Public Finances & State Owned Enterprises (SOEs) For Greening Development
Implementing a whole-of-public-sector approach to deliver greater prosperity and sustainable development through the design and implementation of better expenditure, regulatory, and taxation policies and practices.
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Why Greening Development?
Advancing climate action and achieving green growth — what we refer to as ‘greening development’ — are global priorities that require tailored interventions and holistic approaches.
Green growth and climate action are deeply interconnected. Green growth enables economic development that is resource efficient, low-carbon, and socially inclusive. Investing in clean energy, resilient infrastructure, and sustainable land use can reduce greenhouse gas emissions, boost countries’ competitiveness, and generate jobs.
At the same time, effective climate action safeguards long-term economic productivity by minimizing the risks and costs of climate-related shocks.
Why a whole-of-government approach?
Tackling greening development challenges and unlocking opportunities for green growth and climate action requires individual countries to design and implement policies that align with their unique development contexts.
Beyond engaging central government actors, sub-national authorities and state-owned enterprises (SOEs) also need to be engaged. Successful greening development therefore demands a comprehensive, whole-of-government public sector approach.
Country demand and ownership, Strong organizational capabilities and skilled public sector staff, and Modernized, digital information systems — harnessing innovations like big data and artificial intelligence (AI) to better design, implement, and track greening policies.
The Vienna Development Knowledge Centre (VDKC) (see below) also promotes awareness, application, and the adoption of online decision-support tools for better climate actions. Functional resources such as the Geospatial Planning and Budgeting Platform (GPBP) — which can be found on pim-pam.net — can help countries maximize opportunities through user-friendly demonstrated methods and tools.
The Vienna Development Knowledge Centre Public Finance and SOEs Engagement Framework
The VDKC Public Finance and SOEs Engagement Framework applies the whole-of-government approach to achieving country-level results for greening development. The VDKC Engagement Framework offers a structure and pathways for:
Implementing recommendations from the World Bank’s Climate Change Development Reports (CCDRs) and Climate Change Institutional Assessments (CCIAs) for the Eastern Europe and Central Asia Region (ECA).
Enabling countries — notably in Enlargement and Eastern Neighborhood — to meet green growth and climate action outcomes.
Strengthening core institutions while concurrently boosting change management outcomes that prioritize green development in planning stages, while applying the same approach to existing public assets.
Advancing development and greening policy objectives in a continuous, effective and sustainable way.
How does it work?
The foundational departure point of the VDKC Engagement Framework is that national, sub-national, and SOE institutional sectors are all critical to delivering on greening development across the ECA region.
The outcome framework builds on the premise that a combination of taxation, expenditure, and regulatory measures can help deliver climate action and green growth objectives. The public sector depends on adequate policies, but above all the capabilities to deliver on these policies.
Results Framework
Public infrastructure investment and non-financial asset government are critical in green transition trajectories.
Decisions concerning infrastructure investment and non-financial assets have long-term implications, but also potential inertia due to inaction — particularly around existing assets. Given the role of specialized PFM sub-systems dealing with financial and physical management, this area of PFM receives particular attention.
At the heart of this approach is a “less memo, more demo approach”. Through an integrated people, process, and technology engagement approach, it works to stimulate public sector modernization for more inclusive greening development across the Europe and Central Asia Region (ECA), and beyond.
State-owned enterprises (SOEs) play a critical role in mitigating climate change and advancing green economies due to their scale, strategic sectors, and public mandates.
Operating in key areas like energy, transport, and water, SOEs control significant emissions and infrastructure investments. This positions them to lead the shift to low-carbon technologies, renewable energy, and climate-resilient systems. With the right governance and incentives, SOEs can align with national climate goals, set industry standards, and crowd in private finance. Their actions not only impact emissions directly but also signal political commitment, making them essential drivers of sustainable, inclusive economic transformation. The VDKC activity, therefore, has put special emphasis on the launch of an SOE Community of Practice in March 2025 for the Eastern Europe and Central Asia (ECA) region to better address the challenges and opportunities.