Bridging the Gaps for Sustainable Development

The convergence of global crises and the deep interconnectedness of economies and societies demand governance systems that can manage complexity and foster co-ordinated action. As discussed throughout the report, water scarcity and pollution, energy insecurity, carbon-intensive industrial processes, and rapid urbanisation are deeply interconnected. Pressures on water resources affect energy production and industrial operations, while energy transitions in turn influence infrastructure investment and urban planning. These systemic linkages can amplify risks and trade-offs, such as affordability versus decarbonisation, or urban growth versus water security. This is why governance responses can no longer afford to be fragmented. Instead, integrated, forward‑looking strategies are needed with PCSD functioning as a practical means that aligns decisions across systems and enables more effective delivery of the SDGs.

PCSD is not just a principle, it is a practical tool for policy efficiency, effectiveness and impact. In today’s context of fiscal consolidation and tight budgets, coherence is crucial in helping governments do more with less. By breaking down silos, cutting duplication and aligning priorities, PCSD reduces wasteful spending, ensuring that scarce resources are directed toward the most impactful reforms. It also modernises public administration by streamlining co-ordination and reducing bureaucratic burden, which is key to improving delivery capacity and public trust. Coherence embeds a whole‑of‑government approach to ensure that sectoral strategies, from climate and energy to industry and urban development, reinforce each other rather than compete, unlocking synergies and mitigating trade‑offs.

Fragmented governance, however, remains a major barrier to coherence, generating inefficiencies, contradictory incentives and negative spillovers, including across water, energy, industry, and urban systems. Chapter 1 explained why and how fragmentation persists through recurring governance patterns, such as misaligned mandates and unclear authority to arbitrate trade-offs. Chapter 2 illustrated how integrated policy packages, such as circular economy strategies, nature-based solutions and innovation ecosystems, can unlock synergies, manage trade-offs and address transboundary impacts. It is clear that governments need to go beyond identifying interactions across policy areas, and rather make trade-offs explicit, clarify who bears costs and who benefits, and require a feasible response at clear decision points.

This chapter focuses on how governments can operationalise policy coherence in practice, turning the challenges and solutions identified in Chapters 1 and 2 into actionable governance approaches. It also identifies the institutional conditions and tools needed to make such approaches durable and scalable, address coherence gaps, and move from ad hoc co-ordination to systemic action aligned with the 2026 HLPF review, the OECD Recommendation on Policy Coherence for Sustainable Development (OECD, 2019[1]), and the OECD’s Governing Green framework (OECD, 2025[2]).

As highlighted in Chapters 1 and 2, many sustainability challenges stem from fragmented long-term strategies that fail to account for interdependencies across water, energy, industry and urban systems. Strengthening strategic planning frameworks is therefore a foundational step to translate the integrated diagnosis of systemic risks and trade-offs into coherent policy direction for SDGs 6 (Clean Water and Sanitation), 7 (Affordable and Clean Energy), 9 (Industry, Innovation and Infrastructure) and 11 (Sustainable Cities and Communities). In practical terms, this would mean treating issues such as water security, energy transition, industrial competitiveness and urban development as a linked system rather than separate sector agendas. A forward-looking vision helps governments to anticipate ripple effects, including how choices about energy affect water security or how urban expansion influences industrial competitiveness. This can ensure that short-term decisions remain consistent with long-term sustainability objectives.

This section sets out the institutional conditions that make coherence operational in day-to-day government decisions. Integrated policy action begins with foundations that enable governments to manage complexity, align priorities across sectors and levels of government, and embed coherence into core governance processes where choices are made, and resources are allocated. It focuses on enabling conditions that anchor coherence in planning, budgeting, implementation and monitoring, which are essential for governing linkages among water, energy, industry and cities. It also covers the role of coherence in anticipating and mitigating negative spillovers and transboundary impacts. Drawing on OECD principles and country experience, the section highlights how mandates, incentives, co-ordination arrangements and accountability routines can shift coherence from a mere principle to a routine practice that shapes decisions.

Accelerating progress on the SDGs requires more than short-term measures. It demands a strategic outlook that anticipates future challenges and opportunities and aligns near-term choices with long-term wellbeing. National sustainable development strategies often provide this anchor, enabling governments to balance immediate priorities with the needs of future generations. For example, economic growth and industrial competitiveness can create jobs in the short term, but they must be pursued in ways that safeguard public health, preserve natural resources, and maintain ecosystem stability over time.

A coherent long-term vision is essential for steering sustainable development. Because the SDGs are cross-cutting, decisions in one area, can shape outcomes far beyond their immediate domain. A forward-looking national vision for sustainability provides the framework for anticipating these interactions and aligning short-term decisions with long-term objectives. An example of how a long‑term, cross‑sectoral vision can anchor policy coherence in practice, particularly in water management, is presented in Box 3.2.

Long-term visions also help anticipate and mitigate transboundary impacts, such as those arising from investments in renewable technology or water resource management. Large-scale deployment of renewable energy technologies can create global supply chain pressures for critical minerals, influencing environmental and social conditions in resource-exporting countries, which could in turn be amplified by industrial policy choices (e.g., domestic manufacturing requirements, industrial electrification) and by urban infrastructure demand for clean power, transport and buildings. Across the OECD, long-term visions are widely used as an anchor for policy coherence. Twenty-two countries (representing 85% of respondents to the OECD survey on PCSD) developed a strategic long-term vision in the last five years, providing a framework for coherent action across sectors (OECD, 2024[3]). These visions are reflected in national sustainable development strategies, 2030 Agenda implementation plans, and sectoral plans. For example, Greece has adopted a series of National Action Plans and Strategies that mainstream the principle of leaving no one behind in public policies and reforms, with targeted measures for future generations. Similarly, Finland institutionalised foresight at the Prime Minister’s Office, preparing a “Report on the Future” each parliamentary term to guide intergenerational policy choices (OECD, 2024[3]).

Turning long-term visions into actionable strategies requires governance tools that anticipate uncertainty and systemic interdependencies. Linking these tools with institutional conditions ensures that visions are not static statements but adaptive strategies capable of navigating complexity and volatility. This connection is critical for managing trade-offs across water, energy, industry and urban systems and for aligning short-term decisions with long-term sustainability objectives.

The effectiveness of a long-term vision depends on enabling conditions within the governance system – contextual factors that determine whether visions remain aspirational or translate into sustained action. These conditions include:

• Securing high-level commitment for coherence. Endorsement through legislation, cabinet decisions or council approval signals that long-term objectives should guide decisions across ministries and agencies. This type of commitment does more than set a vision, elevating sustainable development beyond sectoral interests and short political cycles. Such commitment also encourages private sector engagement and investment in sustainable infrastructure by providing predictability in policy direction. It also indicates that public procurement and budgeting will align with sustainability goals, creating demand for green products and services and opening opportunities for public-private partnerships. For example, Portugal adopted a Resolution of the Council of Ministers (2023) to, among other subjects, institutionalise PCSD within the Presidency, reinforcing that all ministries must integrate sustainability into planning (OECD, 2024[3]). This helps create a clear framework for private investors in renewable energy and circular economy sectors and support investment planning across renewable energy, water services efficiency, circular industry and sustainable urban infrastructure. Similarly, Japan’s SDG Promotion Headquarters provides a whole-of-government platform to align policies with the SDGs and mobilise resources for transformative investments (OECD, 2024[3]). Namibia’s pursuit of PCSD is guided by its Vision 2030, which is operationalised through a series of five-year national development plans that are aligned with global and continental frameworks (APRM-OECD, 2025[4]).

• Ensuring stability beyond political cycles. Because the SDGs are not legally binding, they are vulnerable to shifts in political priorities. Institutionalising long-term strategic visions through legal frameworks, medium-term expenditure plans, and formal review cycles helps maintain continuity and predictability for investors and stakeholders. This stability is critical for sectors with long investment horizons, such as water infrastructure, clean energy systems, industrial decarbonisation, and urban development, where projects often span decades and require consistent policy signals to avoid costly lock-ins. In Belgium, the federal Act of 5 May 1997 establishes a legal framework mandating a stable and continuous cycle of five-year Federal Plans for Sustainable Development, which include actions and measures to meet European and international commitments, and align with Belgium’s federal Long-Term Vision (LTV) for Sustainable Development to 2050. Italy’s PCSD NAP explicitly aims to “outlive electoral cycles” by embedding coherence into planning and budgeting processes (OECD, 2024[3]). Establishing mechanisms such as futures funds, or ombudsperson for future generations can help sustain commitment. Dedicated working groups can periodically update the vision to reflect emerging priorities.

• Breaking silos. Integrated governance structures, such as inter-ministerial committees and focal points networks enable governments to identify and resolve short- and long-term policy conflicts early. This is critical, for example, for managing water-energy linkages (SDGs 6 and 7), aligning industrial growth with climate goals (SDG 9), and coordinating urban planning with infrastructure development (SDG 11). Such a whole-of-government vision for sustainable development also helps strengthen coherence between domestic and external policies. Switzerland’s formal consultation processes across federal departments institutionalise coherence by requiring systematic review of all major decisions, embedding long-term sustainability considerations into the country’s federal governance culture (OECD, 2024[3]).

• Engaging society. Achieving the SGDs requires a whole-of-society approach. Public consultations, particularly with marginalised groups, can strengthen legitimacy, reduce risks of unintended impacts and build broad-based support for implementation. Well‑designed participatory processes help ensure equitable access to water and energy services (SDGs 6 and 7), support informed planning for housing and mobility in cities (SDG 11), and increase social acceptance of industrial transitions (SDG 9). Such engagement also foster trust and partnerships (SDG 17) and helps manage place-based trade-offs (e.g., industrial siting near urban areas, water allocation between households and industry, and energy affordability in cities). Greece’s National Action Plans were developed through dialogue with vulnerable groups and integrate human rights and gender equality into long-term strategies, ensuring that sustainability policies address social inclusion. Ireland’s National Stakeholder Fora provide structured engagement with civil society, creating a platform for diverse voices to influence long-term national SDG priorities. Japan’s SDG Roundtable brings together government, business, and civil society to shape national priorities (OECD, 2024[3]).

The SDGs represent a highly intersectoral agenda that cuts across ministries, areas of activity and levels of government. Water management influences energy production and industrial processes; energy policies shape urban development; industrial strategies affect land use, air quality, and biodiversity. National policies also have global repercussions through transboundary impacts on climate, biodiversity, food systems, and energy. These interdependencies mean that fragmented governance can lead to costly lock-ins – such as energy transitions that strain water resources or urban expansion that undermines climate goals. Whole-of-government co-ordination is therefore essential to align strategies across these systems, manage trade-offs (e.g., affordability versus decarbonisation, urban growth versus water security), and leverage synergies, (such as linking clean energy deployment with industrial innovation or integrating nature-based solutions into urban planning).National policies must anticipate transboundary impacts on climate, biodiversity, food systems, and energy security. Box 3.3 illustrates how country efforts, supported by OECD and the EU, are strengthening institutional conditions for PCSD to deliver integrated outcomes in key SDG areas.

Clear roles and responsibilities are critical to avoid that ambitious, cross-cutting agendas don’t fall through gaps between policy silos. Many countries designate a lead institution, often at the Centre of Government (CoG), to co-ordinate SDG implementation and ensure alignment across ministries. Others establish councils or committees for sustainable development to maintain engagement and momentum. While specialised bodies can raise visibility, integrating SDG co-ordination into existing CoG structures avoids unnecessary bureaucracy, strengthens political traction and can help clarify decision rights on the needed revisions and arbitrate between often-competing objectives (see below). These measures help anchor sustainable development at the core of government decision making, including decisions that cut across priority areas).

In South Africa, the Policy and Research Services branch in the Presidency is mandated to ensure policy coherence and facilitate policy co-ordination of the implementation of the government’s programme of action, and the National Development Plan integrates the SDGs into national policies. The German government has defined institutional roles that cover a significant range of PCSD functions: the State Secretaries’ Committee for Sustainable Development, for example, is responsible for coordinating sustainable development policies across ministries and ensuring policy coherence, while the Parliamentary Advisory Council on Sustainable Development provides oversight and ensures that sustainability principles are integrated into legislative processes. In Egypt, the Supreme Council of Energy was established to formulate policies, co-ordinate between stakeholders, and oversee the implementation of the national energy strategy (World Economic Forum, n.d.[6]).

Coherence requires institutional leadership that moves beyond information-sharing to embed sustainability into the operational fabric of government, setting clear expectations for how decisions are made, including surfacing trade-offs and proposing feasible implementation packages. This also means aligning organisational culture and day-to-day practices with strategic objectives, ensuring that coherence is not only understood conceptually, but enacted across all levels of administration.

In this context, the CoG plays a pivotal role in translating whole-of‑government‑government ambitions for sustainable development into coherent and actionable policy outcomes (OECD, 2024[7]). As the institutional locus responsible for supporting executive decision making, coordinating across ministries and arbitrating ‑ordinating across ministries and arbitrating trade-offs, CoGs are uniquely positioned to manage the systemic interdependencies that characterise the SDGs. In most OECD countries, CoGs act as gatekeepers for cabinet processes, reviewing draft strategies, legislation and major policy proposals to ensure alignment with government priorities and to reduce the risk of fragmented or contradictory measures. This crosscutting oversight function is particularly critical where decisions in water, energy, industry or urban development generate spillovers across sectors, territories or borders (see Box 3.4).

OECD surveys underscore the centrality of the CoG in this role. Around 92% of CoGs identify leading cross-cutting and whole‑cutting and whole-of‑government priorities as a core responsibility, reflecting their mandate to look beyond sectoral silos and balance competing objectives (OECD, 2023[8]). In the context of the 2030 Agenda, CoGs increasingly steward SDG implementation by embedding sustainability objectives into cabinet procedures, strategic planning cycles and policy quality standards. Integrating SDG co-ordination into existing CoG functions, rather than creating parallel structures, strengthens political ownership, reduces administrative duplication and helps ensure that long-term sustainability objectives are consistently driven through the public administration including to line ministries responsible for water, energy, industry, transport, housing and urban development.

Many CoGs issue policy development guidance, templates and coherence checks that require line ministries to assess cross-sectoral impacts and alignment with national priorities early in the policy cycle. When supported with analytical capacity, these tools enhance the CoG’s ability to identify inconsistencies, surface trade-offs and arbitrate between competing policy objectives, for example, across water allocation, energy affordability, industrial competitiveness and urban liveability. CoGs also deploy a range of institutional mechanisms to operationalise policy coherence. These include permanent or time‑bound inter‑ministerial committees, strategic foresight units, innovation labs, expert advisory groups and structured stakeholder dialogues. Such mechanisms help build a shared understanding of interlinkages, enable collective problem‑solving and create formal spaces to examine cross‑cutting challenges.

International experience also highlights important design and implementation challenges. The proliferation of committees or taskforces without clear mandates, decision making rights or review mechanisms can dilute accountability and increase administrative burden. In the absence of clear mandates, countries may introduce overlapping sustainability strategies or create co-ordination bodies without enforcement power, leading to duplication, policy fatigue, or even contradictory measures (e.g. fossil fuel subsidies alongside green investment incentives). Similarly, CoGs may face constraints where authority is not matched by analytical resources, or where responsibility for SDG co-ordination is located in institutions with limited leverage over economic or sectoral policies. Effective CoG leadership for policy coherence therefore depends on aligning mandates, authority and capacity, and on prioritising a limited number of high impact co-ordination mechanisms that are embedded in core government processes.

Ultimately, the strength of the CoG lies not only in its formal position, but in its ability to connect institutions, tools and incentives across government (OECD, 2024[7]). CoGs provide the institutional backbone for integrated policy action. This stewardship role is essential for moving from fragmented responses toward coherent strategies that manage trade-offs, leverage synergies and ensure that domestic policy choices contribute to sustainable development outcomes at home and globally, including across SDGs 6 (Clean Water and Sanitation), 7 (Affordable and Clean Energy), 9 (Industry, Innovation and Infrastructure) and 11 (Sustainable Cities and Communities). If required, the CoG could convene a resolution process, assign a decision owner, and ensure the agreed corrective action is reflected in a range of decision points and government tools, such as budgets, regulations, procurement and performance reviews.

Turning systemic consideration from aspiration into practice depends on governance conditions that embed this responsibility into decision making. Clear mandates backed by legal frameworks are critical: they make coherence a requirement rather than an option, and signal predictability to stakeholders. Spain’s legislation on development co-operation explicitly requires consideration of transboundary impacts, while Korea’s Framework Act on Sustainable Development stipulates that national development must not undermine environmental or social justice abroad.

However, mandates alone are insufficient. Systematic consideration must be supported by robust systems that make interlinkages visible and actionable. Interoperable data platforms and integrated indicator frameworks enable administrations to track spillovers, anticipate externalities and inform coherence checks early in the policy cycle. In practical terms, this may mean connecting datasets and indicators across water (e.g., availability, quality), energy (e.g., demand peaks, grid constraints), industry (e.g., emissions and supply chains) and cities (e.g., land use, housing, mobility), so decision makers can see trade-offs and synergies.

A coherent approach to the SDGs also depends on the wider policy-development capacity of the public administration, particularly coordinating bodies. CoGs in many OECD countries increasingly invest in capability-building initiatives such as competency frameworks, policy-quality standards, inter-ministerial training, and communities of practice. By equipping coordinating bodies with the skills to navigate complexity and work across sectors, governments can better embed SDG considerations into routine policy processes. This is critical for anticipating and managing systemic interactions. Examples include ensuring that energy infrastructure planning accounts for water availability, industrial decarbonisation aligns with innovation and circular economy strategies, and urban development integrates resilient transport and housing systems. Country experiences show how equipping coordinating bodies with strong mandates and analytical capacity can operationalise coherence across sectors. Portugal’s PLANAPP provides a compelling example (see Box 3.5).

Effective whole-of-government co-ordination requires robust communication channels that enable timely sharing of information, insights, and emerging policy signals across ministries and agencies. These channels are critical for identifying and managing systemic interdependencies. By creating structured forums, through formal committees, focal-point networks, innovation labs, inter-ministerial briefings or even informal exchanges, governments can identify cross-sectoral impacts early, anticipate trade-offs, and design integrated solutions.

Recent analysis underscores the importance of transparency, digital platforms and open communication to build coherence. Digital government initiatives – such as interoperability platforms, shared policy dashboards, and open-data portals – provide essential infrastructure for cross-departmental dialogue and joint analysis, laying the foundation for decision making (OECD, 2025[13]). Moreover, governments exhibiting higher levels of openness and participation tend to have stronger co-ordination outcomes and higher public trust in their institutions. For water, energy, industry and cities decision points, this can mean agreeing on simple data-sharing protocols and minimum shared datasets, so that each public actor works from a consistent basis.

By complementing institutional co-ordination mechanisms with transparent information flows and digital infrastructure, governments also enhance the legitimacy and responsiveness of their SDG implementation across sectors. This can support integrated planning for infrastructure investments, innovation strategies, and resilience measures, ensuring that policies reinforce each other rather than create costly lock-ins, for example, by synchronising water and energy infrastructure upgrades with industrial siting decisions and city expansion plans.

Building capacity within administrations is essential to ensure that institutional reforms and accountability mechanisms are supported by the technical expertise needed to manage interlinkages across SDGs, including on water, energy, industry and urban systems. Engagement can be limited by a lack of awareness of sustainable development interdependencies across ministries. For example, ministries may not see sustainable development as part of their core mandate, making them less likely to apply coherence tools or consider impacts beyond their sector. Equally, public servants may lack the technical skills or knowledge to integrate cross-sectoral agendas or the SDGs into their areas of work. Governments can also strengthen these capabilities by embedding sustainability directly within public administration practices, ensuring that government operations themselves reflect the objectives they promote externally (see Box 3.7).

Capacity building efforts, such as competency frameworks, have been designed to target cross-disciplinary knowledge or skills, and can facilitate coherence in policymaking. Poland, with the support of the EU and the OECD, has developed a capacity building programme on SDG implementation, including targeted modules on policy coherence for sustainable development, which is available online to all central-level civil servants. Malta is embarking on a similar project. Belgium has acted to address such issues through a major awareness and information campaign on the SDGs that includes an exhaustive inventory of existing tools for implementing the SDGs across various public services and organisations.

Multilevel governance arrangements that ensure vertical coherence are essential to accelerate SDG progress and tackle complex challenges. Global agreements, for example, set shared trajectories, while national governments align fiscal and industrial policies, and local authorities manage land use, water systems, and transport. Local governments – responsible for 55% of public investment in OECD countries – are pivotal for SDGs 6, 7, 9 and 11, as they deliver water and sanitation services, energy infrastructure, housing, and urban mobility. As highlighted in Chapter 1, it is estimated that 65% of SDG targets cannot be achieved without active engagement of subnational governments, making vertical co-ordination a cornerstone of coherent implementation, including clarification of delivery responsibilities, financing, and decision rights.

OECD countries are embedding this principle through national sustainable development strategies, local monitoring systems, and formal mechanisms such as interterritorial commissions and participation of local authorities in national SDG councils. Italy offers a notable example: regions are localising the National Action Plan on PCSD and aligning their Regional Sustainable Development Strategies with the National Sustainable Development Strategy, as well as international and EU-level frameworks. The Piemonte Region is developing a permanent Laboratory for PCSD, a co-design process that brings together regional departments, agencies, and experts to integrate coherence into planning and investment decisions (OECD, 2024[3]).

Beyond vertical co-ordination, multi-level and multi-stakeholder partnerships, such as city-to-city partnerships and decentralised development co-operation (DDC) are emerging as critical vehicles for advancing SDG 17 at the local level. Such initiatives are helping to align local delivery models with national priorities in priority areas (e.g., service affordability and procurement practices) (OECD, 2023[15]). These partnerships foster mutual learning between local and regional governments from OECD and partner countries, enabling knowledge exchange and peer-to-peer capacity building in areas such as local governance, water management (SDG 6), and waste services (SDG 12). Unlike traditional technical assistance, modern DDC increasingly operates on principles of reciprocity and mutual benefit, leveraging the comparative strengths of subnational governments to co-create local solutions.

Recent trends underscore the growing importance of these partnerships. Between 2015 and 2023, overall volumes of DDC increased by more than 60%, reflecting growing demand and recognition of its added value. DDC now spans a wide range of urban development sectors, from education and health to governance and civil society (OECD, 2023[15]).

National governments and development co-operation agencies can play a vital enabling role. By connecting supply and demand, supporting capacity development, and fostering policy coherence between decentralised efforts and national strategies, they can reduce fragmentation and strengthen alignment between municipal initiatives and national and partner-country strategies. This includes clarifying roles across levels of government, supporting pipeline development and quality assurance, and creating incentives for coherence, such as co-financing linked to agreed priorities, shared results frameworks, and learning loops (Box 3.8)

Ongoing OECD work aims to strengthen the evidence base on how DDC contributes to local governance and SDG outcomes. Preliminary findings provide the first quantitative evidence of associations between DDC ODA – ODA channelled through subnational governments – and SDG outcomes in partner regions and cities, notably in regional income growth and the expansion of urban green areas. They also point to improvements in local governance in OECD regions and cities, including gains in institutional quality and perceived impartiality. In addition, qualitative evidence from the OECD Impact Survey highlights the importance of the non-financial dimension of DDC, with OECD regions and cities reporting benefits in access to new knowledge and innovation and strengthened institutional capacity. The new global community of practice on decentralised development co-operation, anchored in the OECD Roundtable on Cities and Regions for the SDGs and the Seville Platform for Action (SPA), will connect national governments, regions and cities from OECD and partner countries. The platform aims to enable regular exchanges, lesson-sharing, and peer learning across a growing ecosystem of decentralised actors, contributing to more coherent and impactful local development co-operation.

Institutional conditions provide the backbone for coherent and co-ordinated policymaking, ensuring that long-term visions, legal mandates, and whole-of-government co-ordination are firmly in place. Yet these foundations alone cannot deliver the integrated outcomes required by the 2030 Agenda. International collaboration can play a pivotal role in strengthening governance levers. Governance tools, analysed in the next section, if applied consistently, enable administrations to anticipate interlinkages, manage trade-offs, and prevent lock-ins (e.g., energy investments that intensify water stress or industrial policies that increase urban pollution).

Formal co-ordination structures or mandates are not always sufficient to overcome entrenched silos, competing incentives, or capacity gaps across ministries and levels of government. Addressing these constraints may require gradual reforms, dedicated capacity-building, and sustained political commitment. Ensuring realistic timelines and prioritising early wins can help build momentum and demonstrate the value of integrated approaches.

Building on the institutional foundations outlined in section 3.1, this section turns to the practical governance instruments that operationalise coherence in day-to-day policymaking. Once these foundations are in place, governments can deploy a range of practical tools that anticipate systemic risks, align resources with integrated priorities, and ensure accountability for outcomes across water, energy, industry and urban systems. Organised into three functional clusters, this section explores: (i) anticipatory governance tools that help manage uncertainty and interdependencies; (ii) resource alignment instruments that steer investments toward integrated outcomes; and (iii) regulatory and accountability frameworks that make trade-offs and transboundary spillovers visible and governable. By integrating these instruments into planning and implementation processes, countries can strengthen resilience, improve resource efficiency, and ensure that policies across water, energy, industry, and urban systems contribute to widely shared and sustainable development. OECD analysis and country experiences illustrate how these tools can be adapted to different institutional contexts and capacity levels.

To make the most of these tools, governments first need to understand where policy interactions occur, and how they may amplify or undermine each other. This requires practical ways to identify cross-sectoral and transboundary impacts early in the policy cycle (Box 3.9).

OECD analysis finds that systemic risks – such as climate shocks, resource scarcity, and technological disruptions – often emerge gradually and interact across sectors. Anticipatory governance tools, including strategic foresight and AI-enabled risk management, enable administrations to stress-test policies against multiple scenarios, identify cascading impacts, and prepare for discontinuities. By embedding foresight into planning and budget cycles, governments can ensure that decisions on energy infrastructure, water management, industrial innovation, and urban development remain robust and aligned with long-term sustainability objectives.

Short-term political cycles and siloed planning processes undermine coherence by narrowing policy horizons and reinforcing sectoral logics. Strategic foresight helps overcome this by identifying emerging risks and opportunities early, and supporting integrated planning across sectors and timelines. As highlighted in Chapters 1 and 2, major sustainability trade-offs often emerge over time rather than at the point of decision. Strategic foresight helps governments surface these future tensions early and test policy choices against multiple risk pathways.

Strategic foresight is increasingly central to coherent, future‑ready policymaking. It enables administrations to think systematically about alternative plausible futures, challenge assumptions, and prepare for discontinuities. This is particularly relevant for water, energy, industry and urban systems. In times of heightened uncertainty and interdependence, foresight helps to stress‑testing policies against shocks, cascading impacts and deep uncertainties that conventional models struggle to capture (OECD, 2025[18]).

Recent OECD guidance proposes a practical five‑step foresight process – from scanning and exploring disruptions (e.g., climate hazards or supply-chain disruptions) to building scenarios, stress‑testing strategies, and translating insights into actionable plans, accompanied by explicit inclusion of transboundary channels (e.g., critical mineral supply chains or cross-border water impacts) and identification of early mitigation options (OECD, 2025[18]).

Governments are also beginning to use AI‑enabled scanning and analysis to broaden inputs and accelerate scenario design, while addressing reliability, transparency and bias challenges to ensure AI strengthens rather than distorts foresight practice (The World Economic Forum/OECD, 2025[19]).

To make foresight a governance lever, OECD practice highlights four institutional conditions: diversity of perspectives (to surface blind spots), independence (to challenge the status quo), high‑level champions (to protect the function and secure use), and embedding into core processes (strategy, budget cycles, regulation, performance dialogues). When these conditions are in place, foresight can inform priority setting, align long‑term trajectories with annual budgeting and RIAs, and support whole‑of‑government stewardship, especially from the centre of government (OECD, 2025[18])

Countries are increasingly using foresight to inform strategies that accelerate progress on interconnected goals. Finland applies scenario‑based stress tests to energy transition plans, ensuring investment pathways remain resilient under different climate and technology futures (Government of Finland. Prime Minister’s Office, 2025[20]). Italy uses foresight in integrated urban policy to anticipate demographic and infrastructure challenges and guide long‑term strategies for housing, transport and green infrastructure (OECD, 2025[21]).

Operational value emerges when foresight is translated into concrete decisions. Scenarios can guide capital allocation for clean energy and circular industry, stress‑tests can inform regulatory design for high‑emission sectors, and horizon scans can feed centre‑of‑government dialogues to anticipate spillovers rather than react to them. Embedding these linkages into budgeting and evaluation frameworks is a best practice for strengthening coherence and resilience across the policy cycle (OECD, 2023[22]).

Artificial intelligence (AI) is becoming a strategic enabler for governments, improving productivity, responsiveness and accountability across the policy cycle. OECD analysis of 200 use cases shows AI is increasingly applied in areas critical for sustainable development, including water and climate resilience, energy transition, industrial innovation and infrastructure, and urban policy. It provides the potential to strengthen coherence across these areas by improving the timeliness and granularity of information used to manage interdependencies and trade-offs. These applications range from predictive analytics and scenario simulation to anomaly detection and participatory planning, helping administrations anticipate risks, optimise resources and engage citizens in shaping future sustainable development pathways (OECD, 2025[23]).

Extreme weather and resource pressures demand foresight and agility. AI-driven predictive models are helping governments move from reactive responses to proactive planning. Canada’s wildfire prediction system, for example, uses historical and real-time data to anticipate fire risks and guide emergency preparedness. Belgium applies AI to forecast slippery road conditions, enabling timely winter maintenance and reducing accidents (OECD, 2025[23]).

AI is also reshaping how governments manage complex transitions in energy and industry. Korea’s dBrain+ platform integrates real-time fiscal and economic data with AI analytics to support risk-based budgeting and investment sequencing. In public integrity systems, Portugal uses AI to prioritise audits in procurement, while Chile applies large language models to detect irregularities (OECD, 2025[23]). These tools safeguard resources and improve the enabling environment for clean energy and industrial decarbonisation, critical for coherent long-term planning.

Urban policy is another area where AI is making governance more participatory and adaptive. Helsinki’s UrbanistAI tool generates visualisations of alternative planning scenarios, helping stakeholders weigh trade-offs and build consensus on compact, low-carbon development. Digital assistants such as France’s Albert and the UK’s Caddy improve access to regulatory and service information, while open-source platforms like Polis enable large-scale deliberation and clustering of citizen inputs (OECD, 2025[23]). These innovations illustrate how AI can help cities design for resilience and inclusion in an era of rapid change (Box 3.10), including decisions that affect energy demand, water service requirements and infrastructure investment needs.

AI offers governments a powerful lever to anticipate shocks, optimise resource allocation and support sustainable development pathways, but only if adoption is strategic and trustworthy. Moving beyond pilots to mainstream AI in budgeting, regulatory delivery and urban planning can connect long-term trajectories with annual decisions, strengthen centre-of-government stewardship and improve coherence across water, energy, industry and cities. The challenge is clear: start where capacity and data are strongest, mitigate risks early, and scale responsibly to deliver public value.

Budgeting is a central lever for coherence, as we’ve seen how green budgeting integrates environmental and social objectives into fiscal frameworks, aligning resources with cross-sectoral priorities. Public budgets and procurement represent some of the most powerful governance levers for shaping sustainability trajectories. OECD analysis shows that fiscal choices influence whether countries accelerate green transitions or lock in unsustainable patterns. Green budgeting moves beyond descriptive tagging to alignment checks that test consistency with SDG objectives, while green public procurement uses purchasing power to stimulate markets for low-carbon and resource-efficient solutions. Together, these instruments help governments connect resource decisions across priority areas and steer investments toward integrated outcomes; this can include linking clean energy deployment with industrial decarbonisation, ensuring water and sanitation investments keep pace with urban growth and embedding circular economy principles in urban infrastructure.

Public procurement is a powerful governance lever for advancing sustainable development. Globally, governments spend approximately 12-14 % of GDP – equivalent to around USD 11 trillion annually – on public contracts (Bosio and S. Djankov, 2020[25]), while OECD countries average 12 % of GDP and 30 % of public expenditure (OECD, 2025[13]). This scale gives governments significant influence over markets and the ability to shape sustainability outcomes in sectors where public and private actions intersect, such as water services and resource management (e.g., treatment, networks, leakage reduction), clean energy transitions (grids, renewables, efficiency), industrial innovation and decarbonisation (low-carbon materials, circularity), and urban development (housing, transport, public space). All these spheres are critical to accelerate progress on SDGs 6, 7, 9, 11 and 17. By embedding sustainability criteria into procurement processes, governments can align short-term purchasing decisions with long-term objectives and stimulate demand for low-carbon technologies and resource-efficient solutions (OECD, 2024[26]). Procurement must function as a strategic governance tool rather than a transactional process. OECD analysis shows that impact is greatest when procurement is embedded in broader frameworks that promote coherence (OECD, 2024[26]). National strategies in Portugal and France mandate green criteria in tenders, linking procurement to climate and circular economy goals. Co-ordinated platforms, such as those in Sweden, where procurement authorities and environmental agencies jointly guide climate-aligned purchasing, and in Italy, where procurement is integrated into the National Sustainable Development Strategy, help reconcile environmental objectives with market realities. (OECD, 2024[26]).

Country experiences illustrate how governance arrangements translate into practice. In Greece, procurement for river restoration and electric bus fleets linked water management with clean urban mobility. Italy piloted innovative water management solutions to strengthen infrastructure resilience and resource efficiency. Portugal embedded circular economy principles into regional procurement strategies, promoting industrial transformation and waste reduction (OECD, 2024[26]). Similarly, experiences in the United Kingdom and Mexico show how adapting public procurement and funding frameworks has enabled the scaling‑up of nature‑based solutions for flood and water risk management, linking ecosystem restoration with infrastructure resilience and land‑use planning (OECD, 2021[27]). These examples demonstrate how procurement can operationalise systemic linkages across water, energy, industry and urban systems, turning purchasing power into a driver of coherent, cross-sectoral progress.

Public budgets can shape the trajectory of sustainable development and investments across water, energy, industry, and urban systems. By determining where resources flow, budgets influence whether countries can strengthen resilience. Recent OECD analysis underscores that fiscal choices remain available for achieving environmental protection goals, and that the way budgets are structured can either amplify trade-offs or unlock synergies that deliver multiple SDG benefits simultaneously (OECD, 2025[13]) (OECD, 2024[28]).

The strategic use of budgeting is therefore critical. While many OECD countries have introduced green budgeting instruments, the use of the instruments is broadening to include spending reviews and investment approvals. The moved recognises that to be effective, green budgeting needs to move beyond budget tagging to clear alignment tests that flag measures inconsistent with agreed trajectories (OECD, 2024[28]). The adoption of green budgeting instruments should also examine whether medium‑term budgets are consistent with key sustainability objectives.

Spain’s approach, summarised in Box 3.11, demonstrates how embedding SDG alignment in the legal framework of the budget process can turn fiscal governance into a driver of integrated policymaking. Ghana is another country committed to generating and using data to guide policy decisions and budget allocations, publishing an annual SDG Budget and Expenditure Report. Ghana’s budget is also linked to indicators in the 2063 Agenda for Africa (APRM-OECD, 2025[4]).

Embedding these practices in the core budget cycle – rather than in parallel reporting – can strengthen accountability and improve the credibility of fiscal frameworks. It also responds to persistent gaps identified in governance assessments related to limited enforceability of coherence measures, insufficient technical capacity and weak consideration of transboundary impacts (OECD, 2024[3]). By linking alignment checks to budget negotiations, and publishing the results alongside fiscal documentation, governments can achieve more clarity between strategic objectives and resource allocation.

Governance arrangements are critical to making this work (OECD, 2024[28]). Experiences from OECD member countries show that green budgeting is most effective when ministries of finance collaborate closely with environment and sectoral ministries. When analytical outputs feed directly into ceilings, spending reviews and investment planning, it can help resolve cross-sector trade-offs. Linking budgeting to other governance tools, such as regulatory impact assessments, strategic foresight and green procurement, further enhances coherence (OECD, 2025[13]). These connections allow governments to manage trade-offs holistically, and to align fiscal decisions with broader policy objectives.

Improving the quality of budgeting tools is indispensable. Current classifications capture the primary purpose of spending but often overlook secondary environmental impacts (positive or negative) or cumulative effects across sectors. Strengthening analytical capacity within finance ministries and line agencies is equally important, as is investing in skills and guidance to ensure that sustainability considerations become a routine part of fiscal decision making (OECD, 2024[29]). These steps would not only enhance domestic policy coherence but also help governments anticipate and mitigate transboundary effects – an area where progress remains limited despite its centrality to the 2030 Agenda (OECD, 2024[3]).

The strategic use of budgeting does not stand alone. Its effectiveness depends on integration with complementary instruments that enable adaptive policymaking. Strategic foresight can inform budget choices by anticipating long-term risks and opportunities, while regulatory impact assessments provide information on the systemic effects of policies beyond their primary objectives. Green public procurement reinforces these efforts by aligning market incentives with sustainability goals. Together, these tools create a governance ecosystem where fiscal decisions, regulatory frameworks and investment strategies converge to deliver coherent, forward-looking outcomes across sectors and levels of government to help align water investments with energy and industrial transitions, and ensure cities can deliver housing, mobility and resilient services consistent with national targets (Box 3.12).

Regulatory frameworks and accountability mechanisms are essential for managing policy interactions across interconnected systems. This is clearly the case for water, energy, industry and cities, where decisions on infrastructure, markets, standards and permits routinely create cross-sector effects and long-lived lock-ins.

Good regulatory practices (GRPs) are powerful tools for policy design, providing governments with a coherent set of mechanisms, including regulatory impact assessment, stakeholder engagement, and the monitoring and evaluation of regulations, to integrate economic, social and environmental considerations across the policy cycle. Applied together, these practices help policymakers identify trade-offs, manage spillovers and align domestic regulatory choices with broader sustainability goals.

Regulatory impact assessment (RIA) is one of the most important instruments within this toolkit. By embedding sustainability considerations into ex ante assessments, RIAs can make trade-offs and spillovers more visible, for example, water stress from energy projects or emissions embodied in global supply chains. This enables governments to anticipate unintended consequences, assess the costs and benefits of different options, and align decisions with global sustainability goals. Consultation with affected stakeholders is a critical part of this process, ensuring that diverse perspectives inform policy outcomes (OECD, 2020[32]).

Regulation is a cornerstone of sustainable development. It shapes outcomes in critical systems such as energy, water, transport and telecommunications, which underpin economic activity, social well-being and environmental sustainability. These systems are undergoing rapid transformation, driven by climate objectives, technological innovation and evolving market structures (OECD, 2025[33]). Decisions on issues such as energy decarbonisation, infrastructure investment or market regulation increasingly need to be taken amid uncertain conditions, while managing complex interactions between economic, social and environmental objectives.

Given the interconnected and global nature of the SDGs, regulatory decisions also have implications beyond national borders and over the long term, including for SDGs 6, 7, 9 and 11, as regulatory choices in one domain (e.g., energy market rules) can shift risks and costs across the others. This makes it essential for regulatory frameworks to anticipate cross-sectoral linkages, manage trade-offs and consider potential transboundary impacts, ensuring that domestic regulatory choices support sustainable development objectives in an integrated and coherent manner.

Regulatory impact assessment (RIA) is a critical governance tool for strengthening decision making and improving the quality of regulation (OECD, 2025[33]). RIAs can help governments identify likely effects on sustainable development, compare alternative policy options and balance economic, social and environmental objectives (OECD, 2025[13]). When applied systematically, RIAs make trade-offs explicit and help ground decisions, supporting regulation that is transparent, balanced and aligned with both national and international sustainability goals, including the SDGs and the Paris Agreement.

The 2025 OECD Regulatory Policy Outlook (OECD, 2025[34]) shows that while most OECD countries formally require environmental and social considerations as part of their RIA frameworks, implementation remains uneven. Few countries conduct granular assessments of key sustainability dimensions, such as biodiversity, and greenhouse gas emissions or extreme-weather resilience. Embedding these dimensions into RIA processes – and equipping regulators with the data, tools and capacity to do so – is essential to ensure that regulations support integrated and forward-looking policy objectives.

Despite progress, structured RIA processes that systematically inform regulatory design remain uneven across countries (OECD, 2025[34]). In many countries, RIA still focuses on short-term economic efficiency, overlooking environmental and social dimensions and too often failing to anticipate spillovers beyond national borders. Strengthening RIAs to better serve SDG considerations thereby requires three shifts:

• First, expand the scope and alignment of impact assessments by explicitly linking RIA to national SDG strategies and sustainability objectives, as already piloted in several OECD countries (see Box 3.13) (OECD, 2023[35]). To be effective, especially for proposals with material distributional impacts (for households, SMEs, workers or regions and municipalities), RIAs should include mitigation options, feasible design alternatives, sequencing options, and proposed safeguards or compensation measures, and clarify how these connect to budgeting and delivery.

• Second, strengthen the monitoring of regulatory impacts over time, particularly for long-term and transboundary effects in high-emission sectors. This connects to the broader GRP framework: ex-post review of regulations is essential to determine whether they are delivering expected sustainability outcomes and to identify unintended consequences requiring course correction.

• Third, invest in the enabling conditions needed to operationalise these ambitions: granular sectoral data, interoperable systems, analytical capacity, clear institutional mandates, and robust regulatory oversight bodies with the authority and resources to ensure that assessments are conducted thoroughly and from the earliest stages of the policy process. Without these foundations, RIAs risk becoming procedural checklists rather than strategic tools for policy coherence across water infrastructure, energy markets, industrial transition pathways and city development.

Good regulatory practices, of which RIA is a central instrument, support more coherent and balanced regulation by ensuring effective implementation and monitoring across the policy cycle. RIA in particular strengthens informed decision making by making trade-offs explicit, engaging stakeholders and promoting transparency. When applied effectively within a broader GRP framework, these tools can help align regulatory outcomes with environmental and economic goals, for example, balancing affordability with decarbonisation or resource efficiency (OECD, 2023[35]). However, OECD reviews highlight persistent challenges: limited technical capacity, fragmented mandates and insufficient integration of RIAs into broader governance frameworks (OECD, 2024[3]). Box 3.13, illustrates how Luxembourg’s Sustainability Check embeds these principles into the legislative process, moving RIAs beyond economic analysis toward integrated assessments of sustainable development impacts.

RIAs are most effective when connected to complementary instruments. Strategic foresight can help anticipate future regulatory challenges and strengthen policy coherence, while green procurement and performance budgeting reinforce incentives for sustainable outcomes. Together, these tools create an integrated governance ecosystem where regulation, fiscal policy and investment strategies work in concert to deliver coherent, forward-looking results across sectors and levels of government.

Periodic ex-post reviews of regulations are essential to ensure that laws and policies remain fit for purpose as technology, environmental conditions and societal needs evolve. Such reviews help determine whether regulations are delivering expected sustainability outcomes, identify unintended consequences, and support continuous improvement. Embedding sustainability criteria into these reviews allows governments to adjust course where needed and ensure that regulatory frameworks continue to promote long-term SDG objectives.

Without interoperable data, interlinkages and spillovers can remain invisible, limiting the possibility to influence choices on budgets, regulation or delivery. Robust monitoring, reporting and evaluation (MRE) systems are the backbone of coherent and sustainable policymaking. They translate strategic intent into clear policy objectives, measurable outcomes and performance information, reveal whether policies, programmes and investments are delivering as intended, and provide early warnings when course corrections are needed. Recent OECD analysis emphasises that, in an era of fiscal limits and heightened expectations, performance information must become routine for cabinet and center‑of‑government action (OECD, 2025[13]). This is particularly relevant for SDG implementation, where outcomes depend on co-ordinated actions across multiple sectors and levels of government, unfold over long horizons, and often generate effects across borders.

The latest OECD report on the implementation of the OECD Recommendation on PCSD (OECD, 2024[3]) confirms that many countries collect SDG data and indicators, yet few systematically monitor transboundary impacts or embed coherence tests in evaluation routines. These gaps weaken the feedback loop on decisions (OECD, 2024[3]), including the impacts transmitted through energy and industrial supply chains, traded emissions, and/or shared water and ecosystem systems.

To move from reporting to decision making, OECD guidance highlights three pillars for effective monitoring and evaluation systems: institutionalisation, quality, and use. Institutionalisation anchors mandates and roles; quality sets standards for methods and data; use ensures that findings inform strategy, budgeting, regulation and delivery. The OECD Recommendation on Public Policy Evaluation [OECD/LEGAL/0478] and its implementation toolkit articulates these pillars and positions evaluation as a shared responsibility across government levels, integrating monitoring data, ex ante and ex post evaluations, and performance audits to drive learning and accountability (OECD, 2022[36]).

Beyond institutional mandates and oversight, effective coherence depends on the ability to translate monitoring data into actionable insight. For example, performance dialogues could routinely include a distributional analysis, such as affordability and access, service reliability, and place-based impacts (e.g., regional employment effects of industrial transition). This approach can help develop responses from the coherence reforms (e.g., policy adjustment, targeted support, or revised sequencing).

Countries should aim to combine interoperable digital platforms, integrated indicator frameworks, methodological standards and clear links with decision points, including budget negotiations, regulatory reviews, risk assessments and proportionate approaches to compliance, to ensure that monitoring systems are both robust and administratively feasible. Such an approach allows for tracking progress, aggregating results across sectors, diffusing strategic objectives throughout the public administration, and simplifying the regulatory landscape by identifying and reducing unnecessary burdens on citizens and businesses (OECD, 2025[13]). Importantly, integrating spillover analysis (even using proportionate qualitative methods where data is scarce) into monitoring frameworks and evaluation guidance, especially when linked to decision points (e.g., spending reviews), can help administrations anticipate externalities, trigger corrective action, and align domestic decisions with global sustainability objectives (OECD, 2024[3]).

Monitoring and evaluation have the strongest impact when embedded in structured work routines (OECD, 2024[7]). Regular, data-driven review meetings create predictable rhythms for assessing progress, challenging assumptions and coordinating action. Integrating holistic sustainability assessments into governance frameworks has become essential for achieving the SDGs. These assessments go beyond traditional monitoring by combining quantitative indicators with foresight and systemic analysis, enabling governments to anticipate risks, identify synergies and manage trade-offs across sectors. By linking strategic planning and investment decisions, integrated approaches help administrations move from fragmented reporting to adaptive policymaking. They provide a structured basis for aligning priorities such as energy security, biodiversity protection and resource efficiency, ensuring that short-term actions remain consistent with long-term sustainability objectives (OECD, 2024[3]).

For government tools to deliver impact, they need to be integrated into core governance processes that include cabinet submissions, budget circulars and spending reviews. This can allow governments to move from general commitments to decisions that can hold politically, when trade-offs are surfaced early, and an explicit package is agreed before policies are locked in through budgets and other key decisions.

Translating coherence tools into impact demands political leadership, coalition-building, and a realistic reform trajectory. Governments often face resistance from established bureaucratic practices, capacity gaps at the working level, and incentive misalignments that discourage cross-sectoral collaboration Sequencing reforms strategically can help overcome these barriers: for example, starting with budgeting or procurement reforms help link directly to service delivery to build early momentum and stakeholder buy-in, such as improving water-network investment planning, accelerating clean and reliable energy infrastructure, procuring low-carbon public transport, or upgrading public buildings and facilities.

Importantly, coherence reforms can shift resources, discretion and visibility across ministries and levels of government. The resulting perceived loss of autonomy added procedural burden, or short-term cost exposure could in turn generate resistance among stakeholders. To advance such reforms, it’s important to secure a finance ministry and/or CoG alliance to link coherence requirement to resource allocation and delivery, possibly starting with sectors where benefits are easy to demonstrate (e.g., cost savings or service reliability).

Strengthening governance for coherence frameworks requires whole-of-government approaches, clear mandates, open and transparent decision making and enforceable accountability mechanisms. Multi-stakeholder platforms and cross-sector partnerships can align priorities, mobilise resources and foster innovation, but require sustained financing, clear responsibilities and follow-through to be effective. International co-operation is equally critical to address transboundary impacts, such as carbon leakage, supply-chain disruptions and shared resource management.

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