“Think7”, an engagement group of leading think tank from the G7 countries, proposes policy-recommendations to support the German persidency. The DRGR Co-authors Ulrich Volz and Stephany Griffith Jones are part of the task force “Sustainable Economic Recovery” which, inter alia, emphasizes the importance of scaling up sustainable and climate finance for developing countries.
To scale up sustainable finance and align all financial flows
with climate and sustainability goals, the policy brief, which was drafted by Griffith-Jones and Volz as well as
- Kathrin Berensmann (German Development Institute),
- Simon Dikau (Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science),
- Anthony Lacavaro (People Centered Internemakes), and
- Irene Monasterolo (EDHEC Business School and EDHEC-Risk Institute),
makes ten recommendations for the G7.
To enable sustainable recoveries from Covid-19 and meet the goals set out in the Paris agreement and in the Agenda 2030 for Sustainable Development, the global financial system needs to be rewired. Finance needs to properly account for sustainability risks and impacts, and it needs to be aligned with internationally agreed sustainability goals.POLICY BRIEF – SCALING UP SUSTAINABLE FINANCE TO ENABLE SUSTAINABLE ECONOMIC RECOVER
In addition to measures that focus primarily on the G7 itself – such as implementing science-based taxonomies for sustainable finance, or introducing a harmonized standard for mandatory disclosures of climate-related risks and opportunities mandatory for large private companies and supervised financial institutions – the Task Force does also take the relationship of the Group of Seven with developing countries into account.
It emphasizes the importance of scaling up sustainable and climate finance for developing countries, as they face enormous investment needs in climate adaptation and mitigation. The pandemic and the consequences of the Russian invasion in Ukraine have further widened the financing gap for advancing the Sustainable Development Goals. Even before Covid-19, the United Nations estimated that the countries concerned were facing an annual funding shortfall of $2.5 trillion in this context.
Critically, all G7 members need to fulfil their development and climate finance commitments. In terms of climate finance, the G7 should go beyond the US$100 billion annually committed and live up to their historical responsibilities to address loss and damage in the Global South. To this end, they should provide additional funding to a newly established a Loss and Damage Facility as proposed by the G77 and China at COP26 in Glasgow.POLICY BRIEF – SCALING UP SUSTAINABLE FINANCE TO ENABLE SUSTAINABLE ECONOMIC RECOVER
Moreover, all G7 countries should commit to donating all Special Drawing Rights (SDRs) they have received from the International Monetary Fund’s historic $650 billion allocation in August 2021 either to multilateral development banks or other prescribed holders of SDRs so they can be used to finance sustainable development and climate action.
Last but not least, G7 countries should also work with China, other G20 countries and groups of debtor countries on an ambitious scheme for sovereign debt relief from private and public creditors for all countries that need it to provide the basis for green and inclusive recoveries