Tuesday, October 26, 2021

The G7 will explore carbon pricing and green finance for developing nations

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G7 Finance Ministers have agreed on a new set of principles aimed at improving global supply chain resiliency and backing a new initiative from the International Monetary Fund (IMF) aimed at helping developing countries boost green economic opportunities.

Ahead of COP26 Sunak has called on other G7 nations to support the IMF’s proposed Resilience and Sustainability Trust

A meeting of G7 Finance Ministers and Central Bank Governors in Washington DC has led to a new agreement on collaborative efforts to monitor supply chain pressures across the globe.

With nations reeling from supply chain bottlenecks – the IMF recently downgraded US growth forecasts by 1%, the most of any G7 nation – Ministers met to discuss ways to mitigate against future cases of disruption.

UK Chancellor Rishi Sunak chaired the meeting and stressed the importance of global cooperation. Sunak announced that the UK is pledging an additional £1bn in Special Drawing Rights (SDRs) to the IMF’s Poverty Reduction and Growth Trust (PGRT). The PGRT provides zero-interest loans to vulnerable countries that need financial support.

Sunak has called on other nations to follow in providing financial support. Ahead of COP26 Sunak has called on other G7 nations to support the IMF’s proposed Resilience and Sustainability Trust. The proposal would see SDRs redirected to low-income and vulnerable countries to address climate and health risks as part of a green economic recovery.

Chancellor Rishi Sunak said: “Supply chain issues are being felt globally – and finance leaders from around the globe must collaborate to address our shared challenges.

“Today we have collectively agreed to work closely over the coming months – and together we will build a strong and resilient recovery.”

As part of the discussion, the G7 has, for the first time, agreed to collaborate on how carbon pricing can be integrated to help deliver the ambitions of the Paris Agreement.

It is the latest step from the G7 to ramp up climate commitments ahead of COP26.

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