Green Budgeting in the EU How to Align the Various Green Workstreams for a Coherent Approach and Improved Policy Making?

Numerous workstreams have been developed to foster more climate- and environmentally friendly public and private financial management systems. They include green budgeting at national level, meaning using the tools of budgetary policymaking to help achieve climate and environmental goals, green mainstreaming of the EU budget, climate tracking under the various EU funding programmes, minimum spending requirements contributing to climate objectives, including in the recovery and resilience plans, the EU Taxonomy for sustainable finance, the ‘Do No Significant Harm’ principle, a methodology to identify environmentally harmful subsidies, and green bond standards. Since these workstreams and the related tools are rooted in policy commitments taken in different contexts and times, harmonising, integrating and mutually reinforcing their implementation, where appropriate, would help guide policy makers. This paper takes stock of workstreams and associated tools and investigates existing and potential links between them, as well as challenges in creating such links. It also presents good practices from Member States. For green budgeting, the paper suggests that there is no single “optimal” combination of tools, but that practices need to be tailored to the national context. Close cooperation between the ministries and departments involved, transparency, and a stepwise approach are crucial to ensuring coherence between various green workstreams to strengthen their effectiveness and raise the efficiency of their application.