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G20 must act on finance for climate

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G20 Baden Baden

When the global climate deal was agreed in Paris in December 2015, much credit was given to “political will” that helped rally 197 countries to agree a global plan to act on climate change.

Now, another opportunity for “political will” to prevail and deliver concrete actions for the global good will come in the G-20 as Germany prepares to host the Leaders’ Summit in Hamburg in July.

G20 finance ministers meet

In preparation, G-20 country Finance Ministers and leaders of their Central Banks met in earlier this month in Baden Baden, Germany, to discuss various financial and economic issues, including the role of finance facing climate change.

A sign of the tough road ahead for climate action by governments was the signalled in the official communique issued at the end of the meeting.  As Bloomberg reported, “the most notable element of the draft is what’s missing. The statement issued after the G-20 finance ministers and central bank governors meeting in July dedicated 163 words to the Paris Agreement, pushing nations to bring the deal into force, meet emissions targets and fulfil financial pledges. This current draft dedicates just 47 words to the agreement, focusing exclusively on development banks raising private funds, without mentioning government financial support.”

“Disappointing” pronouncements on finance for climate

As WWF, we were disappointment by the lack of pronouncement on finance and climate, of the lack of reference to public finance and inaction on fossil fuel subsidies. Even as “political will” redefines political priorities, the realities of climate change and the urgency with which we need to take concrete action is not being relegated to any low priority list. It is, in fact, escalating to be the defining issue of our day, affecting all countries.

Fortunately, there is still time ahead for the G-20 leaders to properly address this.

Climate change an “economic risk”

A globalised world economy in an intensively changing era brings many complex issues to deal with. We understand that a single problem should not dominate the G-20 agenda. However, it is well known that climate change makes complex problems even more complex.

There is increasing recognition that resource scarcity, deforestation, biodiversity loss, land degradation, and water quality and availability already represent significant risks to the global economic system and, with climate change, it will be exacerbated looking forward. These risks are substantial obstacles to achieving the G-20’s priority to “safeguard strong, sustainable, balanced and inclusive growth.”

The G-20 can build on lessons learned and best practices, as more and more governments enact policies that incorporate sustainability considerations into their financial systems to reflect the interrelationship between environmental risks and financial system stability.

As the G-20 aim to address the more important challenges to the world economy, it should deal with the highest risk of all as stated by the WEF Global Risk Report 2017: climate change. No matter what the political ideology of the day is, this fact remains.   Financial climate-related risks are here to stay and the G-20 needs to make the right decisions now to address these.

Act on fossil fuel subsidies

Further, we believe the G-20 must shake off its lethargy on their 2009 pledge to phase out “inefficient” fossil fuel subsidies for coal, oil and gas. In the eight years since that decision was taken, it remains in discussion, with little action being taken towards achieving this before 2020. This is disappointing!

G-20 members have also agreed to a fossil fuel subsidy peer review process. Already China and the US – the world’s two biggest polluters – have completed their reports. Germany and Argentina must ensure they complete their reports timeously. And the other 16 members should step up and complete their reports, at least by 2018.

High expectations

It is important for all G-20 leaders to keep contributing to solve one of the most challenging issues that the global economy – and global wellbeing – faces: climate change.  It is incumbent on this group of the world’s 20 richest nations to set the pace by doing their part to move ahead with their contributions to finance for climate, and tackling climate change, starting by acting to phase out fossil fuels. By doing so they will provide means of implementation, like finance for climate, to the most vulnerable members of the international community.

There is an expression that says, “to whom much is given, much is expected”.  We expect much from the G-20.

Manuel Pulgar-Vidal is the leader of WWF’s global Climate and Energy Practice. He is based in Lima, Peru.

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