5. A well-designed regulatory framework creates incentives that drive green economic activity. The sector chapters in this report emphasise that a robust regulatory framework at the national level, as well as the effective enforcement of legislation, can be a potent means of driving green investment. Such a framework reduces regulatory and business risks and increases the confidence of investors and markets. The use of regulations is often necessary to address the most harmful forms of unsustainable behaviour, either by creating minimum standards or prohibiting certain activities entirely. In particular, standards can be effective in promoting markets for sustainable goods and services and can induce efficiency and stimulate innovation, which can have a positive effect on competitiveness. Standards may, however, pose a challenge to market access for small and medium-sized enterprises, particularly from developing countries. It is, therefore, crucial for countries to balance environmental protection through the use of standards and other regulations with safeguarding market access.
6. Investing in capacity building and training is essential to support a transition to a green
economy. The capacity to seize green economic opportunities and implement supporting policies varies from one country to another, and national circumstances often influence the readiness and resilience of an economy and population to cope with change. A shift towards a green economy could require the strengthening of government capacity to analyse challenges, identify opportunities, prioritise interventions, mobilise resources, implement policies and evaluate progress. Training and skill enhancement programmes may also be needed to prepare the workforce for a green economy transition. Temporary support measures may, therefore, be required to ensure a just transition for affected workers. In some sectors, support will be needed to shift workers to new jobs. In developing countries, inter- governmental organisations, international financial institutions, non-governmental organisations, the private sector and the international community as a whole can play a role in providing technical and financial assistance to facilitate the green economy transition.
7. Strengthened international governance can assist governments to promote a green economy. Multilateral environmental agreements, which establish the legal and institutional frameworks for addressing global environmental challenges, can play a significant role in promoting green economic activity. The Montreal Protocol on the Substances that Deplete the Ozone Layer, for instance, led to the development of an entire industry focused on the destruction and replacement of ozone- depleting substances. The international trading system can also have significant influence on green economic activity, enabling or obstructing the flow of green goods, technologies and investments. If environmental resources are properly priced at the national level, then the international trading regime allows countries to sustainably exploit their comparative advantage in natural resources that benefits both the exporting and importing country. Finally, an active role by governments in international processes, such as the United Nations Conference on Sustainable Development in 2012 (Rio+20) and the United Nations Environmental Management Group’s work on green economy, can promote coherence and collaboration in the transition to a green economy.