- Finance ministers and central bank governors of the G20 will convene next week (25-26 July) for the third Finance Ministerial under the Brazilian Presidency of the G20.
- Brazil signalled early on that it wanted its Presidency of the G20 to chart a course for ambition on finance system reform for climate. It created the Global Mobilisation against Climate Change or Taskforce Clima in this year’s G20 to “enhance global macroeconomic and financial alignment to implement the goals of the United Nations Framework Convention on Climate Change and the Paris Agreement”.
- This meeting is the last opportunity in 2024 for G20 Finance Ministers to hash out substantive agreement on the shape of key reforms needed to restore trust and show strong collective action on the finance for climate agenda. This, in turn, will shape the context for critical upcoming climate finance negotiations at COP29.
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G20 Finance Ministers will meet in Rio de Janeiro, Brazil, next week to discuss and build convergence on a broad range of international financial issues. While Brazilian Finance Minister Fernando Haddad has identified a new global tax on billionaires as a key deliverable, equally critical are the discussions and convergence on broader finance system reforms necessary to support the collective transition to climate safety. It is essential that momentum behind this wider set of reforms isn’t lost.
The systemic nature of the climate crisis means it can only be tackled effectively through reforms across the economy and financial sector. Implementing these reforms now is the only way to cost-effectively deliver the quantity and quality of finance necessary to transition to climate safety. Delaying action will only increase future costs, and complicate future political negotiations. Only leaders and finance ministers have access to the full set of tools to tackle these challenges at the scale and speed needed. Agreement at the forthcoming meeting of G20 Finance Ministers in Rio is all the more critical as it is effectively the last chance Finance Ministers have in 2024 to hash out substantive agreement on key topics (their final meeting in October will likely focus on agreeing communiqué language and external communications).
The four key building blocks of the “finance for climate” agenda are:
- Bigger, better, bolder multilateral development banks. Scaling up the MDBs is the most efficient means of increasing the flow of climate finance from rich countries into emerging markets, due to their unique ability to leverage any funds provided to them into significantly more in investments. To do so, ministers must make progress on a raft of technical MDB inputs, including on callable capital, SDRs, hybrid capital, and guarantee provisions. This is the most direct and cost-effective way to unlock necessary supplies of finance now, as countries seek political alignment on future MDB capital pledges. G20 Finance Ministers, working closely with both the IMF and the World Bank, should also pursue efforts to accelerate the delivery of debt treatments wherever these are needed, to ensure that these countries have the necessary fiscal space to undertake their own economic transition and development agendas.
- Country platforms and national transition plans. Clear national plans around which finance can align are the bedrock of the transition. G20 Finance Ministers should support the push happening under TF Clima and the G20’s International Financial Architecture Working Group to lay the groundwork for national transition plans and next generation Country Platforms to catalyse the finance needed to implement them. To do so, ministers should agree and promote a set of common design principles ensuring a unified yet adaptable framework for different contexts which enables the effective delivery of climate and development priorities at the national level.
- Transitioning the private sector. G20 Finance Ministers should support work done by the G20’s Sustainable Finance Working Group to define common principles for private sector transition plans. This should enable transition plan disclosure to become a new “business normal” for the real economy and enable consistency of efforts across sectors and geographies, in support of national transition efforts.
- Changing the conversation around banks and their assessment of risk in the era of climate change. G20 Finance Ministers should call on the Financial Stability Board and Basel Committee to accelerate and finalise efforts to align the global prudential framework with the needs of the transition. This is critical to ensure that banks have the right incentives to allocate financing and manage their risks in a way that is fully consistent with efforts undertaken by other key economic actors (states, MDBs, private companies) to transition to climate safety.
Quotes
Sima Kammourieh, Programme Lead, E3G said:
“We are running out of time to secure a liveable climate and with it, the ability to finance the global transition. The costs of the climate crisis are compounding at increasing speed. Brazil has strong ambitions for its G20 presidency and signalled that both climate and inequality were core priorities. To meet its ambitions, it must act now, and seek to get all G20 Finance Ministers to agree to pivotal financial reforms and common principles for the financial sector writ large that are aligned with climate safety”
Rob Moore, Associate Director, E3G said:
“Any realistic pathway to climate safety needs to use the full range of levers available to finance ministers. The urgency of action needed means it is incumbent on the G20, under the leadership of the Brazilian Presidency, to put in place the building blocks needed to accelerate climate financing. This means getting more money through the multilateral system, delivering the plans needed to guide investment and ensuring that financial rules are fit for purpose for a world undertaking an unprecedented transition.’
Laura Sabogal Reyes, Senior Policy Advisor, E3G said:
“Brazil’s G20 Presidency has set a clear priority to move the needle on country platforms and transition planning. This bet is extremely timely as it could transform the delivery of climate and development at the national level. As countries worldwide are confronted with the severity of the climate crisis and worsening economic conditions, G20 Finance Ministers must seize this opportunity to define actionable next steps and harness the current momentum to deliver on the Sustainable Development Goals and the Paris Agreement.”
Gustavo Pinheiro, Senior Associate, E3G said:
“The Finance Ministerial meeting in Rio presents Brazil’s G20 Presidency a last opportunity to shape a prosperous and resilient global economic future for this century. Extreme climate events are already causing severe damage to human societies and imposing significant fiscal burdens worldwide. Finance Ministries and Central Banks must send strong signals to advance key reforms, unlock climate finance at scale, and integrate climate change as a central variable in economic policymaking to enhance well-being and promote social justice. As G20 President, Brazil has the chance to lead decisively, inspiring all G20 members to commit to scaling up financing for the transition, ensuring a stable and thriving future for all.”
Available for comment
Sima Kammourieh (EN, FR, DE, AR), E3G Programme Lead, (International financial regulation and standards, G7/G20 finance ministers)
m: +49 (0) 160 9596 4443 | sima.kammourieh@e3g.org
Alden Meyer (EN), E3G Senior Associate, (UNFCCC and G7/G20 dynamics, multilateral climate and clean energy diplomacy, mitigation ambition, climate finance, US policy and politics)
m: +1-202-378-8619 | alden.meyer@e3g.org
Ana Mulio Alvarez (EN, ES), E3G Researcher, (UNFCCC, loss and damage, adaptation)
m: +32 490 000 514 | ana.mulio@e3g.org
Kate Levick (EN), E3G Associate Director and Co-Head of the Transition Plan Taskforce Secretariat, (International and UK sustainable finance, public and private sector finance, financial initiatives, climate disclosure, transition planning, financial regulation, non state actor accountability)
m: +44 (0) 7860 861225 | kate.levick@e3g.org
Franklin Steves (EN, RU, SP, FR), E3G Senior Policy Advisor, (International financial architecture reform, Bridgetown Initiative, CAF reform, climate finance)
m: +44 7484 815434 | franklin.steves@e3g.org
Laura Sabogal Reyes (EN, ES, DE), E3G Senior Policy Advisor, (Public development banks, Paris Alignment and E3G Public Bank Climate Tracker Matrix, climate finance, nature finance, innovative financial mechanisms, country platforms)
m: +49 160 96466368 | laura.sabogal@e3g.org
Gustavo Pinheiro (EN, ES, PT), E3G Senior Associate, (UNFCCC and G7/G20 dynamics, climate finance, transition planning, climate related risks and financial regulation, multilateral climate diplomacy, clean energy transition, mitigation ambition, nature-based solutions, adaptation and resilience, BR climate and energy policy, BR politics)
m: +55-61-98338-8586 | gustavo.pinheiro@e3g.org
Danny Scull (EN), E3G Senior Policy Advisor, (Evolution Roadmap, World Bank Group, International financial architecture reform)
m: +1 (301) 787 0942 | danny.scull@e3g.org
Rob Moore (EN), E3G Associate Director – Public Banks and Development, (MDBs/DFIs, financial architecture reform, climate finance geopolitics)
rob.moore@e3g.org
Notes to Editors
- E3G is an independent climate change think tank with a global outlook. We work on the frontier of the climate landscape, tackling the barriers and advancing the solutions to a safe climate. Our goal is to translate climate politics, economics and policies into action. About – E3G
- For further enquiries email press@e3g.org or phone +44 (0)7783 787 863
- Register for our journalist WhatsApp briefing service to receive updates and analysis for key geopolitical and climate events over 2024 and 2025 on the road to COP29 and COP30: E3G WhatsApp registration for journalists – E3G.
- There is a risk of the “finance reform for climate” agenda slipping off the radar at a critical time. In a context of continued polycrisis and ever-increasing climate impacts: mitigation and adaptation financing gaps are widening in emerging economies; advanced and developing economies alike are experiencing fiscal pressures of varying degrees; insurance companies have been pulling out of geographical areas where exposure to climate risk is seen as too high. These “insurance gaps” and the financial risks they represent are an issue in vulnerable or emerging economies but also in developed economies, like the United States or Italy.
