The OECD says expanding climate-related financial policies and improving data quality will be critical to unlocking investment, managing climate risks and accelerating progress toward global net-zero and resilience goals.
Governments and financial institutions have expanded climate-related financial policies and increased investment in clean energy in recent years, but global financial markets remain only partially aligned with international climate goals, according to the OECD Review on Aligning Finance with Climate Goals 2026.
The Organisation for Economic Co-operation and Development’s second review assesses progress since 2024 and examines how governments, regulators, financial institutions and investors can better align financial systems with the objectives of the Paris Agreement. The report evaluates climate-related financial policies, investment trends and climate metrics to determine whether capital is flowing toward activities consistent with low greenhouse gas emissions and climate-resilient development.
The review says aligning financial flows with climate goals is essential to achieving net-zero greenhouse gas emissions and strengthening resilience to climate change, reflecting the objective set out in Article 2.1(c) of the Paris Agreement. It argues that financial systems influence investment decisions across all sectors of the economy and therefore play a central role in accelerating the climate transition.
The OECD focuses on three areas: the implementation of climate-related financial sector policies adopted by governments, regulators and central banks; the tracking of financial flows and investment portfolios to assess whether they support climate objectives; and the climate metrics used by financial institutions to measure alignment with net-zero pathways. Compared with its first edition, the review expands geographical coverage, updates evidence through 2025 and identifies 14 policy actions aimed at strengthening climate finance worldwide.
The report says finance has become a central pillar of climate action, requiring greater investment not only in renewable energy and low-carbon technologies but also in the transition of emissions-intensive industries and adaptation to climate risks.
Although climate-related financial policies have expanded significantly, countries continue to adopt different regulatory approaches reflecting national economic structures, regulatory systems and policy priorities. Some rely primarily on mandatory disclosure requirements while others focus on voluntary frameworks, prudential supervision or combinations of multiple policy tools.
The OECD says policymakers have continued to develop disclosure standards, climate taxonomies, stress-testing frameworks and sustainable finance regulations. However, it notes that evidence on the effectiveness of many recently introduced measures remains limited because most have been implemented only within the past decade.
Investment trends present what the report describes as a mixed picture. Low-carbon investment has increased substantially, particularly in clean energy, but financing directed toward fossil fuel activities continues to exceed low-carbon financing across several financial asset classes. Green-labelled syndicated loans continue to grow while momentum in green corporate bond markets has weakened since 2022, illustrating that financial markets remain only partially aligned with climate objectives.
The review also identifies significant gaps in climate-related data, particularly regarding financial assets, transition risks and investment opportunities. It recommends broader policy mixes, coordinated data systems and stronger evaluation of policy effectiveness as three overarching priorities.
According to Chapter 1 of the report, policymakers in 111 countries and institutions of the European Union had adopted more than 860 climate-related financial sector policies by 2025. Between 2023 and 2025, the number of such policies increased by more than 25 percent despite some countries slowing or revising individual initiatives.
Transparency measures account for about 78 percent of all climate-related financial policies, while prudential measures such as climate stress testing and financial supervision represent around 20 percent. Monetary policy tools account for approximately 2 percent.
The OECD says central banks have assumed a larger role in developing climate-related financial policies since the Paris Agreement alongside governments and financial supervisors.
Regional approaches differ considerably. African countries and many Asia-Pacific economies rely more heavily on transparency measures and disclosure requirements, while Europe and North America place greater emphasis on prudential supervision, climate stress testing and financial risk management. Emerging markets have expanded sustainable finance taxonomies rapidly, while some advanced economies increasingly incorporate climate considerations into monetary policy operations.
The report says global investment in low-carbon energy now exceeds investment in fossil fuel energy. In 2024, low-carbon energy represented approximately 7 percent of global gross fixed capital formation compared with 4 percent for fossil fuels, with the gap widening further during 2025.
Private investment has become the main driver of low-carbon energy growth, particularly across Asia-Pacific, Europe and North America. However, Africa, Latin America and the Middle East continue to receive comparatively limited low-carbon investment, which the OECD identifies as significant untapped opportunities for future climate finance.
Despite improvements in real-economy investment, the report says financial markets continue to lag behind. Fossil fuel financing remains higher than financing directed toward low-carbon activities across many financial asset classes. Green corporate bonds have plateaued since 2022 while green syndicated loans continue to expand. Listed equity markets have remained relatively stable, suggesting that capital market transformation is progressing more slowly than clean energy investment.
The review also notes that more than 85 percent of real-economy investment remains difficult to classify because many sectors lack adequate climate-tracking methodologies.
Chapter 2 examines financial sector policies, arguing that climate-related financial measures complement rather than replace broader climate policies such as carbon pricing, renewable energy incentives and environmental regulations. It identifies transparency, prudential regulation and monetary policy as the three main categories of financial policy.
By 2025, more than 670 transparency policies had been introduced across 110 countries and the European Union. Mandatory disclosure requirements remain the foundation of these policies, increasingly supported by voluntary guidelines, transition roadmaps and sustainable finance principles.
The OECD says improved disclosure enhances the availability and quality of climate-related information, allowing investors to identify climate risks, compare companies and allocate capital more efficiently. However, it cautions that disclosure alone does not reduce greenhouse gas emissions and recommends stronger evaluation frameworks to determine whether transparency policies change financial behaviour or simply improve reporting quality.
The report says around 200 prudential policies had been adopted by 2025, including climate stress testing, supervisory expectations, scenario analysis and risk management requirements. Many of these measures remain voluntary, particularly in emerging markets and developing economies, while insurance companies and investment funds remain only partially covered.
Climate-related monetary policies remain at an early stage, with only a limited number of countries incorporating climate considerations into asset purchases, collateral frameworks and monetary operations. The OECD says more research is needed before wider implementation.
Chapter 3 assesses whether financial flows are becoming more aligned with climate goals. It finds that investment in clean energy has continued to grow rapidly, with low-carbon energy investment exceeding fossil fuel investment by its widest margin to date in 2025. Greenfield foreign direct investment in renewable energy has more than doubled since 2016 and now exceeds fossil fuel investment across every region.
Nevertheless, the report says fossil fuel financing continues to exceed financing directed toward low-carbon sectors across many financial asset classes. Listed equity markets show only modest improvement, while many energy-intensive industries continue to receive substantially larger volumes of finance than climate solutions.
Corporate debt markets remain mixed. Green corporate bonds have expanded over recent years but their growth has slowed since 2022. Green-labelled bonds still account for only a small share of total corporate bond markets while fossil fuel companies continue issuing significant volumes of conventional debt. Green syndicated loans have continued to grow steadily although lending to fossil fuel sectors remains higher overall.
Europe leads global green bond issuance, according to the report, while Africa and parts of the Asia-Pacific region have relatively higher shares of green-labelled corporate bonds than fossil fuel bonds. However, fossil fuel financing continues to dominate in several parts of Asia and the Americas. Africa has shown promising growth in green finance but overall investment volumes remain comparatively small.
The report also identifies major data limitations for sovereign bonds, private equity, bilateral loans and many institutional investors. Green sovereign bonds account for only a small share of public debt issuance and no widely accepted method exists for assessing the climate alignment of conventional government bonds.
Chapter 4 examines climate metrics used by financial institutions, regulators and investors, arguing that robust and comparable data are essential for measuring climate alignment. While disclosure has improved since the Paris Agreement, the OECD says significant measurement gaps remain.
The report says climate metrics now extend beyond greenhouse gas emissions to include investment portfolios, transition plans, capital expenditure, corporate engagement and adaptation activities. It argues that emissions data alone are insufficient because investors increasingly need indicators showing whether companies are genuinely transitioning toward low-carbon business models.
Climate metrics are most developed for listed companies where public reporting requirements provide relatively consistent information. By contrast, private equity markets and unlisted companies continue to suffer from limited disclosure, making accurate climate assessments more difficult.
The OECD also highlights adaptation as an area requiring greater attention. Existing reporting frameworks focus primarily on emissions reductions, while adaptation remains comparatively underdeveloped. It recommends incorporating metrics covering physical climate risks, resilience investments and adaptation outcomes alongside mitigation indicators.
The report also points to the growing use of natural language processing, artificial intelligence and geospatial analysis to help fill data gaps by extracting climate information from corporate reports, satellite imagery and public databases.
Drawing together its findings, the OECD recommends 14 policy actions grouped into three priorities: broadening policy mixes through stronger coordination and peer learning, improving climate data through coordinated national frameworks and better disclosure, and strengthening evaluation of policy effectiveness through expanded climate stress testing, evidence-based assessments and greater transparency of climate ratings.
The review concludes that climate finance has advanced since 2024 through the introduction of hundreds of new financial sector policies, increased clean energy investment and improved climate disclosure. However, it says fossil fuel financing continues to dominate many financial markets, climate metrics remain inconsistent across sectors and significant investment gaps persist, particularly in emerging economies.
The OECD says stronger coordination between climate policy and financial regulation, together with better data and more rigorous policy evaluation, will be necessary to direct global capital toward a climate-resilient future while supporting long-term economic resilience, innovation and financial stability.
