chapter 2.
At the same time, the effectiveness of integrated approaches depends on governance arrangements that can translate strategic objectives into co-ordinated action across sectors, levels of government and borders. Domestic policy choices are embedded in global systems, and their impacts increasingly extend beyond national boundaries through trade, investment, resource use and emissions. Managing these transboundary effects, as well as aligning sectoral and territorial action, requires robust institutional frameworks, clear decision authority and accountability mechanisms, as set out in the OECD Recommendation on PCSD (OECD, 2019[18]). These governance conditions are examined in Chapter 3.
Water and sanitation for all (SDG 6)
Access to safe water and sanitation (SDG 6) remains elusive for far too many. Lack of access increasingly is caused by systemic failures and governance constraints, rather than just infrastructure gaps. Despite global commitments, 2.2 billion people still lack safely managed drinking water, 3.4 billion lack safely managed sanitation, and 1.7 billion have no basic hygiene services at home (DESA, 2025[10]). OECD analysis shows that meeting global water-security needs would require annual investments of around USD 1 trillion (OECD, 2022[27]), while current financial levels fall far short with water-related ODA at only USD 8.5 billion (3.1% of total ODA) (OECD, 2024[28]). As a result, water-related risks are intensifying and increasingly systemic, thus having implications for fiscal stability, economic resilience, and social equity (OECD, 2025[21]).
Yet, progress on SDG 6 is frequently constrained less by technical solutions than by governance fragmentation and weak enforcement across sectors and jurisdictions. Responsibility for water, land use, energy, agriculture and infrastructure is often fragmented across ministries, agencies and levels of government, with unclear mandates and weak co-ordination mechanisms. An OECD survey of 48 cities found that fragmentation of tasks and the absence of a strategic cross-sector vision were the most frequently cited governance challenges, followed by unbalanced powers among authorities and weak legislative co-ordination (OECD, 2016[29]).
These gaps highlight a central coherence challenge. Water security often depends on decisions taken in other sectors and levels of government, while financing and management remains fragmented and – in many cases – disconnected from risk reduction and long-term service sustainability. A related challenge is conflicting incentives and unaligned public policy choices. These can range from land-use and agricultural policies that contribute to increase runoff and pollution, to infrastructure decisions that lock in exposure to droughts and floods that disproportionately affect vulnerable groups and widening territorial inequalities.
Building resilience and addressing incoherence calls for sequenced investment pathways that can explicitly manage trade-offs across different users (e.g., households, agriculture, energy, and industry) and anticipate climate variability and fluctuations in demand. Integrated water resource management, when combined with forward-looking investment strategies, can therefore enhance coherence across infrastructure and urban development while building long-term resilience, equity and reduction in costly lock-in by aligning water, land-use, energy and infrastructure decisions. Rather than just additional investment, these arrangements require institutional mechanisms that clarify mandates, align planning and budgeting, and enable arbitration of allocation decisions across sectors and basins.
The 2015 OECD Principles on Water Governance underline that water policy cannot be effective if it is designed in isolation (OECD, 2015[30]). Principle 3 calls for greater policy coherence through effective cross-sectoral co-ordination, especially between water and the environment, health, energy, agriculture, industry, spatial planning and land use. In practice, however, water-related responsibilities are often fragmented across ministries, agencies and levels of government, resulting in conflicting objectives and siloed approaches. In response, several countries are moving towards a whole-of-water approach that connects blue and green water, rivers and oceans, while also going “beyond water” by linking governance with ecosystems, biodiversity and climate objectives.
OECD work on water governance (OECD, 2025[31]) and the blue economy (OECD, 2024[32]) shows that stronger policy coherence can support improved protection of freshwater ecosystems and biodiversity, including endangered species, while also improving water quality and water-use efficiency. These benefits can include reduced exposure to hazardous chemicals, lower nutrient pollution, more efficient agricultural water use, and better allocation of water across sectors. Form a water governance perspective, cross-sectoral co-ordination and multilateral co-operation can improve data and information gathering, knowledge sharing, monitoring and evaluation, and risk assessment. They can also support more coherent policies to manage water-related risks, including droughts, floods and pollution, while strengthening stakeholder engagement and institutional capacity. In this context, inter-ministerial bodies, co-ordinating committees or integrated planning frameworks play a critical role by providing institutional spaces to reconcile competing objectives and support collective decision making. Governance complexity illustrates the systemic nature of these challenges. In many contexts, water management frameworks are based on outdated legislation and involve numerous institutions with overlapping mandates. While multi-stakeholder platforms and basin-level initiatives have improved dialogue, fragmented responsibilities often hinder integrated approaches and strategic decision making across sectors (OECD, 2023[33]) (OECD, 2024[34]). Legacy regulatory frameworks and rigid allocation regimes further complicate efforts to manage trade-offs. In some cases, water rights have historically been defined in ways that limit flexibility to prioritise human consumption or ecological flows during periods of scarcity. (OECD, 2024[34]). Addressing this complexity calls for legal and institutional frameworks that clearly specify the allocation of roles and responsibilities across all levels of government and water-related institutions, as well as mechanisms for multi-level co-operation among users and levels of government.
Water and the spatial planning nexus (SDGs 6, 11 and 14)
Spatial planning, land use and building density are high-leverage drivers of water security outcomes and a recurrent source of incoherence between SDGs 6 and 11. Zoning rules and urban expansion patterns influence stormwater runoff, groundwater recharge, and exposure to water-related risks. Yet many planning processes still overlook hydrological functions and long-term water security. Without co-ordination between urban development and water policies, impervious surfaces multiply, exacerbating flood risk and degrading natural systems (OECD, 2016[29]).
Integrated spatial and water planning can strengthen resilience, particularly in fast-growing cities and coastal zones. A “whole-of-water” approach aligns water supply, sanitation, wastewater treatment, and land-use planning with coastal and marine management (OECD (2024[32]). Land-based pollution, untreated wastewater and stormwater runoff all impact estuaries and oceans, threatening biodiversity and blue economy sectors. Nature-based solutions, such as wetlands or floodplains, can cost‑effectively reduce flood and drought risks by enhancing natural water retention, while also delivering co-benefits for biodiversity, carbon sinks, public health and recreation when integrated into spatial planning frameworks (OECD, 2020[35]).
Water and energy interdependencies (SDG 6 and SDG 7)
Water and energy systems are deeply interconnected. Around 15% of global freshwater withdrawals are linked to energy generation, especially cooling of thermal power plants, extraction of fossil fuels, and irrigation of biofuel crops. At the same time, water utilities are highly energy-intensive, requiring significant electricity for abstraction, pumping, and treatment. This dependence increases with alternative sources such as desalination or reuse (OECD, 2016[29]).
Lack of water availability is increasingly becoming a critical constraint for sustainable development. In many contexts, energy systems that rely heavily on water-dependent generation or storage – such as hydropower – are becoming more vulnerable to climate-driven variability in precipitation and river flows (OECD, 2023[33]) Prolonged droughts and declined reservoir levels have shown how these dependencies can undermine energy security and resilience (OECD, 2024[34]). This highlights a core coherence challenge, as energy security strategies that rely on water-dependent generation or storage are increasingly exposed to hydrological variability, underscoring the need for integrated approaches across water and energy systems.
The transition to cleaner energy sources may also create new pressures on water systems. In some contexts, emerging green hydrogen strategies rely on large volumes of water for electrolysis, often in regions already facing water stress. This can increase demand for energy-intensive desalination and requires careful management of brine and other residuals (OECD, 2024[34]). Coherence therefore calls for systemic water-stress screening of energy investments and clear rules for managing local trade-offs.
Water-Energy-Food nexus and industrial value chain linkages (SDGs 2, 7, 9 and 12)
Water-agriculture interactions lie at the core of the water-energy-food (WEF) nexus, generating trade‑offs that shape resource allocation, pollution pressures and impacts along value chains. Agriculture remains the largest consumer of water globally and a major source of nutrient pollution. Excessive or inappropriate fertiliser and pesticide use can lead to nitrate and phosphate contamination, undermining water quality and ecosystem health. Certain subsidies can exacerbate over-abstraction or unsustainable practices. OECD analysis of the water-energy nexus shows that such pressures are further amplified where irrigation, agricultural processing and energy supply systems are poorly co‑ordinated, allowing inefficiencies and resource conflicts to propagate along agri‑food value chains. Co-operative arrangements between cities and farmers, such as those developed in the Paris hinterland, show how upstream-downstream collaboration can reduce agricultural pressures on water resources and improve water quality (OECD, 2016[29]).
Industrial water use and wastewater management also pose challenges, particularly in cities where inadequate wastewater treatment leads to chemical effluents polluting rivers and aquifers. While the WEF nexus highlights direct biophysical linkages between water, energy and food, OECD work shows that industry acts as a key transmission channel through which these interdependencies materialise along value chains, linking water and energy use in food processing, materials production and infrastructure systems. Water reuse and circular approaches can help reduce the demand for freshwater and thus support competitiveness, although they require appropriate standards, monitoring and enforcement to avoid shifting risks elsewhere. The city of Milan is piloting integrated approaches that link water and solid waste management under its “Smart Water Resource Management” initiative (OECD, 2024[32]).
In many contexts, pressures on water resources increasingly arise from the combined effects of agricultural production, energy use and industrial activities, as these systems are tightly interconnected along value chains. The green transition is also increasing demand for critical minerals such as lithium and copper, while extraction processes often rely on water-intensive methods that can strain local resources and affect fragile ecosystems. (OECD, 2024[34]). OECD analysis on strengthening the water-energy nexus highlights that weak co-ordination across these systems can undermine the resilience and competitiveness of industrial and agri-food value chains, reinforcing the need to align industrial transformation and agricultural strategies with robust water governance.
Affordable, reliable, sustainable and modern energy for all (SDG7)
Energy is the backbone of sustainable development, yet the global energy transition remains uneven and far too slow to meet the Paris Agreement and SDG 7 targets. Electricity access now reaches 92% of the world’s population, yet 655 million people still lack energy, and over two billion people rely on polluting fuels and technologies for cooking (IEA, 2025[36]) (United Nations, 2026[1]). In parallel, energy-related CO₂ emissions reached a record 37.8 gigatonnes in 2024, driven by continued reliance on fossil fuels and slow deployment of clean technologies (IEA, 2025[37]). These shortfalls cut across sectors and borders.
While renewable energy capacity continues to expand – global installed capacity per capita hit 478 watts in 2023 – progress remains insufficient to meet 2030 targets, due in part to highly uneven investment (IEA, 2025[36]). Thus, the challenge is not only to ensure investment quality and sequencing, but also to mobilise sufficient investment levels since grids, storage, permitting and financing often fail to keep pace. As a result, new clean capacity does not always translate into reliable and affordable energy services.
Energy access and its ripple effects across systems
Despite progress, large gaps remain in access to modern energy services. Most people without electricity live in Sub-Saharan Africa, and clean cooking solutions are still out of reach for billions across the world (IEA, 2025[36]). Decentralised renewable technologies such as mini-grids and solar home systems have driven recent gains, providing more than half of new connections in Sub‑Saharan Africa between 2020 and 2022. Still, affordability barriers and financial constraints continue to slow adoption, affecting health, education and productivity, and reinforcing inequalities.
Energy reliability also shapes water and sanitation services, health systems and urban resilience. Without dependable power, water utilities cannot operate effectively, hospitals face cold-chain challenges and cities struggle with rising cooling needs and air pollution. Integrated planning that combines energy with transport, housing and land use can deliver multiple benefits, improving access to services and reducing vulnerability to climate risks (OECD, 2024[38]).
Investment and technology choices shaping industrial and urban futures
Global energy-related emissions remain high, while the share of renewables in total energy consumption is still below what is needed to meet climate goals (IEA, 2025[37]). Industrial electrification, process efficiency and low-emission heat sources, along with demand-side measures in buildings and transport, are essential to curb costs and emissions. Meanwhile, policymakers increasingly confront difficult trade-offs including affordability versus rapid decarbonisation, speed of deployment versus system stability, and technology pathways that may increase water or material pressures if not assessed holistically.
Investment is growing but uneven. Global energy investment is projected to reach around USD 3.3 trillion in 2025, with USD 2.2 trillion expected to flow into clean energy technologies (IEA, 2025[39]). Yet financing gaps and high capital costs in emerging economies risk delaying technology diffusion and limiting participation in clean technology value chains. International public flows for clean energy in these economies rose to 21.6 billion USD in 2023 but remain far below requirements (IEA, 2025[36]). Closing this gap will require a coherent set of measures that bring together project‑preparation capacity, blended finance, regulatory predictability and reforms to grids and permitting systems.
Urban decisions have system-wide effects. Distributed renewables and storage, combined with efficient building codes and public transport, can reduce grid stress and improve air quality. Conversely, unmanaged electrification of vehicles and cooling can strain networks and widen inequalities. Data from OECD regions shows that aligning energy, transport and land use improves accessibility, mitigates climate risks and enhances productivity (OECD, 2024[38]).
Cross-border dynamics driving coherent transitions
Energy transitions are often shaped by cross-border interdependencies, where domestic policy choices on energy supply, pricing and decarbonisation interact with regional markets, global value chains and shared climate risks. This makes international co-ordination a prerequisite for coherent and effective transitions. Yet fossil fuels still supply more than 80% of global energy demand (IEA, 2025[39]). Developing countries face persistent financing gaps that heighten exposure to energy insecurity and price volatility. A resilient and coherent transition increasingly relies on the ability of power systems to integrate variable renewables, scale up storage solutions, and maintain affordability for vulnerable households. Climate change amplifies these risks, as extreme weather events disrupt energy infrastructure and supply chains. These interdependencies mean that issues such as cross‑border electricity trade, global fuel markets and carbon leakage require coherent and co‑ordinated international policies that align energy security, decarbonisation and equity objectives, supported by sequenced investment and social protection measures.
Cross-border impacts increasingly shape domestic options. Carbon leakage risks and border carbon adjustments influence industrial location, electricity trade and emissions accounting. Dialogue and interoperability - shared approaches to carbon-intensity measurement, grid standards and market rules - are needed to preserve development prospects and sustain ambition. Regional market integration through grid interconnections, shared balancing capacity and comparable carbon-intensity methods can lower costs and improve reliability, especially for smaller systems integrating variable renewables.
Resilient infrastructure, inclusive and sustainable industrialisation and innovation (SDG9)
Infrastructure and industry remain central to economic development, productivity growth and job creation. At the same time, they are major sources of environmental pressure and deeply embedded in energy, water and urban systems. Advancing SDG 9 therefore depends not only on scaling investment and innovation, but on the coherence of policies that shape industrial transformation, infrastructure planning and technology deployment.
Twin transitions in infrastructure and industry: opportunities and risks
Infrastructure and industry remain cornerstones of economic development, yet their transformation depends on the twin green and digital transitions. These transitions can reinforce productivity, resilience and environmental performance, but they can also generate new risks if policies are misaligned. Global investment needs for sustainable infrastructure exceed USD 3 trillion annually, with the largest financing gaps in emerging and developing economies (DESA, 2025[10]). OECD estimates indicate that delivering climate-compatible infrastructure will require annual investments of USD 6.9 trillion by 2030, with local and regional governments responsible for nearly 69% of climate-significant public investment in OECD countries (OECD, 2024[40]).
At the same time, industry sector accounts for as much as 40% of the total global energy related- CO2 emissions with steel, cement and chemicals production representing the lion’s share (OECD, 2023[41]). Heavy industry remains one of the largest sources of global emissions, and without coherent policies that link industrial development with decarbonisation objectives, investments risk perpetuating carbon-intensive and outdated technologies. Climate-related disruptions to transport, energy and water networks further expose the vulnerability of existing systems (OECD, 2024[42]). These sectors are deeply embedded in and dependent on large‑scale infrastructure systems, including transport, energy, water and digital networks, which shape both their emissions profile and their capacity to transform.
Against this backdrop, the central challenge is enhancing coherence across infrastructure, industrial, digital and climate policies. When these policies are not aligned, unresolved trade‑offs between cost, speed, competitiveness and resilience wind up slowing both industrial transformation and infrastructure modernisation. Co-ordinated approaches, such as combining industrial innovation with renewable energy deployment and carbon capture solutions, are essential to accelerate net-zero transitions while maintaining competitiveness (OECD, 2024[43]) (OECD, 2025[44]).
Advancing SDG 9 depends on integrated strategies and decision frameworks that link infrastructure planning with clean energy deployment, circular economy approaches, innovation policies and climate resilience objectives. The OECD Recommendation on Digital Technologies and the Environment provides a system‑wide framework to harness digital technologies for environmental objectives while managing life‑cycle footprints in energy, materials and e‑waste (OECD, 2025[45]). OECD analysis indicates that climate‑related disruptions to energy, transport and digital networks are increasingly exposing vulnerabilities in existing infrastructure and industrial systems, with implications for both productivity and resilience.
At the same time, the rapid evolution of STI introduces new uncertainties and governance dilemmas. While STI remains essential for addressing global challenges (OECD, 2025[46]) and breakthroughs offer transformative opportunities for climate action, resilience and growth (OECD, 2024[47]), fragmented policy frameworks can limit their impact and create new environmental, economic, digital and social trade‑offs. In practice, STI frameworks often fail to align research investment, industrial strategies, education and skills systems, and international co‑operation.
Strengthening policy coherence in this area therefore depends on better connecting STI priorities with investment, regulation and skills policies across ministries and levels of government. In practice, coherence requires embedding these linkages in planning, procurement, budgeting and regulation, rather than treating industrial, innovation and climate strategies as parallel agendas
Financing and pathways for industrial transformation
It is more urgent than ever to mobilise finance and investment for industry decarbonisation in emerging markets and developing economies (EMDEs). A joint OECD-IEA study released at COP30 estimates that three-quarters of global investment in near-zero emission technologies for steel and cement would need flow to EMDEs to align with a net-zero pathway, with investment needs in near-zero emission technologies in these two sectors alone exceeding USD 500 billion globally over the next decade (OECD/IEA, 2025[48]). The core constraints are not only capital availability, but risk allocation, revenue uncertainty and weak project pipelines, stressing the need for blended finance, risk mitigation instruments, revenue stabilisation mechanisms, and the mainstreaming of industry decarbonisation into development finance strategies.
Closing cost gaps between conventional and low-carbon industrial technologies requires a combination of instruments tailored to technology maturity and local conditions. For instance, a recent OECD-South Africa partnership applied the OECD Framework for Industry’s Net-Zero Transition to the steel sector (OECD, 2022[49]), identifying detailed solutions for financing decarbonisation. This confronts a central SDG 9 trade-off, where without targeted support and predictable demand signals, firms may delay investment, locking in higher emissions and future adjustment costs. While incremental upgrades to electric arc furnaces were found to be economically viable, more transformative shifts, such as hydrogen-based direct reduced iron (DRI) or carbon capture, were 26-42% more expensive than traditional production routes. Further work is underway in Egypt (low-carbon hydrogen), Indonesia (steel and textiles), and Thailand (plastics and petrochemicals) to identify feasible decarbonisation pathways and improve investment conditions. Portugal is seeking to reduce emissions through improvement in maritime infrastructure such as developing green ports and attracting environmentally conscious shipping companies (OECD, 2025[50]).
Sector dynamics condition both pace and geography of investment. Analysis of steel markets highlights how excess capacity and uneven demand compress margins and can crowd out green investment even as producers publish decarbonisation roadmaps (OECD, 2025[51]). At the same time, it is important to ensure that financial support for SDG 9 does not unduly lead to non-market-conform steel capacity growth that exacerbates the current steel excess capacity crisis (OECD, 2026[52]). Maritime value‑chain data points to rising orders for alternative‑fuel‑ready vessels and energy‑saving technologies. But it also reveals bottlenecks in retrofits, fuel infrastructure and specialised capabilities, reinforcing the need to align shipbuilding innovation, port infrastructure and fuel supply (OECD, 2025[53]).
Coherence through standards, data and market frameworks
Ensuring coherence across standards, data systems and market frameworks will determine whether digitalisation and decarbonisation reinforce competitiveness, resilience and inclusion. Coherent frameworks are needed to connect standards, data and finance across the twin transitions of digitalisation and decarbonisation. Recent assessments confirm that earlier guidance remains relevant, but highlight the need for updates in four areas: measurement systems to track environmental impacts, exposures and vulnerabilities in a consistent manner; circularity principles to reduce resource use and waste; green procurement practices to leverage public purchasing power; and whole‑of‑government co-ordination so that digital and climate policies are aligned across ministries and levels of government (OECD, 2024[54]). Data also points to the importance of comparable metrics and transparent reporting, enabling countries to monitor progress and avoid shifting environmental burdens from one sector or jurisdiction to another, undermining SDG 9 outcomes.
The environmental profile of data‑intensive technologies increasingly influences industrial and infrastructure policy. OECD work on measuring the environmental impacts of artificial intelligence compute and applications calls for common metrics that capture direct impacts from hardware, electricity and water use, as well as indirect effects through AI applications and behaviour (OECD, 2022[55]). These metrics help manage trade-offs between AI-enabled efficiency gains and rising resource demand, thus enabling policymakers and firms to scale AI‑enabled optimisation of energy systems, plants and logistics while maintaining credible pathways to net‑zero industry.
Market conditions are as decisive as technology readiness. Analysis of steel markets shows how growing overcapacity and non‑market support can depress utilisation and prices, complicating investment in near‑zero routes and creating risks of capital misallocation (OECD, 2025[51]). Strengthened international transparency on support measures complement domestic technology, infrastructure and skills policies, helping ensure decarbonisation investment is not undermined by persistent market distortions (OECD, 2025[51]).
International STI co-operation has becoming increasingly important for addressing key global issues such as climate change, food security and global health. Such co-operation supports innovation, enables economies of scale and creates fairer incentives for investment. However, policy coherence frequently falters in practice, as national R&D priorities, fragmented funding rules and intellectual property arrangements limit alignment and cross-border effectiveness. OECD analysis also shows how rising geopolitical tensions and security concerns are creating new barriers to knowledge exchange and technology transfer (OECD, 2023[56]). Dedicated multilateral initiatives, such as international climate clubs, have emerged to address free-rider problems and promote reciprocity (IEA, 2023[57]).
Sustainable cities and communities (SDG 11)
Cities as engines of sustainable development
Cities are central to achieving sustainable development. They concentrate economic activity and innovation, but face mounting challenges from rapid urbanisation, climate risks, and social inequalities. By 2050, nearly 5 billion people will live in cities, up from 3.5 billion in 2015, requiring massive investment in infrastructure and resilience (OECD, 2023[58]). Urban areas already account for two-thirds of global energy demand and up to 70% of greenhouse gas emissions (OECD, 2020[59]), making cities central to climate mitigation efforts. However, in many high‑income cities, consumption‑based emissions embedded in imported goods and services far exceed location‑based emissions. Local climate strategies often focus primarily on territorial emissions, overlooking this global footprint. This creates a gap between ambition and impact and can weaken coherence between urban policy, trade and broader sustainability objectives.
The policy levers for advancing SDG 11 also drive progress on related goals such as SDG 6 (water and sanitation), SDG 7 (clean energy), SDG 9 (infrastructure and industry), and SDG 13 (climate action). Housing and land use policies, for example, are deeply interconnected with energy demand, emissions, and affordability. When urban expansion occurs without integrated planning (e.g. for water, sanitation and energy) cities can face long-term costs, health risks and inequality. These systemic interlinkages are illustrated in Figure 1.1, which maps the multiple connections between SDG 11 targets and other SDGs. Conversely, dense urban development, when well aligned with sustainable mobility and energy-efficient buildings, can reduce emissions and energy costs, and support widely shared growth.
Note: The figure provides a conceptual overview of selected interlinkages between SDG 11 targets and other SDGs. It is illustrative rather than exhaustive and does not imply causal relationships or the magnitude of impacts.
Source: Adapted from OECD analysis.
Mobility and emissions: a growing challenge
Transport remains a major source of emissions. Across OECD countries, it represents 23% of greenhouse gas emissions, with road transport responsible for 88%. Despite growing interest in sustainable mobility, 73% of workers in functional urban areas commute by car, while only 20% use low-carbon alternatives such as walking, cycling, or public transport. Capital cities perform better, with 38% of commutes via sustainable modes, but car dependency remains dominant (OECD, 2024[38]) (OECD, 2021[60]). Globally, transport accounts for 23% of energy-related CO₂ emissions, and its share could rise to 40% by 2030.
Persistent car dependency reflects misaligned incentives and fragmented planning, where transport infrastructure, land-use decisions and pricing policies are developed separately. Recent OECD analysis highlights that car dependency is not primarily the result of individual travel preferences but of structural features of mobility systems that reinforce private vehicle use over time. Road expansion that induces additional traffic, spatial development patterns that increase travel distances, and the erosion of active and shared transport options interact to create reinforcing dynamics that lock systems into high levels of car use and emissions (OECD, 2021[60]). These feedbacks make private vehicles the most convenient option for many trips and limit the effectiveness of technological solutions alone, underscoring the need for system-level policies that reshape mobility demand and strengthen alternatives to driving, such as road space reallocation and the improvement and connection of active and shared transport modes (OECD, 2021[60]). Under current trends, emissions may increase by 60% by 2050, driven by surging demand for mobility as passenger transport is projected to more than double and freight demand to grow 2.6 times by mid-century. Meeting this challenge will require annual infrastructure investments of 1.6-1.7% of global GDP, alongside accelerated electrification and modal shifts toward public transport, cycling, and walking (ITF, 2023[61]) (ITF, 2024[62]). According to the IPCC, demand-side measures and behavioural changes – including modal shifts towards active and shared transport modes - could reduce global greenhouse-gas emissions by 40–70% by 2050, provided that supportive infrastructure, policies and social conditions enable shifts in consumption patterns and mobility behaviour (IPCC, 2022[63]).
Spatial inequalities and access gaps
Access to services and green spaces is uneven both within OECD countries and globally. In OECD functional urban areas, 76% of residents in urban centres can walk to a primary school or childcare facility within 15 minutes, compared to 36% in suburban areas. Moreover, one in four residents lacks access to green spaces within 400 metres of their home, and 36% of older adults cannot walk to a pharmacy, highlighting spatial inequalities in service provision (OECD, 2024[38]). Globally, disparities are even more pronounced, only half of the world’s urban population had convenient access to public transport in 2022. The share of green spaces in urban areas worldwide declined from 19.5% in 1990 to 13.9% in 2020, reducing natural resilience and quality of life (UN-Habitat, 2024[64]). OECD analysis also underscores that the allocation of urban space plays a central role in shaping mobility patterns. Historically, a large share of street space has been dedicated to traffic lanes and car parking, creating structural advantages for private vehicle use while limiting the competitiveness of public transport and active modes. Reallocating road and parking space toward wider pavements, cycling infrastructure and priority for public transport is identified as a high-leverage intervention to reduce car dependency and support more accessible, low-emission urban systems (OECD, 2021[60]).
These access gaps are not coincidental but reflect fragmented spatial, housing and transport policies, often compounded by informal development and affordability constraints. With 1.12 billion people living in slums or informal settlements, and up to 3 billion struggling to afford housing (UN-HABITAT/OECD, 2024[65]), there is an urgency for integrated urban strategies that prioritise accessibility, affordability, and environmental sustainability.
Bridging governance gaps and aligning incentives for sustainable urban development
Urban development intersects critically with energy and water systems, where land-use decisions at the local level directly influence climate exposure and resource demand (OECD, 2023[66]). For example, the "urban heat island" effect, where cities are significantly warmer than surrounding rural areas, drives rising demand for indoor cooling and intensifies energy use. This challenge opens opportunities for enhancing policy coherence, since building regulations, zoning rules and urban design standards can help cities to reduce emissions, manage water runoff and improve health outcomes at the same time.
Coherent infrastructure planning must also account for territorial interdependencies. Local actions can shift risks to neighbouring areas, such as building dykes or diverting water flows, as upstream flood protection can increase downstream exposure if not aligned with catchment-wide strategies. Co-ordinated urban planning is therefore essential to ensure that water, land use and climate adaptation decisions are mutually reinforcing across jurisdictions (OECD, 2023[66]).
Governance gaps and incentive misalignments often undermine local efforts to enhance sustainability (OECD, 2023[66]). Local decision makers may prioritise short-term economic returns, such as expanding sealed surfaces or accelerating real estate developments, over long-term resilience, especially when municipal revenues are tied to land conversion. In some cases, the expectation that national governments will fund post-disaster recovery reduces incentives for local investment in preventive infrastructure. National regulatory frameworks can also limit local innovation. For instance, public procurement frameworks in some countries continue to favour conventional grey infrastructure and short-term cost criteria, constraining municipalities’ ability to adopt nature-based solutions (NbS) and delaying the scaling up of green infrastructure (OECD, 2021[67]). Strengthening urban governance will therefore require realigning financial incentives, regulatory tools and accountability mechanisms to support place-based, forward-looking strategies.
The Global Partnership for Sustainable Development (SDG 17) as the driver of co-ordinated and coherent action
SDG 17 – Revitalise the Global Partnership for Sustainable Development – sits at the heart of the 2030 Agenda, providing the conditions that enable progress across all other goals. Its mechanisms – financing, science, technology and innovation (STI), trade, capacity building, policy coherence, partnerships, and data – form an integrated set of means of implementation. They will help determine whether countries can accelerate transitions in water, energy, industry and urban systems, which are deeply interconnected. As highlighted earlier in this chapter, energy choices influence water demand; industrial strategies shape urban growth; and all depend on coherent governance and predictable financing. SDG 17 is the structural anchor for integrated implementation, making systemic interlinkages explicit and actionable.
Global efforts, however, remain insufficient. Only a limited share of SDG 17 targets are on track, with several indicators – including domestic revenue mobilisation, debt sustainability, and statistical capacity – having deteriorated since 2015 (UNSD, 2024[68]) (United Nations, 2024[69]). Progress on technology transfer and data availability is uneven, leaving critical gaps in the infrastructure of global partnership. These gaps matter because they undermine the connective framework of the 2030 Agenda. Without robust financial flows, interoperable data systems and widely accessible technology diffusion, any sectoral gains will merely be isolated achievements as systemic resilience remains elusive. This section examines SDG 17 through the lens of its means of implementation, highlighting how each element interacts with others to shape coherent and integrated outcomes. It explores why weaknesses in these interlinkages remain a binding constraint on achieving the SDG under HLPF review in 2026 (6, 7, 9 and 11).
Domestic and external resources as coupled flows
Analysis shows that domestic resource mobilisation (DRM) and external finance can move together. Stable, predictable and efficient revenue systems – underpinned by broad tax bases, effective tax administration and compliance – strengthen fiscal credibility, lower risks and improve access to concessional and private capital, while external flows depend on countries’ capacity to co‑finance, implement and maintain public investment (OECD, 2025[11]) (UNSD, 2024[68]). At the same time, global financing needs have grown faster than available resources: financing needs increased by 36% between 2015 and 2022, compared with 22% rise in resources, placing the SDG financing gap on a trajectory to reach USD 6.4 trillion by 2030 in the absence of reforms (OECD, 2025[11]). These pressures are compounded by tighter global financial conditions, as governments refinance maturing debt at higher interest rates while facing raising investment needs for grid modernisation, water resilience and industrial retrofits (OECD, 2024[70]). In this context, fiscal capacity and policy coherence shape whether financing can be mobilised at scale through integrated investment programmes or remains fragmented across stand-alone projects with higher total system costs (OECD, 2025[11]).
The coherence challenge arises when decisions about fiscal policy, debt‑management and resource mobilisation are disconnected from integrated investment planning. In such contexts, budget cycles, debt operations and external finance pipelines tend to optimise within institutional and policy silos rather than at system level, raising delivery risks and increasing the overall cost of transition pathways.
Science, technology and innovation access
STI policy determines the pace and breadth with which solutions – grid balancing, industrial electrification, water reuse and digital planning – diffuse across sectors. It works best when direct R&D support, fiscal instruments and mission‑oriented programmes are paired with enabling framework policies and long‑term investment (OECD, 2025[71]). Even as international STI co‑operation and roadmaps connect domestic capabilities to global networks, uneven digital connectivity continues to constrain absorptive capacity in utilities, firms and municipalities (UNSD, 2024[68]). Where STI roll‑out is not synchronised with tariff reform, standards, procurement and skills, technologies land in misaligned regulatory environments, slowing uptake and limiting the system‑wide gains expected from integrated deployment (OECD, 2025[71]).
The coherence gap emerges because STI policies often evolve in isolation from pricing, procurement and regulatory frameworks, and without consistent links to financing constraints and skills strategies, producing deployment without integration, slower diffusion and missed scale economies across energy, water, industry and cities.
Trade openness and facilitation
Trade policy and facilitation directly shape the cost, timeliness and reliability of inputs critical to participation in international trade, with OECD monitoring pointing to steady facilitation progress but persistent implementation gaps and rising fragmentation risks (OECD, 2025[72]). OECD Trade Facilitation Indicators (TFIs) across 163 economies show advances in transparency and domestic border agency co‑operation, but continued challenges in automation of documents and processes, appeal systems and cross‑border agency co‑operation. These shortfalls raise trade costs and delivery uncertainty for stakeholders across the entirety of supply chains (OECD, 2025[72]). On the services side, the Services Trade Restrictiveness Index finds regulatory barriers remained high in 2025, and new restrictions outweighed the effect of liberalisation across many of the 22 sectors tracked in 51 countries; restrictions in digital trade, cross‑border data and telecommunications constrain the installation, operation and maintenance arrangements that underpin clean‑tech deployment and water‑smart industrial retrofits (OECD, 2026[73]). Ambitious services reforms could save up to USD 1.6 trillion in trade costs annually. Such savings highlight the efficiency gains than can be achieved by reducing frictions that slow diffusion of enabling services and technologies (OECD, 2026[73])).
Macro conditions compound these frictions. The latest OECD outlook links higher tariffs and policy uncertainty to softer global trade and investment, with global GDP growth projected around 2.9% in 2025 if mid‑year tariff settings persist, thereby raising financing costs and delaying integrated projects (OECD, 2025[74]). In parallel, the SDG financing gap continues to widen (OECD, 2025[11]). Aligning Aid for Trade (USD 51.1 billion in 2022) with trade facilitation priorities (automation tools, risk management systems, inter-agency co‑operation), as well as with services market opening, can improve procurement reliability and bankability across sectors (OECD/WTO, 2024[75]) (OECD, 2025[72]).
Coherence challenges arise when trade reforms and sectoral strategies do not converge. Misalignments between customs procedures, data and licensing regimes, and infrastructure timelines, creates delays and inefficiencies. Aid for Trade and infrastructure finance are also often disconnected from services market reforms and trade facilitation reforms, creating regulatory and delivery frictions. These gaps persist even as countries face macroeconomic headwinds and the widening financing gap demand tighter policy integration (OECD, 2025[72]) (OECD, 2025[76]) (OECD, 2025[11]).
Strengthening coherence through partnerships and governance frameworks
As the SDG dedicated to means of implementation, SDG 17 plays a central role in enabling integrated action across the 2030 Agenda. Beyond finance, trade and technology, it explicitly recognises policy coherence and partnerships as core mechanisms for delivering results across sectors and levels of government.
PCSD provides a practical framework for operationalising this role by helping governments strengthening existing mechanisms to manage cross‑sectoral interactions and align long‑term objectives with day‑to‑day decision making. By connecting long‑term strategic visions, budget structures, sectoral mandates and multi‑level governance arrangements, PCSD helps ensure that actions taken in one policy domain do not undermine outcomes in others (OECD, 2021[77]). The updated global methodology for SDG indicator 17.14.1 on PCSD further reinforces this role, demonstrating that coherence can be assessed, monitored and compared across countries through a common framework spanning political commitment, co-ordination mechanisms and financing for coherence (UNEP, 2025[78]).
Recent reporting under SDG indicator 17.14.1 shows that institutional mechanisms to support PCSD are now widely in place, but often remain only partially developed. While political commitment and long‑term vision are relatively advanced, implementation gaps persist in areas such as whole‑of‑government co-ordination, stakeholder engagement and impact assessment. This underscores the importance of strengthening partnerships and governance arrangements as part of SDG 17’s means of implementation.
Partnerships extend this architecture by translating coherence frameworks into collective action. Muti-stakeholder partnerships bring together governments, subnational authorities, the private sector and civil society around shared priorities, enabling integrated investment pathways (UNSD, 2024[68]) and joint problem‑solving that no single actor can deliver alone. In this sense, partnerships function as delivery vehicles for SDG 17, linking policy coherence with implementation on the ground.
Where these mechanisms are weak, a coherence gap emerges. Institutional arrangements often continue to reward siloed delivery with co-ordination bodies lacking authority, budget frameworks failing to incentivise joint outcomes, and partial vertical alignment allowing sectoral decisions to undercut integrated trajectories. These shortcomings limit the effectiveness of partnerships and weaken accountability for cross‑cutting results.
Addressing this gap requires strengthening the governance foundations that underpin SDG 17. Clear mandates, aligned incentives and shared accountability frameworks are essential to ensure that partnerships reinforce, rather than fragment, policy action. Robust impact assessment, international dialogue and, where appropriate, support for partner countries affected by major policy shifts are also critical to managing cross‑border effects and sustaining trust. These governance conditions are examined in more detail in Chapter 3, which focuses on how governments can embed coherence systematically across institutions and policy processes.
Data and measurement feedback loops
Data under SDG 17 supply feedback loops for adaptive governance, allowing for baseline assessments for integrated measurement, and midpoint reviews showing persistent gaps in statistical capacity and indicator coverage despite improvements in connectivity (UNSD, 2024[68]). Interoperable systems are necessary to observe cross-resource dynamics – load curves, water flows, industrial processes and urban demand – so that sequencing and resource allocation can adjust in real time; where these systems are absent, interlinkages are invisible and policy responses risk reinforcing fragmentation (UNSD, 2024[68]).
The coherence weakness lies in fragmented statistical systems that cannot provide integrated solutions for adaptive governance. Under‑financed and disconnected data infrastructures limit interoperability across ministries and levels of government, constraining adjustments to tariffs, investment phasing and regulatory design across water, energy, industry and cities.
Systemic risks from coherence gaps
When these mechanisms are weak, gaps in coherence amplify systemic risks and undermine progress across SDGs. Weak connections across SDG 17’s means of implementation – finance, trade, STI, policy coherence, partnerships and data – remain the main constraint on accelerating progress in water (SDG 6), energy (SDG 7), industry and infrastructure (SDG 9) and sustainable cities (SDG 11). Financing needs are rising faster than resources, while debt pressures make multi‑sector investment harder to sequence. Trade facilitation gains coexist with regulatory barriers that slow delivery of clean technologies, while higher tariffs and policy uncertainty add cost and risk to integrated programmes. STI diffusion is uneven where deployment is not aligned with pricing and procurement, and data gaps mean governments cannot see or manage cross‑system dynamics. Closing these gaps is essential to achieve efficiency (lower system costs and avoided lock‑ins), resilience (adaptive capability aftershocks) and inclusion (fair access to benefits) across the SDGs.
By contrast, when finance, trade, STI, policy coherence and data operate as a connected system, integrated programmes in cities and industrial regions deliver more predictable outcomes at lower risk and cost.
Water, energy, industry and cities are deeply connected. Yet major gaps in policies, incentives and governance still pull these systems in different directions. These incoherences create higher costs, weaken resilience and slow progress on SDGs 6, 7, 9, 11 and 17. The following are five major areas of incoherence.
Water-energy-industry pressures reinforcing one another
Energy production already uses around 15% of global freshwater withdrawals, yet new clean‑energy technologies such as green hydrogen, desalination and thermal cooling are being planned in water‑stressed regions. Water systems depend heavily on energy for pumping and treatment, increasing operating costs as climate shocks intensify. The rapid expansion of digital infrastructure adds new pressure. AI‑related water withdrawals could reach 4.4-6.6 billion m³ by 2027.
Uncoordinated urban development drives higher emissions and water risks
Many cities expand without aligning housing, land use, transport and water planning. This fuels sprawl, higher car use and greater exposure to floods and heat. Only about half of urban residents worldwide have convenient access to public transport, and around 1.1 billion people live in slums or informal settlements, where water and sanitation services are weakest. Urban green space continues to shrink, from 19.5% in 1990 to 13.9% in 2020, reducing cities’ ability to manage heat and stormwater.
Industrial and digital transitions are not aligned with sustainability goals
Heavy industries still produce more than 30% of global CO₂ emissions. Without tighter links to clean energy and circular‑economy policies, industrial support can lock in carbon‑ and resource‑intensive pathways. Digitalisation brings both opportunities and risks. While it can improve efficiency, data centres and AI systems significantly increase energy and water demand, yet often remain outside core environmental planning.
Finance and regulation remain siloed, blocking integrated solutions
Many regulatory and budgeting systems still evaluate projects sector by sector, overlooking benefits that cut across systems, such as combining water reuse with energy recovery. Global investment is not keeping pace with needs. In emerging and developing economies, clean‑energy investment must triple to USD 2.2-2.8 trillion annually, while ODA fell by 6.1% in 2024 and by a further 23.1% in 2025, with additional declines projected in 2026 (OECD, 2026[9]). These gaps limit countries’ ability to build pipelines of integrated, cost‑effective projects.
Cross‑border spillovers that weaken domestic policy outcomes
Climate policy remains uneven. Only 42% of global emissions face any carbon price, and effective carbon rates in road transport are more than four times higher than in industry and buildings, on average. Cross‑border impacts, such as carbon leakage, supply‑chain risks, and uneven due‑diligence requirements can weaken competitiveness and push compliance costs onto suppliers with limited capacity. The SDG financing gap of about USD 4 trillion per year and debt service of USD 1.4 trillion in 2023 limit the ability of many countries to manage these spillovers or invest in long‑term solutions.
Addressing these incoherences will enable countries to replace fragmented, sector‑by‑sector responses with integrated solutions that deliver efficiency gains, build resilience and advance inclusion across SDGs 6, 7, 9, 11 and 17.
This chapter has shown that the coherence gap is not a marginal issue but a systemic constraint on SDG delivery. Fragmented responses amplify costs, lock in unsustainable pathways and erode trust; while integrated approaches unlock synergies across water, energy, industry and cities, reduce systemic risks and strengthen resilience. Coherence requires anticipating interactions and aligning decisions across these domains.
Water security depends on energy choices and land-use planning; clean energy transitions shape industrial competitiveness and material demand; and urban development influences resource flows, emissions and exposure to climate risks. At the same time, domestic strategies cannot succeed in isolation. Global partnerships, interoperable standards and financing mechanisms are essential to manage transboundary spillovers, mobilise resources and accelerate technology diffusion. Without these elements, progress in one area will continue to undermine outcomes in another, slowing the 2030 Agenda and increasing vulnerability to shocks.
Building on this diagnostic, Chapter 2 moves from principle to practice. It sets out how integrated policy packages across water, energy, industry and cities can operationalise coherence (Section 2.1), how to make trade‑offs visible and governable (Section 2.2), and how to integrate transboundary impacts into day‑to‑day policy design (Section 2.3).
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