## 1.23 Environmental classifications within GFS ## Source details **Canonical URL:** [1.23 Environmental classifications within GFS](https://www.imf.org/-/media/files/data/statistics/gfsm/global-consultations/proposed-recommendations-gfsm-2014-update-1-23-environmental-classifications-within-gfs.pdf) ## Other formats - [Markdown version](/-/media/files/data/statistics/gfsm/global-consultations/proposed-recommendations-gfsm-2014-update-1-23-environmental-classifications-within-gfs.pdf.md) - [Structured JSON version](/-/media/files/data/statistics/gfsm/global-consultations/proposed-recommendations-gfsm-2014-update-1-23-environmental-classifications-within-gfs.pdf.json) --- ### Summary of purpose and scope - Aim: improve availability of government’s environment related flows by aligning the updated GFSM with the draft 2025 SNA and by enhancing existing guidance on the use of GFS for environment related analysis. - Key elements: retain current reporting options for environmental taxes; introduce categories for environmental grants as climate financing sources; include environmental, social and governance (ESG) and green financial instruments in supplementary reporting; integrate renewable and non-renewable resources into GFSM’s stocks and flows; broaden Appendix 7 text to other sources of government environmental statistics. ### Background and issues - Environmental and climate-change issues have increased demand for statistics measuring interactions with the economy; SEEA CF and COFOG update processes and the 2008 SNA/BPM6 reviews considered environmental classes. - Governments influence economic behavior for environmental objectives via taxes, permits, rent, subsidies, and transfers; these transactions are recorded in GFS but generally are not separately identifiable as environment-related without additional source disaggregation. - Example: Subsidies provided for environmental protection are recorded under Subsidies (GFS Code 25) and are disaggregated only by recipient sector, preventing direct identification of subsidy amounts for environmental protection from standard GFSM 2014 presentations. - GFSM 2014 (Tables 5.2 to 5.5) offers option for compilers to include ‘of which’ lines for environmental taxes under each tax category; revenue includes pollution taxes (GFS Code 114522) with definition quoted in para. 5.81. - Grants and financial assets/liabilities related to climate finance are not explicitly identifiable in GFSM 2014; climate finance sources typically include contributions from international organizations, foreign governments (often through grants or financial instruments), and the private sector. - SEEA CF and COFOG address some gaps by presenting government expenditures and revenues aimed at environmental protection; SEEA CF aligns with SNA economic classification and is broadly consistent with GFSM 2014; COFOG can be cross-classified to economic classifications. - GFSM 2014 incorporates COFOG and promotes reporting of environmental taxes and transfers in line with SEEA CF. ### Prior SNA-related changes and guidance (WS.12 Environmental Classifications) - Recommended and implemented SNA changes summarized: - Including ‘of which’ categories for environmental, social and governance (ESG) and green instruments (debt securities, loans, and equity and investment fund shares), for supplementary reporting. - Introducing sub-classes of natural resource rent to separately identify rent related to non-renewable mineral and energy resources, renewable energy resources, biological resources, water resources, and other natural resources. - Introducing a class of government taxes for emission permits and other carbon taxes. - Including non-renewable mineral and energy resources, and renewable energy resources class into the SNA classification of stocks and flows. - Including definitions of environmental taxes and subsidies, in line with the 2012 SEEA CF, and encouraging users to report this information. ### Proposed recommendations for GFSM 2014 update - Maintain consistency with the draft 2025 SNA and aim for consistency with revisions from SEEA CF and COFOG updates where possible. - Specific proposed changes: - Maintaining the existing ‘of which’ reporting options for environmental taxes, while also maintaining the inclusion and definition of ‘pollution taxes’ in the main GFSM framework. - Introducing ‘of which’ categories for environmental grants receivable and payable, given the relevance of grants as a source of climate financing, particularly from international organizations and foreign governments. - In line with the draft 2025 SNA, including ‘of which’ categories and definitions for ESG and green instruments for debt securities, loans, and equity and investment fund shares for supplementary reporting (as described in draft 2025 SNA (Table 35.3 and paras. 12.151-12.152)). - In line with the draft 2025 SNA, introducing sub-classes of natural resource rent to include non-renewable mineral and energy resources, renewable energy resources, biological resources, water resources, and other natural resources. - In line with the draft 2025 SNA, including non-renewable mineral and energy resources, and renewable energy resources classes into the GFSM classification of stocks and flows. The final classification should be based on the outcomes of GFSM research project 2.19 Accounting for natural resources and their exploitation in GFS. - Updating and expanding the existing text in GFSM 2014 (Appendix 7), on the relationship of GFS with the SEEA CF to discuss how users and compilers can use GFS for environment-related analysis, thereby broadening the discussion to other sources of government environmental statistics (e.g. environmental protection expenditure accounts, G20 Data Gaps Initiative 3 (DGI-3) recommendations 6 and 7). ### Rationale for recommendations - Harmonize updated GFSM with draft 2025 SNA—key objective of GFSM 2014 update. - Consider unique demands of fiscal data in environmental and climate-change context while balancing compiler burden. - Account for progress in COFOG and SEEA CF updates in GFSM revisions. - Fiscal cost analysis of climate change focuses on government mitigation/adaptation policies and costs of responding to climate-related disasters; many governments committed to reducing greenhouse gases, highlighting climate finance needs, especially for developing countries. - A dedicated annex explaining how GFSM can be used alongside other frameworks for environmental analysis can support emerging user needs. ### Proposed text and drafting guidance - ‘Of which’ categories for environmental grants receivable and payable: - Include the following footnote in Table 5.7, for 1311, 1312, 1321, 1322, 2611, 2612, 2621, 2622. - Further breakdown/”of which” lines could allow for the identification of those grants related to environmental purposes. - Including ‘of which’ categories for ESG and green instruments: - Table 35.3 in the draft 2025 SNA to be included in the dedicated annex for GFS and environmental analysis. Drafters may also decide to include a reference to these instruments in the main chapters. - Definitions for the supplementary instruments to be adapted from draft 2025 SNA paras. 35.119-35.126. - Introducing sub-classes of natural resource rent: - Based on the final classification and text included in the draft 2025 SNA. - Including non-renewable mineral and energy resources, and renewable energy resources classes into GFSM stocks and flows: - Based on the final classification and text included in the draft 2025 SNA. ### Additional references (reporting structure examples from draft 2025 SNA Table 35.3) - AF.3 Debt securities - Of which: ESG debt securities - Of which: Social debt securities - Of which: Green debt securities - Of which: Sustainability debt securities - Of which: Sustainability-linked debt securities - Of which: Other ESG debt securities - AF.4 Loans - Of which: ESG loans - Of which: Green loans - AF.5 Equity and investment fund shares/units - AF.51 Equity - Of which: ESG equity - Of which: Green equity - AF.52 Investment fund shares/units - Of which: ESG investment fund shares/units - Of which: Green investment fund shares/units --- _Source: https://www.imf.org/-/media/files/data/statistics/gfsm/global-consultations/proposed-recommendations-gfsm-2014-update-1-23-environmental-classifications-within-gfs.pdf_