Coordinating the net zero transition: a practical framework for policymakers

Jurisdictions around the world have already developed and implemented policies to transition to a net zero economy. To maximise the impact and effectiveness of such policies a coordinated policy approach is necessary.

To guide policymakers as they face the challenge of taking financial and economic policy decisions for the transition, this report develops a design approach based on ‘building blocks’. The approach can be adjusted in the context of the specific needs of the financial sector in the transition. It incorporates building blocks to better enable the design, implementation and evaluation of financial and economic public policy that supports the integration of climate change and environmental factors, with a particular emphasis on the intricate interrelationship between economic and financial systems, the roles of key economic and financial stakeholders and enabling improved coordination.

The authors define three main building blocks, described in Figure 1: 1) foundations; 2) adjusting policies; and 3) evaluation and anticipation.

Figure 1. Three building blocks for effective economic and financial policymaking that facilitates the net zero transition

The report is intended for use by policymakers engaged in the design, implementation and evaluation of policies aimed at achieving a sustainable, net zero economy. It is particularly relevant for government agencies, including Ministries of Finance, central banks and regulators, but is also valuable for international organisations and financial institutions.

The approach is relevant both for jurisdictions that are in the initial stages of implementing transition-related policies, and those already further along the path. The former will find guidance on how to start designing and implementing comprehensive policies to support the transition. The latter might make use of the framework to evaluate their progress and refine their approach to design complementary policies.