When France’s President Emmanuel Macron announced in late 2022, after an abysmal COP27, that he’d be hosting a summit where world leaders could deliver big on their climate finance commitments, there was a glimmer of hope.
While COP has become a series of disappointments, maybe a G7 leader could convince his peers to finally deliver in big ways.
However, Macron’s Summit is following in the footsteps of previous COP conferences, and, despite some small incremental wins, has failed to move the need for climate financing and climate justice.
This is despite the Power Our Planet campaign, which for months has been calling for world leaders to deliver climate funding, and the global financial system to reform to better meet the needs of the climate crisis.
This campaign also came to Paris on June 22, when 24,000 Global Citizens, climate activists, world leaders, NGOs, and global artists assembled on the Champ de Mars to demand global leaders take action on the climate crisis.
The Power Our Planet campaign boiled down to one thing: figuring out how the world will pay for the climate crisis.
Global Citizens are calling on world leaders, financial institutions, and the private sector to:
- keep past promises, such as finally delivering on a pledge for $100 billion a year in climate finance that is long past due;
- free up funding, to ensure climate-vulnerable countries have access to the funding needed to transition to green energy and respond to the impacts of climate change; and
- transition to a low-carbon future, given the essential need to cut global greenhouse emissions.
The Paris summit, which convened more than 300 states and organizations, promised to hash out financing for the climate fight and overhaul a global financial system that is stopping the world from responding at the urgency and scale needed.
But after all the hype, did it actually deliver? Let’s take a look at what we called for, and what world leaders delivered at the summit.
Keep Past Promises
What We Called For
First, back in 2009, wealthy nations promised to deliver $100 billion a year in climate financing every year from 2020 to 2025. It’s now 2023, and that funding has yet to be delivered — there’s still an outstanding $16 billion in the climate funding that was due in 2020.
Next, the countries that make up the G20 have promised to allocate $100 billion in special loans (known as Special Drawing Rights, or SDRs). The International Monetary Fund (IMF) issued $650 billion in SDRs during the pandemic to support the global economic recovery.
But, because of a quirk of the global financial system, the majority of these SDRs went to the wealthiest countries — G20 countries received 68%, while the poorest 44 countries received just 7%. We called on those G20 countries to reallocate $100 billion in SDRs to the poorest countries who need them most.
And lastly — it’s an old call but a vital one — we called on governments to keep increasing their international aid budgets, to invest in education, health care, food security, and more.
So, that’s $100 billion a year in climate finance; $100 billion in redistributed Special Drawing Rights; and increasing international aid budgets.
How Did They Do?
$100 Billion for Climate Financing
At the opening of the Summit, economists commissioned by the COP28 Presidency said that the $100 billion target is likely to be met this year, which was welcomed.
The estimate, however, means nothing without being verified by the Organisation for Economic Co-operation and Development (OECD).
There was also an announcement of a new Just Energy Transition Partnership between Senegal and the G7 — to increase Senegal’s share of renewable energy to 40% by 2030, along with an additional 2.5 billion euros in funding to support that transition. The source for that funding and how it will be used, however, is still unclear and needs to be clarified.
Meanwhile, as good as the G7-Senegal partnership is, it’s not a solution for the many more countries that need support in their just transition to green energy.
$100 Billion in Special Drawing Rights
Both the International Monetary Fund (IMF) Managing Director, Kristalina Georgieva, and the summit outcomes documents announced at the summit that the $100 billion SDR target has been met — however, this included a $21 billion contribution from the US that’s not yet approved by the US Congress and is unlikely to be approved this year, along with other promises that haven’t yet been delivered.
It’s therefore misleading to say that the $100 billion target has been met — it only will be met once all SDRs have actually been reallocated.
Even if all of the $100B in SDRs had been committed, there needs to be a process in place to handle this transfer — such as having multilateral development banks help ensure they are distributed properly.
The IMF did announce it will increase the Resilience and Sustainability Trust’s absorptive capacity from $40 billion to $60 billion — a $20 billion increase in reallocation capacity. The RST is one of the two IMF funds through which SDRs can be channeled, but it has a cap. By increasing that cap to $60 billion, it will help ensure more of the $100 billion in SDRs can be operationalized.
Also missing from the final outcomes of the Summit is a clear deadline for these transfers to happen.
There were also new commitments from France, to reallocate 40% of its SDRs; Belgium, for 15% of its SDRs; and Switzerland for 6.7%. France joins Japan — which pledged back in April to also reallocate 40% of its SDRs — in demonstrating strong leadership and sets an important example for other wealthy countries to follow suit.
G20 partners failed, however, to agree to create an SDR reallocation tracker to transparently monitor progress on reallocations — although this was listed as a proposal.
Increase Official Development Assistance (ODA)
When it comes to official development assistance, or countries’ international aid budgets, the world’s poorest countries continue to be overlooked and deprioritized.
In 2022, nearly $30 billion that had been marked to go to developing countries wasn’t deployed — instead staying within the borders of the world’s wealthiest nations, including to support refugee populations.
When the UK, for example, diverted nearly a third of its international aid budget to domestic programs in 2022. About £3.7 billion, that should have gone to help vulnerable people overseas, was instead spent on hosting refugees in Britain — most of them Ukrainian.
Yet development assistance is one of the essential tools that governments must urgently deploy to help people in low-income countries overcome the coinciding crises of food security, climate change, and rising fuel prices, or we risk them spiraling further into extreme poverty.
We urgently need governments to increase and accelerate their contributions to international development assistance. And yet, not only did countries not agree to accelerate their ODA commitments, there wasn’t a single mention of official development assistance in any of the Paris summit’s outcome documents.
Free Up Funding
What We Called For
As well as delivering on funding that’s already been promised, we also need to unlock more — because solving the challenge of climate change isn’t going to come cheap.
The first thing we need here, is for the world’s development banks — such as the World Bank and the International Monetary Fund (IMF) — to reform their policies to free up funding.
The way these development banks are structured means they’re essentially sitting on a large amount of finance (to the tune of $1 trillion) that, if they reform their policies, could be used to tackle climate change and end extreme poverty.
So our call to the world’s development banks was to make loans more available to countries who need access to funding NOW; reform their processes so they can respond better to the climate crisis; and, amid a spiraling debt crisis that’s hitting low-income countries hard, find urgent solutions to the current debt crisis and shake up mechanisms to prevent further debt distress.
A key solution to the mounting debt crisis is introducing debt pause clauses, also called debt suspension clauses — which would essentially allow countries, when disaster strikes, to suspend their debt repayments. Currently, countries’ debt repayments are the highest they’ve been in 25 years and, by getting the option to suspend repayments, disaster-hit countries could use their money instead to respond and recover.
How Did They Do?
Multilateral Development Bank Reform
The summit did not agree on major multilateral development bank (MDB) reforms, but supported a push for increased Capital Adequacy Framework (CAF) implementation. The CAF is basically a report provided to the G20 including recommendations on how multilateral development banks can unlock more financing, which we’ve been calling on MDBs to implement.
One of three outcome documents, the Paris Agenda for People and Planet, did raise the expectation that MDBs should include their lending capacity to an additional $200 billion over the next 10 years. It said they can do this by optimizing their balance sheets and taking more risks. In return for these reforms, shareholders could reinject new capital into the MDBs.
An additional $20 billion a year is less than what we were asking for and less than what is needed, but it would be a great first step. Not all countries, however, have yet signed up to the agenda and we need them too, and soon.
The World Bank launched new initiatives, which aim to free up funds, such as giving countries new flexibility to quickly redirect a portion of their funds for emergency response, helping governments build advance-emergency systems, and providing new types of insurance to backstop development projects.
Debt Pauses Clauses
In a good show of faith, a coalition of creditors agreed to include debt pause clauses (which only apply to new loans), including conducting a review of progress by COP28.
As of now, this does not include a commitment to pause debt repayments in the case of pandemics, but merely an exploration of possibilities. Although a review of these plans was penciled in for COP28, there was no actual timeline given for adopting pause clauses.
France said that it would introduce the pause clauses directly, but we need others to do the same. Other welcome commitments to introduce clauses were made by the World Bank, the UK, and the US. Commitments were missing, however, from other MDBs such as the European Investment Bank; and also important bilateral creditors, such as Germany.
While we’re on the topic of debt, Zambia (a country that has been in the grip of a debt crisis pushing its people into poverty for years) reached a restructuring deal for $6.3 billion in debt, opening the door for a $188 million tranche of money from the IMF.
The deal, however, only covers so-called sovereign debt, debt that is detained by official creditors (like other governments, for instance). It doesn’t include private creditors. We now need private creditors to follow suit and also agree to restructure Zambia’s debt — and, of course, we need to see further deals for other countries in debt distress, after the successful Zambian one.
Colombia, Kenya, Germany, and France proposed a global expert review of solutions for debt driven by the climate emergency, that should be set up by COP28 in 2023, and report on its findings no later than COP29 in 2024. Côte d’Ivoire and France have further agreed to reduce Côte d’Ivoire’s bilateral debt by 1.14 billion euros — which will instead be converted into grants to finance various development projects in the country.
Transition to a Low-Carbon Future
What We Called For
It’s time for the biggest polluters in the private sector to also start pulling their weight and help finance the fight against climate change.
We called for governments to put in place new global solidarity taxes on the biggest carbon emitters — including a tax on the global shipping sector, which currently accounts for just under 3%; and a Financial Transaction Tax, which would mean a small tax on financial transactions — of global greenhouse gas emissions, to help fund climate solutions.
How Did They Do
International Solidarity Taxes
A coalition of countries agreed to support a tax on the greenhouse gas emissions of the global shipping sector, which is a good sign. The money raised from these taxes, the summit outcome documents say, should “notably” contribute to transitioning the shipping industry to clean energy.
We also need revenues from these taxes to contribute to international climate finance, including funding for Loss & Damage and adaptation. Elsewhere in the outcomes documents, it’s said that taxation revenues are also a source of potential funding for Loss & Damage and adaptation in that context — which, again, is a good thing.
The launch of a taskforce to examine possible new financial resources through taxation was also proposed, which is set to present its first conclusions by the Africa Climate Summit, organized by Kenya in September 2023.
So What’s the Conclusion on How the Summit Delivered?
In spite of President Macron's efforts, and some notable progress and announcements, the New Global Financial Pact Summit was not a success. The rest of the G7 leaders simply didn’t show up, ignoring the urgent needs of the most vulnerable people and countries. Meanwhile, the US failed to deliver on its climate promises — as the biggest economy in the world, the US has got to step up and do its part to help the most marginalized countries of the world, and deliver on its past promises to do so.
We still need to see courageous reforms from the world’s biggest economies and the world’s worst polluters — and the Power Our Planet campaign is just getting started.
The campaign will continue to stand for justice on behalf of the countries and populations being devastated by climate change, which have contributed the least to this crisis, and now turn our attention toward this year’s G20 meetings, the UN General Assembly (UNGA), Global Citizen Festival on September 23, and COP28. It ain’t over til it’s over.