G20: Expert Group Calls For $3 Trillion Annual Spend By 2030 For Climate Action, Meeting SDGs

The Independent Expert Group formed under the India G20 Presidency, in its latest report, called for additional spending of $3 trillion per year till 2030 towards investments in climate action and attaining sustainable development goals in developing countries.

The report, titled "The Triple Agenda," recommends that the Multilateral Development Banks increase their annual official financing by $260 billion—as part of the $3 trillion figure—and mobilise more private finance. From this, $200 billion, according to the report, must come from non-concessional lending.

The IEG was co-chaired by 15th Finance Commission head NK Singh and former Secretary of the Treasury, Larry Summers. It laid out the first volume of its recommendations to strengthen MDBs, which was circulated among G20 finance leaders during the FMCBG Meeting in Gujarat on July 17 and 18.

A second volume of the report will be submitted for discussion by the G20 finance ministers prior to the Marrakech meeting in October. The second volume is expected to provide more details on the timing and sequencing of measures beyond the reform roadmap.

The three elements of the agenda include:

• Adopting a triple mandate of eliminating extreme poverty, boosting shared prosperity, and contributing to global public goods.

• Tripling sustainable lending levels by 2030.

• Creating a third funding mechanism which would permit flexible and innovative arrangements for purposefully engaging with investors willing to support elements of the MDB agenda

Here, global public goods would be especially focused on climate change, the preservation of biodiversity and the global water cycle, and pandemic preparedness and response.

Additional spending of about $3 trillion per year is required by 2030, of which $1.8 trillion would go towards additional investments in sustainable infrastructure for climate action—a four-fold increase in adaptation, resilience, and mitigation compared to 2019—and $1.2 trillion would go towards additional spending to achieve other SDGs, a 75% increase in health and education, according to the report.

The figure is expected to be sourced from a mix of parties, including private-funded additional external financing packages amounting to $1 trillion and $260 billion from MDBs.

The report also includes a roadmap to 'Strengthening MDBs' and a timeline of the actions that need to be taken. The roadmap calls for MDBs to acknowledge global public goods in their vision statement, take actionable steps in the form of operational models, and start measures to address the scale of funding needed.

In the outcome document of the third FMCBG, the G20 nations appreciated the efforts of the report and agreed to discuss it further in a high-level seminar that will be held on the sidelines of the fourth FMCBG meeting in October on strengthening the financial capacity of MDBs.

G20 members also endorsed the 'Roadmap for Implementation of Recommendations of the G20 Independent Review of MDBs’ Capital Adequacy Frameworks, a release on the subject said.

The IEG report also urged implementing the recommendations made in the G20 CAF report, which could further generate headroom to lend $80 billion more each year, helping MDBs optimise their balance sheets.

One of the Indian G20 Presidency's key agenda items includes strengthening the Multilateral Development Banks to make them more responsive to global challenges and current realities.

"The welfare of billions of people and the health of the planet, the foremost examples of a global public good, are under threat. To make matters worse, the problems are getting bigger; the SDGs are badly off track, with over 600 million people still living in extreme poverty...," the report said.

As the nature of MDBs involves working with governments and the private sector to create the conditions for investment, they have been identified as 'the most effective institutions to provide low-cost, long-term financing, to mitigate risks faced by private investors, and to share risks in the most efficient way'.