The 5^th webinar, titled "How can green budgeting support the emission of green bonds?", featured as speakers Camila Vammalle, Senior Policy Analyst, Public Management and Budgeting Division, OECD, moderating the event, joined by María del Carmen Bonilla Rodríguez Head of the Public Credit and International Affairs Unit, Ministry of Finance, Mexico, María Paz Gutierrez, Head of the Sustainable Finance Office, Ministry of Finance of Chile, and Victoire Corre Responsible for Sustainable Finance, French Treasury.

The webinar underscored the crucial role of green budgeting and green bonds in aligning public financial policies with sustainability goals. Panelists shared experiences and practices from their countries (Mexico, Chile and France), providing insights into the challenges and opportunities in this field.

Camila Vammalle opened the webinar by introducing the concept of green budgeting and its significance in supporting the issuance of green bonds. She emphasized the integration of environmental, social, and governance (ESG) policies into budgetary processes to align public finances with environmental and climate objectives. She presented the results of a recent OECD survey on green budgeting practices and discussed four specific tools: i) green budget tagging (identifying green expenditures in the budget); ii) estimating the fiscal impact of climate change (assessing the costs associated with climate change adaptation and mitigation); iii) fiscal risk analysis (integrating climate risks into fiscal risk analysis, monitoring risks associated with environmental issues and managing them via contingency reserves or reserve funds) and  iv) natural capital accounting (calculating the economic value of natural resources).

María del Carmen Bonilla Rodríguez (Mexico) explained then Mexico's strategy for mobilizing sustainable finance, including the issuance of SDG bonds and developing public-private partnerships. She highlighted Mexico's efforts to link budgetary programs to Sustainable Development Goals (SDGs) and develop an ESG taxonomy to support green bond issuance. She finally discussed the development of sustainable yield curves since 2020.

María Paz Gutierrez (Chile) described the collaboration with the UNDP to identify public spending related to climate change. She emphasized the importance of measuring public spending on climate change to identify financial gaps. She then addressed the challenges in categorizing climate change initiatives due to budget complexity, using data mining techniques on specific budget databases.

Victoire Corre (France) presented France's green bond framework, focusing on transparency, accountability, and detailed reporting. After highlighting France's integrated approach combining green budgeting with green bond issuance to enhance environmental commitments, Victoire discussed how green budgeting fosters collaboration among ministries, public agencies, and local stakeholders.

In the Q&A session the panelists addressed various topics, including: preventing negative spillovers from expenditures financed through thematic bonds, the benefits of issuing SDG bonds through green budgeting and improving coordination among ministries and public agencies to maximize sustainability policies' impact.

Key Takeaways:

This webinar examined how green budgeting can support the issuance of green bonds. It highlighted the importance of transparency, accountability, and collaboration among line ministries and relevant stakeholders in enhancing the credibility and effectiveness of environmental commitments through financial instruments.