In 2022, the impact of climate change has been felt like never before. Heat waves, drought, raging wildfires, typhoons, torrential rains, and flooding have not spared any continent, leaving millions of people distraught and causing millions of dollars in damage. It is increasingly apparent that climate change is affecting both developed and developing countries. However, the poorest and most vulnerable countries are being hit the hardest.

As scientists predicted, each decade is warmer than the previous one. The frequency and severity of climate-induced disasters is increasing sharply and rapidly, and the world is approaching dangerous tipping points. These dramatic trends make international cooperation and climate actions more necessary and urgent than ever before.

The Conference of the Parties (COP 26), in Glasgow, in November 2021, was a landmark event. It reaffirmed commitment to the Paris Agreement to keep global warming under 1.5⁰C. The outcome document - the Glasgow Climate Pact - urged parties to scale up action to meet mitigation and adaptation goals, while respecting and promoting human rights and gender equality. The Pact also called for doubling climate finance from 2019 levels, by 2025.

Despite renewed commitments, the world is way off-track to reach the objectives of the COPs. To achieve the Paris Agreement’s 1.5⁰C objective requires a 55 percent reduction in emissions1. However, the new and updated Nationally Determined Contributions (NDCs) fall far short only reducing 7.5 percent of emissions, which in turn may lead to a global temperature rise of at least 2.7 °C, by the end of this century.

Adequate financing for both climate adaptation and mitigation is critical for achieving the global climate goals. The UN Intergovernmental Panel on Climate Change (IPCC) estimates2 that to adequately finance climate change measures, between $1.6 trillion to $3.8 trillion is required annually, until 2030. This figure is far higher than the estimated $634 billion available in 2019/20.3 Climate financing is a pressing priority for developing countries most exposed to climate changes, which do not have sufficient domestic resources. To compound the situation, severe financial impacts caused by COVID-19, and spending on pandemic recovery programs, have limited the ability of many developing countries to invest in climate action.

So, leveraging and effectively managing climate finance with public and private resources is vital. Finance Ministries around the world have started to integrate climate change into national budget and fiscal policies. In Asia and the Pacific, governments with the support of UNDP projects funded by the United Kingdom and Sweden, have factored climate change into national planning and budgeting systems at national and sub-national levels. Several countries have also successfully leveraged new sources of financing, like green bonds and are attracting new investments for vital climate projects To share experiences and accelerate international cooperation for climate actions, UNDP has documented climate finance reforms undertaken by governments across different regions and detailed their impact.

The present review, analyses and synthesizes these reforms across different stages of a budget cycle namely the: Strategic Planning and Fiscal Framework; Budget Preparation and Approval; Budget Execution, Accounting & Reporting; and Control and Audit. The review offers key insights including achievements and challenges, which countries must overcome for climate responsive development plans and budgets.