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What is the IMF doing to help tackle climate change?

We are seeking to put climate at the heart of our work—from country, regional, and global economic surveillance to capacity building, to helping small island states with fiscal strategies that build resilience.

Containing global warming, known as climate mitigation, is a global policy challenge that we analyze through multilateral surveillance—because no country can address this issue on its own. For the 20 largest emitters, we now strongly encourage coverage of mitigation policies in our annual reviews of the health of a country's economy, called Article IVs consultations.

Article IV surveillance will also seek to cover adaptation in countries that are especially vulnerable to climate change. Managing the transition to a low-carbon economy will also be a topic for Article IV consultations, including for countries heavily dependent on fossil fuel production.

Several Fiscal Stability Assessment Programs (FSAPs) have already started to examine physical and transition risks through climate risk assessments. We have completed climate stress testing in two FSAPs ꟷ Norway and the Philippines ꟷ and work is progressing in three additional FSAPs (Colombia, South Africa, and the United Kingdom). Assessment of supervisory frameworks will start considering climate risk in the near future.

Climate change issues feature in our World Economic Outlook, Global Financial Stability Report, Fiscal Monitor, and Regional Economic Outlook. These have focused on a wide variety of issues, including (i) developing a conceptual and quantitative framework for carbon pricing; (ii) making a case for stress testing to climate risks and promoting climate-related disclosures; (iii) highlighting the economic impact of climate change and its policy implications on low-income countries, and on sub-Saharan Africa in particular; and (iv) devising a strategy of how to deliver global emissions reductions while minimizing economic and social cost during the transition.

The IMF also co-hosts the Secretariat of the Coalition of Finance Ministers for Climate Action, and collaborates with international organizations and fora such as the United Nations (UN), the World Bank, Financial Stability Board (FSB), and the Network for Greening the Financial System (NGFS) ꟷ where we co-chair the “Bridging the data gaps” workstream. We work with standard setters like the International Financial Reporting Standards (IFRS) and the International Association of Insurance Supervisors (IAIS).

In the context of the recent allocation of $650 billion of SDRs, we are exploring the creation of a Resilience and Sustainability Trust, to support long-term structural transformation. And we are discussing the possibility of debt-for-nature swaps with keys partners and stakeholders.

Earlier this year, we launched a new Climate Change Indicators Dashboard, in collaboration with partners including the Organisation for Economic Co-operation and Development (OECD), the World Bank, the UN, and the European Commission (EC).

To learn more about the IMF's work on climate change, please click here to visit our climate page.

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Why did the IMF participate in COP26?

Climate change presents a major threat to people's lives and to countries' long-term growth and prosperity, and it has a direct impact on the economic well-being of all countries.

The recent Intergovernmental Panel on Climate Change (IPCC) report has further increased the urgency for bolder climate action and international cooperation to prevent irreversible climate change. Achieving emissions neutrality by 2050 implies global emissions need to be cut by one-third by 2030—and this would have implications for how economies function.

The IMF has a role to play in helping its members address those challenges of climate change for which fiscal and macroeconomic policies are an important component of the appropriate policy response.

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How did the IMF contribute to COP26?

Climate change is likely to affect economic and financial stability through numerous transmission mechanisms. While the mechanisms’ relative importance will differ between individual countries, no country can expect to be spared entirely and many of the ensuing policy challenges fall firmly within the realm of the IMF’s expertise.

As a multilateral institution with global reach, the IMF can assist with coordinating the macroeconomic and financial policy response.

In addition to our capacity development, data and surveillance activities, the IMF has provided analysis and advice to help policymakers select and implement appropriate climate strategies. 

Recent highlights include:

Staff Climate Note: Proposal for an International Carbon Price Floor Among Large Emitters

Staff Climate Note: Climate-Sensitive Management of Public Finances

Staff Climate Note: Strengthening the Climate Information Architecture

Staff Climate Note: Carbon Pricing: What Role for Border Carbon Adjustments?

Staff Climate Note Not Yet on Track to Net Zero: The Urgent Need for Greater Ambition and Policy Action to Achieve Paris Temperature Goals

Working Paper: Still Not Getting Energy Prices Right: A Global and Country Update of Fossil Fuel Subsidies

G20 Note: Reaching Net Zero Emissions

Further analytical work that explores national, regional and global climate challenges and the IMF’s work in this area will continue after the COP, especially in the context of the anticipated updates to countries’ National Determined Contributions. Forthcoming publications include a Staff Climate Note on Mitigation Policy Analysis, and a joint EC-IMF-OECD paper on ‘Green Budgeting: Toward Common Principles.


Remarks of the Managing Director at COP26:

World Leaders' Summit, November 1

Carbon Pricing Leadership Coalition Meeting, November 2

Africa Adaptation Acceleration Summit, November 2

Financing Our Future, November 3

A Financial System for Net Zero, November 3

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What is COP26?

COP26 was the 2021 United Nations Climate Change Conference. For nearly three decades, the UN has been bringing together almost every country on earth for global climate summits – called COPs – which stands for ‘Conference of the Parties,’ or ‘COP’ for short.

In that time, climate change has gone from being a fringe issue to a global priority. This year was the 26th annual summit – giving it the name COP26. With the UK as President, COP26 took place in Glasgow. World leaders arrived in Scotland, alongside tens of thousands of negotiators, government representatives, businesses, and citizens for twelve days of talks. Not only was it a huge task but it was also not just yet another international summit. Most experts believe COP26 had a unique urgency.