Finance ministers from the Group of Seven (G7) industrialized nations have unanimously agreed to tackle climate change and biodiversity loss.
They also promised to ensure a strong, sustainable, balanced and inclusive global recovery that builds back better and greener from the Covid-19 pandemic.
These key decisions were agreed after a virtual meeting that included Central Bank Governors, Heads of the International Monetary Fund (IMF), World Bank Group, Organisation for Economic Cooperation and Development (OECD), Eurogroup, and Financial Stability Board (FSB).
The meeting also agreed sustain policy support as long as necessary and invest to promote growth, create high-quality jobs and address climate change and inequalities.
But to achieve this, they noted that protecting the environment was crucial.
“We commit to a multi-year effort to deliver the significant structural change needed to meet our net zero commitments and environment objectives in a way that is positive for jobs, growth, competitiveness and fairness. We commit to properly embed climate change and biodiversity loss considerations into economic and financial decision-making, including addressing the macroeconomic impacts and the optimal use of the range of policy levers to price carbon.”
They expressed the need to green the global financial system so that financial decisions take climate considerations into account.
This would help mobilise the trillions of dollars of private sector finance needed, and reinforce government policy to meet net zero commitments.
“We support moving towards mandatory climate-related financial disclosures that provide consistent and decision-useful information for market participants and that are based on the Task Force on Climate-related Financial Disclosures (TCFD) framework, in line with domestic regulatory frameworks. Investors need high quality, comparable and reliable information on climate risks. We therefore agree on the need for a baseline global reporting standard for sustainability, which jurisdictions can further supplement. We welcome the International Financial Reporting Standards Foundation’s programme of work to develop this baseline standard under robust governance and public oversight, built from the TCFD framework and the work of sustainability standard-setters, involving them and a wider range of stakeholders closely to foster global best practice and accelerate convergence. We encourage further consultation on a final proposal leading to the establishment of an International Sustainability Standards Board ahead of COP26.”
A major fall-out of this meeting is the plan to push a collective developed country goal to mobilise US$100 billion annually for developing countries from public and private sources, in the context of meaningful mitigation actions and transparency on implementation.
It means a commitment to increase and improve climate finance contributions through to 2025, including increasing adaptation finance and finance for nature-based solutions.
For this to succeed, all countries must fully implement the Financial Action Task Force (FATF) Standards and strengthen them.