In the midst of a global public health crisis, calls for social justice, and a worsening climate emergency, this year’s G7 Summit in June had plenty on the sustainable finance radar. G7 leaders’ joint communiqué rounded out the two-day event in Cornwall, England, which was dominated by environmental and social issues against the overarching themes of “vaccinating the world” and “green recovery.”
Their environmental pledges, including reaffirming aims to limit the rise in global temperatures to 1.5 degrees Celsius and achieve net-zero emissions by no later than 2050, emphasize sustainable finance and a greener financial system.
Significantly, the G7 expressed support for adopting “mandatory climate-related financial disclosures” in line with the Task Force on Climate-Related Financial Disclosures framework. This comes just as the US Securities and Exchange Commission considers its own requirements for disclosing financial risks related to climate change. The G7 came out in support of various other sustainable finance initiatives, including the creation of an International Sustainability Standards Board aimed at setting standards on financial reporting for material sustainability issues.
G7 leaders also unveiled Build Back Better World; in order to meet the infrastructure needs of low- and middle-income countries, the climate-friendly initiative aims to narrow an estimated $40-trillion infrastructure shortfall in developing countries. The US meanwhile said it would look to mobilize “catalytic investment” through development finance tools.
Health and Education
COVID-19’s lingering reach brought the social element of ESG into sharp focus at this year’s G7 Summit. Leaders set a goal to end the pandemic by 2022 through a global vaccination rate of at least 60%. G7 countries pledged a further $1.9 billion for an additional one billion doses to the World Health Organization’s COVAX program.
Health issues joined an emphasis on education and gender equality. The G7 committed to two new targets for girls’ education in low- and lower-middle-income countries: an additional 40 million girls in education as well as 20 million more girls reading by age 10 or the end of primary school by 2026. This was backed by combined G7 funding pledges of $2.75 billion across the next five years to the Global Partnership for Education, which focuses on building better education systems around the world.
Elsewhere on the social front, the G7 committed to eliminating forced labor from global supply chains, highlighting China’s Xinjiang region as an area of concern. Leaders also pointed to human rights abuses in Hong Kong. In terms of governance, G7 leaders voiced their support for a 15% global minimum tax on multinational corporations to stamp out large-scale tax avoidance.
The 2021 G7 summit was set against an especially challenging global backdrop. Freshly exacerbated concerns won the attention of leaders as ESG’s unmistakeable influence spotlighted health, education, and the environment.