As the 2030 deadline for the Sustainable Development Goals (SDGs) approaches, the global community faces a sobering reality: only 18% of targets are currently on track. While political commitment to the 2030 Agenda remains strong, a persistent gap separates sustainability ambitions from the way public resources are actually planned and spent. Understanding how local public finance systems are adapting to sustainability goals is essential for assessing whether the 2030 Agenda can be delivered in practice, given the critical role that subnational governments play in achieving the SDGs.
The recent report, “Local Public Finances and the Governance of SDGs: Insights from Amsterdam, Barcelona, Bordeaux and Hamburg,” published by the KDZ – Centre for Public Administration Research, explores how leading European cities are attempting to bridge this gap. It examines how the governance of SDGs through public finance is evolving at the local level, highlighting both promising innovations and structural bottlenecks that continue to limit impact. This report represents the first analytical output of the EU-funded Sustainability in Local Public Finances (SLPF) project, providing a structured examination of how cities are integrating SDG considerations into their budgeting processes.
At its core, SDG budgeting is not simply about tagging expenditures or producing sustainability reports. It represents a strategic shift in how cities plan, allocate, and monitor public resources. Linking financial decisions to long-term societal outcomes — in housing, mobility, climate resilience, and social inclusion — is essential if municipal budgets are to become genuine instruments of sustainable transformation.
Selected legal and guiding frameworks for SDG budgeting
A variety of global, regional, and non-governmental frameworks guide local governments in integrating the Sustainable Development Goals (SDGs) into public financial management.
At the global level, the United Nations provides the Global Indicator Framework, the UNDP Budgeting for the SDGs Handbook, and the United for Smart Sustainable Cities (U4SSC) initiative. These tools help cities translate global goals into actionable local strategies, emphasising inclusive, evidence-based planning, participatory governance, and the use of disaggregated data to ensure no one is left behind. Budget tagging, fiscal decentralisation, and monitoring tools support municipalities in aligning spending with SDG priorities while tracking results effectively.
The OECD Green Budgeting Framework offers a structured methodology to incorporate environmental and climate objectives into budget processes. While initially developed for national governments, its methods—including budget tagging, impact assessments, cost–benefit analysis, and spending reviews—are highly relevant for local administrations. The framework highlights the importance of institutional coordination, political commitment, and technical capacity, demonstrating that integrating SDG priorities requires both governance structures and analytical tools.
At the European level, the EU provides the SDG Indicator Set, the Green Budgeting Reference Framework (GBRF), the EU Taxonomy, and Voluntary Local Reviews (VLRs). These instruments allow cities to align local budgets with EU and global sustainability goals, providing harmonised data, practical guidance, and classification tools to monitor and promote sustainable investments. VLRs, in particular, emphasise an iterative, process-oriented approach, enabling local governments to assess progress, prioritise actions, and engage stakeholders effectively.
Non-governmental organisations also offer practical guidance for SDG budgeting. The Bertelsmann Stiftung SDG indicators provide municipalities with a flexible framework to monitor local progress and identify priority areas for action, while the C40 Climate Budgeting Framework integrates climate and equity considerations into municipal budgets, linking long-term commitments to short-term, measurable actions. These NGO-led tools demonstrate the value of combining robust data, participatory governance, and iterative learning in local SDG implementation.
Four cities, four pathways: SWOT Insights
Amsterdam: Strategic climate innovation with structural constraints
Amsterdam benefits from strong financial sustainability, diversified revenue sources, and a mature programmatic budgeting system built around its “Goal Tree” framework. This structure links spending to policy objectives and provides a foundation for sustainability-oriented planning. The city has also launched an innovative CO₂ budgeting approach, treating emissions as a scarce resource and linking climate targets to fiscal decision-making.
Yet structural rigidities remain. The Goal Tree logic limits the ability to capture cross-cutting SDG linkages, and SDGs are not formally embedded in the budget classification system. Instead, they mainly appear through strategic objectives and reporting exercises. Short-term, project-based national funding further undermines long-term sustainability planning, while monitoring systems rarely translate SDG ambitions into binding financial choices.
Barcelona: Leading in SDG budgeting, constrained in fiscal steering
Barcelona demonstrates a leading example of SDG-aligned budgeting, with substantial financial allocations to key goals such as Sustainable Cities (SDG 11), Quality Education (SDG 4), and Strong Institutions (SDG 16). Technical innovations—including budget tagging, climate budget assessments, and participatory budgeting—have strengthened transparency and citizen engagement. However, SDG considerations currently exert limited influence on actual budget decisions. Tagging quality varies across departments, performance data is rarely used to guide spending, and national fiscal rules constrain local autonomy. Institutional fragmentation and weak coordination further limit the city’s capacity to strategically reallocate resources. Barcelona’s experience shows that while participatory processes and technical tools are necessary, they must be complemented by stronger institutional coordination, fiscal flexibility, and systematic use of performance data for SDG budgeting to move from reporting toward effective financial steering.
Bordeaux Métropole: Climate-led budgeting within a strong regulatory framework
Bordeaux Métropole stands out as a frontrunner in climate-oriented budgeting. The city applies the I4CE methodology and has developed a Green Multi-Annual Investment Plan (PPI) to assess the climate impact of public spending. This approach is reinforced by France’s legal requirement to include an environmental annex in municipal budgets, creating a formal entry point for sustainability evaluation.
Rather than positioning itself as an SDG budgeting pioneer, Bordeaux’s approach remains primarily climate-driven. While tailored tools, digital dashboards, and pilot financing instruments support environmental monitoring, broader SDG integration — particularly on social and economic dimensions — remains limited. Institutional complexity at the metropolitan level further complicates coordination across municipalities.
Looking ahead, Bordeaux’s experience suggests that climate budgeting can serve as a gateway for wider SDG integration. Stronger stakeholder engagement and selective alignment of SDGs with existing climate investment tools could help broaden the sustainability agenda without overburdening administrative systems.
Hamburg: Advanced performance systems with untapped SDG potential
Hamburg operates one of Europe’s most sophisticated performance-oriented budgeting systems. Supported by strong fiscal autonomy and an advanced digital infrastructure, the city manages more than 1,200 key performance indicators covering economic, social, environmental, and gender-related objectives.
Recent efforts to link these indicators to the SDGs and the publication of Hamburg’s first Voluntary Local Review signal growing political commitment to sustainability. However, SDG integration remains largely symbolic. The link between KPIs, expenditures, and sustainability outcomes is weak, and SDG references currently function more as reporting labels than as drivers of fiscal prioritisation.
Hamburg’s SDG integration corresponds to the first two stages of SDG budgeting: political signalling—through legal frameworks, parliamentary engagement, and public declarations—and technical tagging, linking KPIs to SDGs within the budget system. The third stage, analytical evaluation, remains underdeveloped, with no systematic method to assess how public spending contributes to achieving SDG targets.
Comparative analysis
A comparison of Amsterdam, Barcelona, Bordeaux and the City of Hamburg highlights both shared patterns and distinct institutional pathways in aligning local public finances with the Sustainable Development Goals. All four cities benefit from strong administrative capacity, mature budgeting systems and increasing political recognition of sustainability as a long‑term priority. However, these strengths take different forms: Amsterdam and Hamburg draw on high fiscal autonomy and advanced performance‑based budgeting, Barcelona has developed explicit SDG tagging and transparency instruments, while Bordeaux demonstrates particular strength in green budgeting and climate‑aligned investment planning.
Despite these advances, important limitations remain across the four cases. SDG commitments are not yet fully translated into binding budgetary choices, indicator systems remain fragmented, and dependence on national regulatory and funding frameworks continues to constrain local flexibility—most notably in Barcelona and Bordeaux. At the same time, there is significant potential to deepen integration by leveraging existing tools, strengthening digital systems, and using multi‑annual frameworks to better connect resources with long‑term outcomes. Persistent challenges include fiscal pressure, administrative capacity constraints, and the risk that sustainability objectives remain peripheral to core financial decision‑making.
Key Findings and Lessons Learned: What Makes SDG Budgeting Work at City Level?
1. Using the SDGs as a Shared Strategic Compass. The experiences of Amsterdam, Barcelona, Bordeaux, and Hamburg show that SDGs are increasingly central to city strategies. They provide a common framework for sustainability, guide long-term priorities, and improve transparency. However, they are rarely used to directly determine budget ceilings, spending reallocations, or investment decisions, and their broad scope can be challenging to operationalize fully. Cities need flexible, context-sensitive SDG approaches that anchor long-term strategies and financial planning while adapting to local governance traditions and fiscal realities.
2. Evolving SDG Tagging into Budget Steering. While SDG tagging is becoming common practice, it remains primarily descriptive. Linking SDGs systematically to budget planning, reprioritization processes, and spending reviews is still limited. Existing performance-based budgeting systems provide a strong foundation for deeper integration, allowing cities to evolve SDGs from a reference point into genuine steering instruments that guide financial decisions and resource allocation.
3. Anchoring SDG Implementation in Core City Services. Cities mainly implement SDGs through tangible services such as waste management, mobility, housing, education, social services, and environmental protection. This service-based entry point makes the SDGs relevant to citizens’ daily lives but can limit their broader potential. Moving forward, cities must decide whether to focus on selected SDGs closely tied to municipal mandates or embed the full SDG framework across all functions and budgets, balancing depth and breadth for realistic and meaningful integration.
4. Strengthening Enablers Before Scaling SDG Integration. Political commitment, interdepartmental cooperation, internal capacity, and robust data and indicator systems are critical to advancing SDG budgeting. Strengthening these enablers ensures that pilot initiatives evolve into routine practices, allowing the SDGs to guide decisions systematically rather than remaining symbolic.
5. Harnessing the Potential of Digital, Open, and Interoperable Data. Many cities already collect relevant data for SDG monitoring, but information is often fragmented and stored in separate systems. Integrating datasets, adopting open data platforms, and ensuring interoperability across departments will allow cities to transform data into a powerful tool for evidence-based SDG budgeting. Collaboration between statistical offices, finance departments, and sectoral units is key to aligning indicators with budget structures.
6. Building Coherent Measurement Systems Linking Indicators to Finance. The SDGs provide a shared language of outcomes, but their potential is realized only if indicators are locally relevant and linked to concrete financial decisions. Cities should connect outcome indicators to budget lines, allocations, and spending reviews to move from monitoring to steering resources in line with SDG objectives.
7. Integrating SDGs Through Multi-Annual Budgeting and Investment Planning. Annual budgets alone limit the alignment of financial decisions with long-term SDG objectives. Multi-annual frameworks, sustainability annexes, climate assessments, and investment planning aligned with standards such as the EU Taxonomy can strengthen the link between spending and sustainability outcomes. Blended assessment lenses that consider social, ecological, financial, and governance impacts help make investment decisions more holistic.
8. Aligning Financing Strategies with SDG Delivery. Variations in fiscal autonomy and financing conditions influence how cities implement SDG priorities. Diversified funding sources—including earmarked grants, national transfers, EU funds, and green bonds—can create fiscal space for SDG-related investments. Strategic use of these resources allows for medium-term stability and a direct link between financing and long-term sustainability outcomes.
9. Keeping SDG Budgeting Adaptive. SDG budgeting must remain flexible in response to evolving international frameworks, sustainability standards, and emerging global priorities. Cities should design systems that can integrate new requirements while maintaining continuity, ensuring that SDG budgeting remains relevant, resilient, and aligned with long-term sustainable development goals.
Conclusion: From Ambition to Alignment
The experiences of Amsterdam, Barcelona, Bordeaux Métropole, and Hamburg reveal a central insight: there is no single model for SDG budgeting — and there does not need to be one. What matters is whether the SDGs evolve from a communication framework into an operational logic for public finance.
While none of the four cities has fully achieved this transformation, each has taken important steps that point toward the future of local public financial management. As fiscal pressures intensify and sustainability challenges deepen, the ability to link public spending with long-term societal outcomes will become increasingly critical.
Access the full report:
KDZ (2025). “Local Public Finances and the Governance of SDGs: Insights from Amsterdam, Barcelona, Bordeaux and Hamburg,” , Sara Deranja, Alexander Heichlinger, Emanuele Padovani, Thomas Prorok, Alexandra Schantl.
Note: The Feature Image for this blog post was prepared using AI.
