- Firm
- Provisional
- Coming soon
- Revised
- Firm
- Provisional
- Coming soon
- Revised
How well are we doing?
Editor's note: We have recently refreshed and updated our data for all countries on the platform, as we revised the 21 policies we cover.
Governments can influence the economy in lots of different ways, but two types of policy are particularly important: fiscal policies, which govern taxes and government spending, and monetary policies, which set interest rates and manage inflation. Green Fiscal and Monetary Policy, therefore, is crucial for creating a greener economy.
Most countries covered by the tracker have performed average in developing an integrated and comprehensive approach to greening their fiscal and monetary policies, with some higher scores suggesting a positive but not outstanding performance.
Though not achieving our highest level of ambition, a large and diverse group made up of countries like Bangladesh, the United Kingdom, Japan, Mexico and New Zealand are showing significant progress. In 2023, Japan advanced the greening of its fiscal and monetary policy through its Green Transformation (GX) policy, issuing the world’s first sovereign climate transition bonds. It has also implemented new carbon pricing mechanisms, maintains a strong green finance regulatory framework, and conducted a pilot scenario analysis exercise on climate-related risks with major financial institutions in 2022.
Countries like Mexico have made notable progress with the completion of its Sustainable Finance Strategy in 2023, as well as its first Sustainable Finance Taxonomy that same year. However, environmentally harmful subsidies (particularly fossil fuel support) remain largely untouched.
In contrast, Ethiopia has taken no substantive policy action in this area, with formal fiscal or monetary reforms targeting environmental financial risks, sovereign green bond issuance, mandated climate risk stress testing, and a green taxation framework yet to be established.
We must again invest in the development, manufacturing, deployment, and distribution of energy - but this time green energy.
About this policy
For greening fiscal and monetary policy, the first step is to ensure that existing policies are not actively encouraging unsustainable economic activity – for example, government subsidies for fossil fuels. Beyond this, specifically “green” policies, such as pollution taxes or government investment in electric vehicles, can support businesses, investments and innovation along sustainable lines. The right governance structures for reviewing policies and recommending changes can be as important as the policies themselves.
The potential of fiscal and monetary policies for supporting a green economy are considerable. As always however, different national contexts means there are few silver bullets. Generally, the best approaches will involve commissioning systemic reviews of existing policy, independently monitored, with comprehensive reforms recommended across all sectors; this is the “green new deal” approach. Weaker approaches might have less stringent governance, or focus on just public procurement or certain kinds of monetary tools, such as green bonds. The worst-performing governments have not yet attempted to reconcile fiscal and monetary policy with green economy objectives, and often have existing policies that contradict green objectives.
Case Study: India
India’s innovative Perform, Achieve, Trade (PAT) scheme encourages energy intensive sectors like cement, steel and iron to become more efficient through a trading scheme, and is being expanded to include electricity distribution and railways. On the monetary side, the Reserve Bank of India’s Priority Sector Lending Programme (PSL) has deployed credit guidance to boost green investment in vulnerable sectors such as agriculture, infrastructure, education and MSMEs. Loans for energy projects and social infrastructure have been added to RBI’s priorities, though many banks continue to under-deliver credit.
India Country Profile