Component 1
Institutional arrangements and expertise
Countries have various options for institutionalizing climate investment planning.
The institutional configurations and setups adopted for the development, coordination, and execution of climate investment plans can promote efficiency and accountability and foster whole-of-government collaboration and public-private partnerships.
Steps
- Step 1Map out public entities linked to investment planning; include their mandates, roles, and existing institutional arrangements
- Step 2Analyse and address institutional arrangements and expertise gaps
- Step 3Designate a coordination role or system for climate investment planning and identify actions to formalize roles
Step 1
Map out public entities linked to investment planning; include their mandates, roles, and existing institutional arrangements
Public-sector entities should be mapped so that decision-makers can identify all key institutions involved in planning, delivering, and monitoring investments in the country. Institutions may include the agency responsible for NDC coordination; line ministries in sectors relevant to NDC targets (e.g., energy and transport); ministries responsible for national budgeting and planning, such as ministries of finance and planning; and national development banks. It is crucial to ensure that institutions with expertise in gender, youth, and social inclusion are also part of this process in order to incorporate diverse perspectives, account for broader societal concerns, and enact just transition principles from the onset.
Mapping clarifies and matches mandates and roles within a complex institutional landscape. Mandates are derived from existing functions outlined in institutional regulations, such as general planning or budgeting functions. Roles, on the other hand, are assigned for specific tasks within the development and execution of the climate investment planning process. Countries are encouraged to assess public bodies’ roles across all investment planning components. For each component, the identified public body could either take on a leading role in developing that aspect of the NDC investment planning process (e.g., consolidating information, drafting reports, etc.) or a supporting role focused on providing information to another public body responsible for consolidation.
Example: Sri Lanka undertook a stakeholder mapping exercise to enhance clarity on institutional jurisdictions, functions, and mandates across various levels of government and civil society. This initiative aimed to support the delivery of emission reductions and improve the climate resilience of infrastructure services. Additionally, it sought to understand the governance roles necessary for developing and achieving national climate change targets while exploring how subnational stakeholders can influence and contribute to advancing climate action.
Step 2
Analyse and address institutional arrangements and expertise gaps
Map public entities involved in the investment planning process to help identify gaps, overlaps in institutional arrangements, and assess whether the required expertise is in place. When the mandates of existing institutions—for example, the ministry of finance or ministry of environment—are deemed inadequate for a leadership role, countries might consider establishing a cross-cutting public body, such as a “central office” within the executive branch, with a dedicated mandate for accessing and mobilizing climate finance.
If existing mandates or expertise are insufficient to fulfill specific roles across various components, countries may contemplate establishing intergovernmental units or task forces for fostering expert collaborations with the private sector, academia, research institutions, or similar stakeholders. Expertise in climate science, economic analysis, risk assessment, financial instruments, gender, and monitoring and evaluation are highly relevant to the process.
Example: Sao Tome and Principe’s ‘Multi-sector Investment Plan’ maps all government institutions directly and indirectly linked to climate change risk, including their legal mandate, assesses their institutional capacity, and provides a series of recommendations to create an enabling institutional environment.
Step 3
Designate a coordination role or system for climate investment planning and identify actions to formalize roles
A central coordination role and mechanism is critical for the success of climate investment planning and mobilization, as centralization will ensure efforts across the country are well directed and monitored. Defining this role involves assessing who is best placed to act in a central coordinating capacity according to their mandate and expertise and determining the mechanism format to ensure cross-government coordination—typically a central agency with convening responsibilities and capacities. For example, a specialized “climate finance” unit may be created within the ministry of finance or the presidential office. Such a unit could help streamline investment planning processes; align engagement with key government institutions, investors, and financiers; and more effectively leverage different stakeholders’ expertise, capacities, and other resources.
A centralized body streamlines capacity-building efforts by making implementation more consistent and enhancing coordination and communication across various government entities, leading to more cohesive and effective climate action. The coordinating body’s mandate should include reviewing the effectiveness of existing institutional arrangements and coordination mechanisms and proposing improvements.
Decision-makers should formalize the specific roles that have been identified. In doing so, consider the support and commitment from relevant public bodies, prioritizing NDC investment planning and mobilization and ensuring alignment with broader strategic objectives, including gender and social inclusion, sustainable development goals, and others. The coordinating body may be established permanently to institutionalize systems and structures that implement the processes envisioned by the Framework.
Example: Belize opted to establish a new governance structure to oversee climate change action. This included the Belize National Climate Change Committee (BNCCC), created in 2009, and a National Climate Change Office (NCCO), created in 2012, in the Ministry of Forestry, Fisheries, and Sustainable Development. The BNCCC is the main monitoring body for climate change programs and projects and reports to the Cabinet. Focused on climate change issues, these offices provide expertise and critical oversight across sectors that can mainstream NDC investment planning in the national agenda. Moreover, their direct link to the Cabinet can increase the political will required to prioritize NDC investment planning and implementation.
A Practical Guide to Understanding and Establishing Climate Finance Units
Establishing Climate Finance Units (CFUs) is rooted in the need countries have for financing to implement their NDCs, NAPs, and LT-LEDS and in the recognition that, without dedicated and skilled units to plan, access, coordinate, and manage climate finance, countries risk experiencing inefficient financial flows, duplicative efforts, and a lack of alignment with national climate and development priorities. CFUs enable countries to mainstream climate action into core national development and financing instruments, identify and prioritize climate investments, develop investment-ready projects, and leverage opportunities.
CFUs use attractive and innovative financing vehicles and create enabling environments for private sector participation. CFUs are most often housed within ministries of finance due to the unique role these ministries play in resourcing development initiatives, articulating national priorities, and coordinating across sectors. However, depending on their scope, mandate, and authority within the governance context of the country, CFUs can also be placed in other ministries, the presidential or prime minister’s office, or even be established as a standalone unit.
The most common functions performed by CFUs include mobilizing and coordinating climate finance in alignment with national goals, mainstreaming climate considerations across national development and economic architecture, preparing and appraising projects, embedding gender equality and social inclusion in climate finance processes, and supporting capacity building and institutional strengthening.
Learn more about establishing Climate Finance Units here.
Support resources
The following resources can be considered. Explore the NDC Partnership Knowledge Portal Climate Toolbox for additional institutional arrangements and expertise resources.