08/11/24

GREEN FINANCE: G20 group agrees to advance financial solutions to climate change

As published on: greencentralbanking.com, Friday 8 November, 2024.

Finance ministers and central bank governors from the G20 group agreed last month to promote efforts to address climate change, including voluntary just transition plans, in their last meeting ahead of Cop29 and the G20 summit in Rio de Janeiro.

In its communiqué, the finance ministers and central bank governors say they “remain committed” to making progress on financial solutions that will support the fight against climate change, including environmental degradation and biodiversity loss. The group also endorses the G20 Sustainable Finance Report and welcomes “voluntary and non-binding” transition plans for financial institutions, including sector-specific considerations and just transition recommendations.

The group also notes that debt vulnerabilities and tight financial and market conditions could put pressure on public budgets, and called on the international community to support vulnerable countries facing liquidity issues.

The communiqué also endorses the G20’s roadmap for multilateral development banks and calls on MDBs to implement it. Advocates have been asking for reforms by the IMF and World Bank to restructure global south debt and help vulnerable countries meet their climate commitment goals, as well as get rid of surcharge policies.

The G20 group of finance ministers also reiterates its commitment to international tax cooperation, including on effective taxation of the ultra-wealthy, which has been one of the major focuses of the Brazilian presidency and was welcomed by many when it was announced in July.

Susana Ruiz, tax policy lead for Oxfam International, said “it reflects an emergent shift in consensus from the world’s largest economies to reduce extreme inequality by ensuring the ultra-rich pay their fair share”.

The G20 ministerial group also noted that it appreciated the work taken by the Taskforce for a Global Mobilization Against Climate Change (TF-Clima) and would support efforts to tackle climate change.

A report produced by economists on how the financial system should tackle climate change issues recommends that the G20 should reform the global financial system and increase climate project financing, but it was scaled down from initial drafts, according to Climate Home News.

Sima Kammourieh, executive director for climate at the Finance for Development Lab, said the meetings had “very mixed outcomes”. She applauded the finance minister’s endorsement of the Sustainable Finance Working Group and private sector transition plans.

“This is critical: in the context of climate change, robust and reliable private sector transition plans need to become the new business normal,” she said.

Kammourieh also made note of the group’s commitment to evolving MDBs to address low and middle-income countries’ needs. But she said the biggest disappointment was around the TF-Clima outcome document, which was not formally endorsed by the joint ministerial statement, which was also cautious on calling for further regulatory reform to align private financial flows with the Paris Agreement.

“Brazil worked hard at creating this new structure, bringing together different G20 tracks. They worked hard at defining a holistic, thought-out reform agenda for this group. But final TF-Clima documents show eroded ambition,” she said.

TF-Clima was created by the Brazilian presidency to promote dialogue on aligning macroeconomics and finance with implementing the goals of the Paris Agreement. So far there has been no indication that the taskforce will continue under the South African presidency next year.

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Green finance G20 Climate change