G20 leaders urged to finance global sustainable development

The letter to G20 leaders came ahead of an $11 billion pledge from 11 wealthy countries to fund the World Bank’s efforts to tackle global challenges and promote sustainable development.

In an open letter published ahead of the spring meetings of international financial institutions last week, G20 leaders were urged to reform the global financial system and step up efforts to achieve global sustainable development and combat the climate crisis.

In the letter, the 135 signatories, including actor Stephen Fry, film producer Richard Curtis and singer Annie Lennox, called on the world’s largest economies to “triple their investments in multilateral development banks, end crippling low-income income countries, and make polluters pay.
“Global financial institutions such as the World Bank and the IMF (International Monetary Fund) can help mobilize the financing needed to tackle the polycrisis and achieve the Global Goals, but they need a restart. And their shareholders – the leaders of the G20 – are the ones who can make that happen,” said the letter, coordinated by Project Everyone.

The G20 countries have historically been the largest contributors to global greenhouse gas emissions, accounting for approximately 81% of the total share. An August 2023 report also found that G20 countries spent a record $1.4 trillion on fossil fuel subsidies in 2022 alone, more than double the levels before the pandemic and before the 2019 energy crisis The world’s 20 largest economies have also contributed some $370 billion to the fossil fuel industry through investments by state-owned enterprises and loans from public financial institutions.

“These figures are a stark reminder of the enormous amounts of public money that G20 governments continue to pour into fossil fuels – despite the increasingly devastating impacts of climate change,” said Tara Laan, lead author of the report.

2010 to 2021: Fossil Fuel Subsidy Tracker.  Estimate of 2022 consumption subsidies: G20 share of International Energy Agency (IEA) consumer price support, 2023, 2022 fossil fuel-based energy expenditure from IEA's Government Energy Spending Tracker database, and research by authors.  It was assumed that the remaining subsidies for 2022 would be the average for 2019-2021 (Fossil Fuel Subsidy Tracker).
Estimates of fossil fuel subsidies per beneficiary in G20 countries between 2010 and 2022. Image: Institute for Sustainable Development.

In a speech last week, UN climate chief Simon Stiell called on key financial players – including the World Bank, IMF and leaders of the G7 and G20 – to push for a stronger climate finance deal at COP29 in Baku, Azerbaijan. This would not only benefit developing countries, but also help protect the global supply chains on which all economies depend.

Despite poor and vulnerable countries raising their voices for decades to demand financial support to tackle the climate crisis, many believe that rich countries are not doing enough and that financing is still far from what is needed. The establishment of a Loss and Damages Fund in 2022 and its operationalization, which was hailed as “historic” at COP28 last year, marked an important step forward in the fight for climate justice. However, contributions to the Fund still fall significantly short of what is needed to meet the actual needs of developing countries, with the United Nations Framework Convention on Climate Change (UNFCCC) estimating that developing countries, excluding China, will need climate finance , ranging from US$1 trillion per year in 2025 to US$2.4 trillion in 2030.

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$11 billion pledge

The letter was sent ahead of the annual spring meetings of the International Monetary Fund (IMF) and the World Bank last week, where UN officials, climate and finance ministers met to boost global efforts to tackle climate change.

At the end of Friday’s meetings, 11 wealthy countries, including Japan ($1 billion), the US, France, Germany, Italy and the United Kingdom, announced contributions totaling $11 billion to finance the World Bank’s efforts to global challenges such as the climate crisis and pandemics, and boost sustainable development.

The money could be deployed to raise up to $70 billion over 10 years, the bank said, boosting its lending power to facilitate tackling cross-border challenges and promoting global development.

“We have worked hard to develop these new financial instruments that will expand our lending capacity, multiply donor funds and ultimately allow us to improve the lives of more people,” said Ajay Banga, President of the World Bank Group. “The generosity of these countries is both an affirmation of the progress we have made in reforming the Bank and a sign of their shared commitment to global development.”

Last week, the bank also launched the Global Collaborative Co-Financing Platform, a tool to facilitate co-financing between a coalition of ten multilateral development banks (MDBs) while reducing the burden on partner countries. For countries, the new platform will reduce administrative burdens and transaction costs and enable better coordinated financing in line with their priorities – resulting in greater development impact, the World Bank said in a statement.

The World Bank also announced strategies to support countries to deliver quality, affordable healthcare to 1.5 billion people by 2030, and to provide electricity from renewable energy sources to 250 million Africans by 2030.