Bridging the Gaps for Sustainable Development

4. A Policy Coherence Agenda for Transformative Action

Abstract

Countries face rising complexity and tightening constraints as the 2030 SDG target date nears. This chapter presents a forward-looking priority agenda to help governments strengthen policy coherence for water, energy, industry, and sustainable cities. Supported by partnerships that enable co-ordinated responses, these strategic pillars help policymakers anticipate interlinkages, manage trade-offs fairly and address transboundary impacts. The agenda provides a roadmap for whole-of-government and whole-of-society approaches that can accelerate progress to better meet 2030 objectives, while establishing governance systems for more resilient and sustainable development for decades to come.

Five strategic pillars for action

With less than four years left to achieve the 2030 Agenda, governments face tighter fiscal space, mounting climate pressures and rapidly evolving technological and geopolitical contexts. These challenges underscore the need for governance systems capable of working across traditional boundaries, anticipating cross‑border risks, and responding to interlinkages between water, energy, industry and cities.

These pressures underscore the need for governance capabilities that improve the quality of decision making, connect long-term strategies with day-to-day implementation and strengthen transparency and accountability. Although countries are modernising budgeting, regulation and public management practices, there remain gaps between ambition and implementation and challenges in ensuring that policy measures reinforce one another.

The five strategic pillars presented in this chapter can help enable governments to strengthen coherence and respond to the interconnected nature of sustainable development. The recommendations build on OECD analysis and country experience, offering feasible pathways to scale up efforts in a time of uncertainty and accelerating change.

1. Embed coherence in everyday government decisions

Governments increasingly operate in systems where policy decisions about water, energy, industry and cities influence one another in ways that are often overlooked in sector‑specific approaches. Embedding coherence into routine decision making supports more predictable trajectories, reduces contradictory measures and strengthens the capacity to anticipate trade‑offs to minimise costs. This pillar focuses on the mechanisms that bring cross‑sectoral considerations into daily practice of designing and implementing policies, budgets and regulations. Key recommendations include:

• Integrate cross‑sector and cross‑border analysis into major strategies, legislative proposals and investment plans. This helps policymakers identify how actions in one domain may affect water security, energy transitions, industrial competitiveness or urban resilience, enabling earlier adjustments that reduce long‑term costs. Strengthening this analysis accelerates progress on SDGs 6, 7, 9 and 11 by making interdependencies visible at the outset.

• Use National Urban Policies (NUPs) to leverage the strong synergies with multiple SDGs to ensure that urban policies take a cross-sectoral approach and promote coherence among policy areas. Such NUPs should promote the integration of sectoral policies, such as housing, transport, digitalisation and smart city initiatives, among others, by: establishing shared vision and goals; providing institutional co-ordination mechanisms; aligning funding and investment strategies; and enabling data sharing. Duplication of strategies, programmes and actions leads to inefficiencies in the use of resources and unintended negative consequences. Urban policy integration can enhance complementary effects and coherence across the urban policy system through strategic use of policy planning tools (e.g. the budget process and public procurement).

• Require decision makers to document potential benefits, risks, distributional effects and proposed mitigation options before proposals advance to political approval. Exploring distributional effects supports fairer and more durable transitions, particularly in areas such as water pricing, energy affordability and land use. By clarifying who is affected and how, governments can sustain political support for reforms critical to SDGs 6, 7 and 11.

• Introduce budget alignment tests to assess consistency with long‑term sustainability and resilience goals. Alignment tests help avoid financing measures that inadvertently undermine clean energy transitions, water resilience or urban sustainability. They reinforce SDG 17 by improving co-ordination across financial and sectoral ministries.

• Use proportionate approaches to strengthen regulatory impact assessment to include long‑term, environmental, social and transboundary effects. Proportionate methods help ensure that water, energy, urban and industrial proposals receive appropriate scrutiny without creating unnecessary administrative burden. This promotes progress on SDGs 6, 7 and 11 by reducing risks of harmful lock-in effects.

• Use public procurement strategically to support resilience, resource efficiency and the circular economy. Aligning procurement with climate and resource goals can shift markets toward cleaner technologies and more efficient infrastructure solutions. This directly accelerates SDGs 9 and 11 while easing pressures on water and energy systems (SDGs 6 and 7).

2. Strengthen institutions that manage trade‑offs and sustain long‑term direction

Enhancing policy coherence requires institutions that can navigate competing demands and maintain objectives across political cycles. Many of the critical decisions for sustainable development, from energy systems and water allocation to urban development and industrial pathways, involve trade‑offs that cannot be managed through information-sharing alone. This pillar addresses the institutional capabilities needed to arbitrate trade‑offs, co-ordinate across levels of government and ensure continuity in long‑term transition strategies. Key recommendations include:

• Reinforce the role of centres of government in ensuring alignment across sectors. This enables governments to reconcile competing objectives in water, energy, industry and cities through consistent oversight. Strengthening this function supports SDG 17 by improving whole‑of‑government co-ordination.

• Enable centres of government to convene co-ordination or resolution discussions when ministries hold conflicting positions. Structured mechanisms for managing divergence help prevent delays and encourage integrated planning in areas essential to SDGs 6, 7, 9 and 11.

• Anchor strategic plans in medium‑term expenditure frameworks and scheduled reviews. Doing so protects investments in water infrastructure, clean energy and sustainable cities from short‑term shifts in priorities. This strengthens progress on SDGs 6, 7 and 11 by providing greater policy and financing certainty.

• Establish vertical co-ordination mechanisms linking national objectives with subnational implementation. Effective implementation in cities, regions and water basins depends on clarity and alignment across levels of government. Voluntary national and local reviews (VNRs and VLRs) can serve as structured vehicles for fostering this vertical co-ordination: when linked to one another, they facilitate multi-level dialogue, support lesson learning, create shared ownership of the SDGs, and provide channels through which local governments, civil society and the private sector can contribute to monitoring and evaluation. Improved vertical coherence accelerates progress on SDG 11 and supports SDGs 6 and 7 by reducing inconsistencies between local service delivery and national goals.

• Clarify mandates, financing roles and delivery responsibilities across government levels. Clear roles help reduce duplication, close capacity gaps and ensure coherent delivery of integrated solutions. This contributes to consistent progress across SDGs 6, 7, 9 and 11.

• Link coherence assessments and implementation progress to performance dialogues. Embedding coherence into performance monitoring supports accountability for cross‑sector results and strengthens SDG 17 by reinforcing shared responsibility.

3. Mobilise investment and innovation for system‑wide transformation

Meeting the scale of transitions required in energy systems, water management, industrial processes and urban development will require investment strategies that work across sectors, supported by innovation ecosystems that can accelerate the diffusion of solutions. Transformative change depends on mobilising finance at scale and aligning innovation with sustainability objectives. Key recommendations include:

• Strengthen financing frameworks using blended finance, risk-sharing instruments and targeted guarantees that are applied transparently and based on value-for-money principles. Such approaches help address barriers that limit investment in water resilience, clean energy, industrial decarbonisation and sustainable urban infrastructure. Strengthening investment conditions supports SDGs 6, 7, 9 and 11.

• Establish integrated project preparation facilities. Well‑designed, cross‑sector project pipelines increase bankability, support project design with an integrated perspective on impacts and risks, and reduce delays in implementation. This directly accelerates integrated action across SDGs 6, 7, 9 and 11.

• Leverage city-to-city partnerships and decentralised development co-operation to unlock access to financial resources for sustainable development. City-to-city partnerships can help catalyse financial flows for sustainable development by enhancing subnational financing capacity and expertise, improving access to funding and financial planning, promoting local economic development to expand the tax base and strengthening local governance, thereby creating a conducive investment environment.

• Improve the reliability and comparability of sustainability disclosures to support informed investment decisions. Better data reinforces investor confidence and channels finance toward climate-resilient and resource-efficient technologies, advancing SDGs 7, 9 and 11.

• Link innovation funding to regulation, skills and procurement frameworks. Aligning these levers ensures that technological progress supports sustainable and resilient transitions rather than creating new risks. This is particularly relevant for SDGs 7, 9 and 11.

• Improve measurement and transparency of the environmental footprint of digital and AI systems. Better understanding of resource implications helps guide responsible digitalisation and prevents added stress on water and energy systems, supporting SDGs 6 and 7.

• Expand the use of real-time and interoperable data platforms for adaptive planning. Enhanced data integration strengthens the ability to respond to emerging pressures in water management, energy systems and cities, supporting SDGs 6, 7 and 11.

4. Address impacts and global spillovers

System‑wide transitions inevitably generate uneven impacts across households, workers, firms and regions, and may create cross‑border spillovers. Addressing these impacts directly can enhance fairness, maintain political support and prevent unintended consequences in partner countries. Key recommendations include:

• Conduct assessments for reforms in pricing, land use and industrial transition. Understanding who is affected enables governments to design fairer policies for water, energy and urban reforms. This strengthens SDG 11’s focus on resilient and equitable communities and reduces resistance to changes necessary for SDGs 6 and 7.

• Design proportionate compliance pathways for sustainability and due-diligence requirements. Tailored pathways help small firms and suppliers participate in sustainable value chains. This strengthens SDG 9 and SDG 17 by making global supply chains more resilient and broadly accessible.

• Provide technical assistance, supplier development support and access to sustainable finance. Supporting firms in meeting environmental and social standards helps reduce bottlenecks in sustainable procurement and investment. This advances SDGs 9 and 17 while indirectly supporting SDGs 6 and 7.

• Assess transboundary impacts of domestic policies and integrate findings into design. Such assessments help avoid unintended harm to ecosystems, markets or communities abroad. This strengthens SDG 17 and ensures domestic actions align with global goals across SDGs 6, 7, 9 and 11.

• Engage partner countries where domestic measures risk cross‑border impacts. Dialogue builds trust and supports coherent regional and global transitions. This reinforces SDG 17 and smooths the implementation of measures relevant to SDGs 6, 7 and 9.

5. Build adaptive and future‑ready governance systems

As climate and technological disruptions intensify, governance systems must be equipped to anticipate uncertainty, learn from experience and adjust course. Anticipatory governance supports both immediate SDG delivery and the long‑term resilience needed for transitions beyond 2030. Key recommendations include:

• Institutionalise scenario analysis across planning, budgeting and regulation. Scenario testing helps ensure infrastructure and policy choices remain viable under shifting conditions. This supports resilience in SDGs 6, 7 and 11.

• Embed coherence tools in budget cycles, procurement and regulatory design. Integrating coherence checks at the right stages ensures decisions consider long‑term sustainability and cross‑sector interactions. This advances SDGs 6, 7, 9 and 11.

• Conduct ex‑post evaluations to adjust course and strengthen learning. Regular review allows governments to correct misalignments in areas such as energy planning, water allocation and land use. This improves performance across all SDGs under review.

• Strengthen multi‑stakeholder engagement. Engaging youth, Indigenous peoples, cities, civil society and businesses supports inclusion and shared ownership of transitions. This directly advances SDGs 11 and 17.

• Invest in workforce capabilities and integrated data systems. Better analytical, digital and collaborative skills help public administrations navigate complex transitions. This strengthens SDG 17 and enhances cross‑sector delivery of SDGs 6, 7, 9 and 11.

• Reinforce international mechanisms for coherence. Shared indicators and co-operation platforms support more consistent approaches to transboundary impacts and sustainable financing. This strengthens SDG 17 while supporting aligned action on SDGs 6, 7, 9 and 11.