Most finance ministries are concerned about the physical impacts of climate change, and the implications of the transition away from fossil fuels, according to the results of a major survey published today (9 June 2025) by the Coalition of Finance Ministers for Climate Action.
However, finance ministries are finding it difficult to incorporate climate change into their economic analyses, and face many challenges in taking it into account in their decision-making.
The survey was requested by the Finance Ministry of Denmark on behalf of the Coalition, and carried out last year by one of its Institutional Partners, the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science. Responses to questions were received from the finance ministries of 26 advanced economies and 33 emerging market and developing economies around the world, including nine members of the G20.
Of 45 finance ministries that rated their concerns on a scale of 1 to 5, where 1 is “not concerned at all” and 5 is “extremely concerned”, about the impact of physical climate change on key macroeconomics indicators, 71 per cent gave a score of 4 or 5 for Government expenditure. A score of 4 or 5 for concern about the impacts on GDP was also recorded by 58 per cent of respondents. A markedly higher proportion of finance ministries of emerging market and developing economies were concerned than their counterparts in advanced economies.
The survey also found that, of 44 finance ministries that responded about the impact of national transition risks on key macroeconomic indicators, 70 per cent ranked their concerns as 4 or 5 for government expenditure, with ministries in advanced economies more concerned than their counterparts in emerging market and developing economies. Concerns about GDP were also ranked as 4 or 5 by 61 per cent of respondents, with ministries in emerging market and developing economies more concerned, and 59 per cent of all ministries ranked their concerns as 4 or 5 about government revenue.
According to the survey, most finance ministries are currently engaging with climate-related polices. Of 46 respondents, 65 per cent indicated that they were involved in shaping climate and development strategies, while 59 per cent were engaged with the mobilisation of funding, and 57 per cent were working on green fiscal subsidies.
Of 57 respondents, 25 per cent indicated that the finance ministry is leading on economic analyses to assess the impacts of policies aimed at creating green economic opportunities, while a further 39 per cent are supporting other government departments to carry out such analyses.
Overall, 89 per cent of 56 finance ministries that responded stated that climate change is a core economic issue, with almost a third (32 per cent) indicating that it is central to their mandate.
However, when asked about the extent to which they have integrated physical climate considerations/adaptation into their core analytical functions, only 35 per cent of 37 finance ministries that responded indicated that they had wholly or partially done so for budget projections, while 27 per cent had done so for macroeconomic forecasting and 24 per cent for tax and fiscal policy.
When asked about the extent to which they had integrated decarbonisation/mitigation considerations into core analytical functions, only 29 per cent of 38 finance ministries that responded indicated that they had wholly or partially done so for budget projections, and 29 per cent had done so for tax and fiscal policy, while 26 per cent had done so for macroeconomic forecasting.
Of 50 finance ministries, 82 per cent reported that staffing and skill constraints were barriers to them incorporating climate-related issues into economic analysis and modelling approaches. Data challenges were also cited as a barrier by 78 per cent of respondents.
The results of the survey are informing a series of reports by the Coalition on ‘Economic Analysis for Green and Resilient Transitions Initiative’, which will be launched at an event in June in Copenhagen. The initiative will support peer learning among members of the Coalition and help them to build the tools and capacity needed to lead on green and resilient economic policy.
Commenting on the survey results, Nicolai Wammen, Denmark’s Minister for Finance, said: “This survey makes clear that most finance ministries around the world recognise the growing importance of climate change impacts and policies for the economy. Climate change is not just an environmental concern. It is a fundamental economic challenge, and finance ministers have a central role to play in steering their economies toward greener, more resilient, and more inclusive growth.
Encouragingly, a number of finance ministries are already leading the way, developing and applying new approaches that support this transition. I am proud that we can showcase these examples of leadership through the Coalition of Finance Ministers for Climate Action.”
Matia Kasaija, Minister of Finance, Planning and Economic Development in Uganda, a Co-Chair of the Coalition, said: “We conducted the most comprehensive climate survey of finance ministries worldwide to date. The message is clear: ministries are engaged and aware, but many still lack the tools, capacity, and support needed to tackle climate risks and build lasting resilience. The Coalition is working to close this gap, especially in Africa, by supporting countries to strengthen their analytical capacity, access better tools, and integrate climate risk and adaptation measures into core economic planning and policy.”
Speaking on behalf of the other Co-Chair of the Coalition, Jasper Wesseling, Vice-Minister of Finance in the Netherlands, said: “Through the Coalition’s work, we are advancing our collective understanding of the analytical tools and models that provide a critical foundation for designing informed, effective policy responses. By helping equip finance ministries with these capabilities, we can better address physical climate risks, safeguard long-term economic stability and protect public finances.”
Nicholas Stern, Chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science and author of ‘The Economics of Climate Change: The Stern Review’, said: “This survey shows that finance ministries have a growing understanding of the many ways in which climate change is creating economic risks and opportunities. It is vitally important that researchers develop new and better methods and models to help finance ministries understand and analyse how climate change is affecting the global economy, and the opportunities for growth and development that lie in investing in climate action.”
Read the survey.
The media talks about us:
Business Green article.
Carbon Pulse article.
London School of Economics article.
action in this area. The World Bank also presented the work of the Institute for Economic Development, which proved relevant for capacity-building efforts. The informal setting allowed for rich, candid exchange among peers and helped strengthen connections across the Coalition.