- Finance ministers and central bank governors of the G7 are set to convene this week (23-25 May) for the annual G7 Finance Ministerial in Stresa, Italy.
- In a context marked by a continued polycrisis, affecting especially developing economies, the G7’s role should be to chart a course for ambition on finance system reform for climate resilience. It is notable and positive that the Italian presidency of the G7 decided to set up a Climate Change Mitigation working group this year.
- This meeting presents a pivotal opportunity for the G7 to show collective leadership and meaningful action, on three key fronts:
- Charting the course for next stage reforms for multilateral development banks (MDBs), especially the General Capital Increase for MDBs
- Centring transition plans as a critical tool of transition finance for all types of actors but especially the private sector, and providing clarity and directionality on this topic
- Agreeing to a regulatory roadmap to help strengthen and broaden insurance coverage across communities and geographies vulnerable to climate and disaster risk.
Story
The upcoming G7 Finance Ministerial meeting is a critical moment to signal the intention of the world’s largest and richest economies to help mobilise the financial resources and reforms needed by developing countries to both decarbonise their economies and cope with the mounting impacts of climate change.
Brazil has demonstrated significant ambition with its own presidency of the G20, by setting up a new cross-cutting structure in the form of the Global Mobilisation against Climate Change (Taskforce Clima). This Taskforce was designed to provide a forum for G20 countries to discuss the finance system reform agenda for climate safety in an ambitious and holistic manner.
The world looks now to the G7 and its Finance Ministers and Central Bank Governors. They have a critical role to play in turbocharging the ambition displayed by the Brazilian presidency of the G20 on finance system reform to climate safety.
Here is what we need to see emerge from this critical gathering:
- Next Stages for Bold Economic Transformation through MDBs: It’s imperative for the G7 to send a strong signal of economic transformation and reaffirm the critical role played in this regard by MDBs. This includes backing a general capital increase, offering tangible support through the G7 Infrastructure for All (IFA) initiative, replenishing vital resources such as the International Development Association (IDA), and championing responsible trade practices to foster inclusive growth.
- Accelerating the Mobilisation of the Private Sector: the conversation on transition plans as a critical tool in transition finance, especially for the private sector, has gained considerable momentum in 2023. The G20 will be discussing this topic more concretely in the second half of the year. G7 Finance Ministers have a unique opportunity to add clarity and directionality to the conversation, early in the year. This could start with a commitment to working with the G20 to develop common principles for private sector transition plans before the end of the year and providing early signals as to what some of these core principles could be.
- Strengthening the Resilience of Households and Firms to Climate Impacts: climate-related natural disasters have had increasingly damaging impacts to households and firms, across a variety of geographies. G7 Finance Ministers should design a policy and regulatory roadmap to assess and address growing insurance coverage gaps and strengthen the resilience of climate vulnerable communities, economies and financial systems to climate change.
Quotes
Sima Kammourieh, Programme Lead at E3G, said:
“The G7 is a tight group of like-minded countries with developed economic systems and sophisticated financial markets. They are expected to get in front of the conversation and action on finance system reform for climate safety. The annual G7 Finance ministerial in Stresa is a unique opportunity for this group to show its leadership and the additionality it can bring in an ambitious year for the G20. G7 Finance Ministers and Central Bank Governors could help through clear and specific decisions on next stage reforms for MDBs, transition plans for the private sector, and improved insurance coverage for strengthened resilience to climate change”
Kate Ryan, Senior Policy Advisor at E3G, said:
“This year has seen considerable momentum around transition plans, particularly for the private sector, as a key tool for transition finance. Discussions are underway at the G20 including the development a set of high-level common principles for private sector transition plans. It is critical that G7 Finance Ministers use the opportunity provided by Stresa to demonstrate leadership, through signalling their strong and consistent support for transition plans across the financial and non-financial sectors.”
– ENDS –
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
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
Tom Evans (EN), E3G Policy Advisor, (climate ambition, the Global Stocktake, UNFCCC processes and COP29, climate diplomacy & geopolitics)
m: +44 (0) 7931 317 327 | tom.evans@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
Notes to Editors
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