Abstract

Climate budgeting mainstreams climate considerations into a city’s governance system. A climate budget establishes a city’s short-term targets and actions to deliver the long-term targets of the city’s climate action plan (CAP) or equivalent planning document.

In climate budgeting, as part of the financial budgeting process and in line with the budgetary cycle, the city proposes, adopts, implements, monitors and reports on climate measures to meet short-term targets. Updating the city’s budgetary documents and processes (budget instructions, guidance, template and other related documentation, as well as formal and informal dialogue) is a critical step in integrating climate budgeting into the ordinary budget process. This is usually the responsibility of the city’s chief financial officer (CFO) and the finance team, supported by the team leading the city’s climate action planning, with input from all other departments. 

This article looks at how to redesign these documents and processes for effective climate budgeting.

At a glance:

• Map the city’s budget process and relevant budgetary documents, as well as other formal and informal processes for budgetary development that may need revising. Explore whether you need legislative approval to change them, and any tools your city already uses to integrate new considerations.
• Ideally, the finance department should lead climate budgeting, supported by the team responsible for the city’s climate action planning and with input from all other departments.
• Redesign, test and continually improve based on learnings, especially in the beginning. Keep it simple and use indicators and language that departments will understand.
• Engage with departments to develop climate budgeting with them.
• Ideally, present the climate budget as its own chapter and also integrate actions into the relevant sectoral budget chapters.