Why Sustainable Finance is Essential for the Mediterranean
The Mediterranean region faces major environmental and socio-economic challenges, amplified by climate change, biodiversity loss, and pressure on natural resources. To reconcile economic development and ecosystem preservation, it is crucial to redirect financial flows towards sustainable investments. Sustainable finance plays a key role in steering capital towards low-carbon, resilient, and inclusive solutions, ensuring a just and effective ecological transition.
Phasing Out Environmentally Harmful Subsidies
In the Mediterranean, many subsidies still encourage environmentally harmful practices, exacerbating resource exploitation, pollution, and biodiversity loss. Globally, these subsidies are 5 to 6 times higher than those beneficial to the environment, as highlighted in a preliminary report by Plan Bleu (2023). Reforming these subsidies is essential to align the Mediterranean economy with sustainable pathways. The Mediterranean Strategy for Sustainable Development (MSSD) and UNEP/MAP decisions call for their gradual elimination, notably through the polluter-pays principle and energy subsidy reforms. Plan Bleu supports this transition through its Edited Volume on Harmful Subsidies (ACT I), which analyzes their impacts and proposes recommendations for the region. Published in 2024, this work, mobilizing Mediterranean experts, helps guide policymakers in accelerating reforms for sustainability in the Mediterranean.
Financial Tools to Accelerate the Transition
Following the identification of harmful subsidies’ impacts, a new report explores the role of green public finance and economic tools in accelerating the ecological transition in the Mediterranean (ACT II). Green financial tools – environmental taxation, green bonds, green budgeting – help direct public resources towards sustainable investments. Meanwhile, mechanisms like carbon pricing, incentives for renewable energy, and eco-certification encourage economic practices aligned with climate goals. Through 13 contributions from Mediterranean experts, this report identifies solutions tailored to regional specifics and proposes recommendations for integrating these tools into economic and financial policies. It will be published by the end of 2025.
MSSD Revision: Integrating Sustainable Finance as a Priority
Through in-depth empirical analysis, our work has directly contributed to the evolution of priorities in the Mediterranean Strategy for Sustainable Development (MSSD), highlighting the need to integrate sustainable finance as an essential strategic lever. In this context, in 2024 and 2025, Plan Bleu organized three dedicated working groups, bringing together experts, policymakers, and economic actors to explore the best approaches to mobilizing financial resources for the ecological transition in the Mediterranean. These discussions identified innovative financial instruments, strengthened stakeholder dialogue, and proposed concrete recommendations to align financial flows with sustainability goals. The conclusions of these working groups will be directly integrated into the revision of the MSSD, reflecting a more ambitious approach to sustainable finance. This new direction, backed by solid analyses and constructive exchanges, will be formalized in the text to be adopted by the end of 2025, marking a significant step forward for the environmental and economic agenda of the Mediterranean region. The MSSD 2026-2035 will include sustainable finance as a priority, offering a key opportunity to institutionalize green finance principles, enhance transparency, and establish accountability mechanisms to guide national policies towards shared regional goals. It will aim to establish a standardized framework for classifying public and private financial flows supporting adaptation to environmental risks and resilience.
As a result of this push, the theme has become a priority area for Plan Bleu, and other reports, mobilizing high-level experts, are expected within the framework of upcoming UNEP/MAP Work Programs.
Key Figures
- Globally, subsidies for fossil fuels, agriculture, and fisheries exceed $7 trillion, around 8% of global GDP. Explicit subsidies represent $1.25 trillion, while implicit costs exceed $6 trillion, affecting mostly vulnerable populations.
- Harmful subsidies are 5 to 6 times higher than environmentally beneficial ones.
- In the fisheries sector, 60% of subsidies contribute to overfishing and marine degradation.
- A 1% increase in fossil fuel subsidies could lead to a 0.04% increase in emissions per capita, while a 1% increase in GDP would lead to a 0.5% rise in emissions per capita.
- Women remain underrepresented in the energy sector, holding only 15% of sectoral jobs. Subsidies for traditional energy, in addition to their environmental impacts, hinder their participation and exacerbate inequalities.
