Governance and finance

Yerevan city, Armenia by Ruzanna Aruttyunyan | Dreamstime

The EaP GREEN programme’s first component – governance and finance – focuses on establishing a coherent policy and regulatory framework to promote green growth. Priority is given to those elements that are in line with regional and international agreements as well as the parts of the EU acquis included in the Association Agreements negotiations (where applicable). This work mainly implies activities at the policy level and is primarily carried out by the OECD and UNEP as follows:  

 Strategic policy planning / sustainable consumption and production (UNEP)

Sustainable consumption and production (SCP) and other green growth policies need to be systematically reflected in national plans, development programmes and government budgetars. UNEP is working with a wide range of stakeholders in EaP countries to promote SCP as a holistic approach.

 Green growth indicators (OECD)

EaP countries have been collecting statistical information on economic and social developments; however, this data is often patchy and poorly used in decision-making. Moving towards a green economy will require analytical evidence. The OECD is supporting EaP countries in establishing a coherent green growth measurement framework based on the use of green growth indicators.  

 Identifying environmentally harmful subsidies and launching subsidy reform (OECD)

Reforming environmentally harmful subsidies (EHS) is a fundamental element of green growth strategies. Its benefits include, among others, reducing the use of resource-intensive inputs (e.g. energy), decreasing pollution levels, correcting market distortions and, subsequently, releasing or reallocating public funds. The OECD works with EaP countries to overcome existing barriers in these areas. 

 Creating market incentives for greener products (OECD)

Economic instruments can be effective in stimulating a shift to less damaging forms of production and consumption, and can lead to creation of new jobs and employment opportunities. Through their revenue-generating potential, they can make a significant contribution to enhancing economic growth. The OECD provides guidance to EaP countries in designing or reforming such instruments related to environmentally harmful products. 

 Improving investment policies and access to finance (OECD)

As public resources are often limited in EaP countries, more attention should be given to attracting private finance in the green transformation process. Currently, credit lines supported by international finance institutions (IFIs) are the main source of long-term funding for green investments, particularly those around energy and resource efficiency. Environment-related credit lines are disbursed through local commercial banks. The OECD is working with local stakeholders to create supportive policy frameworks and promote the viability of green financing as an attractive business model. 

 Greening small- and medium-sized enterprises  (OECD)

Small- and medium-sized enterprises (SMEs) represent a growing majority of businesses in the EaP countries. Although the individual environmental footprint of small businesses may be low, their aggregate impact is considerable. Therefore incentives for greening SMEs should lie at the core of national strategies.  The OECD is developing recommendations for EaP countries to improve the environmental results of SMEs and unlock new business opportunities.

 Promoting green public procurement services (UNEP) 

Green procurement relies on clear, justifiable, verifiable and ambitious environmental criteria for products, services and works. UNEP is assisting the governments of EaP countries in leading by example, and promoting the production and purchase of more sustainable products.