G20 Finance Ministers in Rio: A Decisive Meeting for Brazil’s G20 Presidency

• G20 finance ministers and central bank governors will meet next week (July 25-26) for the third Finance Ministerial Meeting under the Brazilian G20 presidency.

• Brazil signaled early on that it wanted its G20 Presidency to chart a course for ambition in reforming the climate finance system. It created the Global Mobilization against Climate Change or Climate Task Force at this year’s G20 to “improve global macroeconomic and financial alignment to implement the goals of the United Nations Framework Convention on Climate Change and the Paris Agreement.”

• This meeting is the last opportunity in 2024 for G20 Finance Ministers to discuss a substantive agreement on the shape of key reforms needed to restore confidence and demonstrate strong collective action on the climate finance agenda. This in turn will shape the context for the upcoming critical climate finance negotiations at COP29.

History

G20 Finance Ministers will meet in Rio de Janeiro, Brazil, next week to discuss and build convergence on a wide range of international financial issues. While Brazil’s Finance Minister Fernando Haddad has identified a new global tax on billionaires as a key deliverable, equally critical are discussions and convergence on broader financial system reforms needed to support the collective transition to climate security. It is essential that the momentum behind this broader set of reforms is not lost.

The systemic nature of the climate crisis means that it can only be effectively addressed through reforms across the economy and the financial sector. Implementing these reforms now is the only way to cost-effectively provide the quantity and quality of finance needed for the transition to climate security.. Delaying action will only increase future costs and complicate future political negotiations. Only leaders and finance ministers have access to the full toolkit to address these challenges at the scale and speed required. Agreement at the upcoming G20 Finance Ministers’ meeting in Rio is even more critical, as it is effectively the last chance finance ministers have in 2024 to reach substantive agreement on key issues (their final meeting in October will likely focus on agreeing the language of the communiqué and external communications).

The four main building blocks of the “climate finance” agenda are:

1. Bigger, better, bolder multilateral development banks. Scaling up MDBs is the most efficient means of increasing the flow of climate finance from rich countries to emerging markets, given their unique ability to leverage any funds provided to them into significantly larger investments. To do so, ministers should progress a range of MDB technical inputs, including callable capital, SDRs, hybrid capital and guarantee provisions. This is the most direct and cost-effective way to unlock the necessary funding supplies now, as countries seek political alignment on future MDB capital pledges. G20 Finance Ministers, in close collaboration with the IMF and the World Bank, should also work to accelerate the delivery of debt treatments where necessary.to ensure that these countries have the fiscal space necessary to undertake their own economic transition and development agendas.
2. National platforms and national transition plans. Clear national plans around which finance can align are the foundation of the transition. G20 Finance Ministers should support the momentum underway under the Climate TF and the G20 International Financial Architecture Working Group to lay the foundations for national transition plans and next-generation National Platforms to catalyze the financing needed to implement them. To this end, Ministers should agree and promote a set of common design principles, ensuring a unified but adaptable framework for different contexts, which enables effective delivery of climate and development priorities at the national level.
3. Private sector transition. G20 Finance Ministers should support the work done by the G20 Sustainable Finance Working Group to define common principles for private sector transition plans. This should enable transition plan disclosure to become a new “business normal” for the real economy and enable consistency of efforts across sectors and geographies, in support of national transition efforts.
4. Changing the conversation about banks and their risk assessment in the era of climate change. G20 Finance Ministers should call on the Financial Stability Board and the Basel Committee to accelerate and finalize efforts to align the global prudential framework with the needs of the transition. This is essential to ensure that banks have the right incentives to allocate financing and manage their risks in a way that is fully consistent with the efforts undertaken by other key economic actors (states, MDBs, private companies) for the climate safety transition.

Quotes

Sima KammouriehProgram leader E3G said:

“We are running out of time to secure a livable climate and, with it, the ability to finance the global transition. The costs of the climate crisis are escalating at an ever-increasing rate. Brazil has strong ambitions for its G20 presidency and has signaled that both climate and inequality were key priorities. To achieve its ambitions, it must act now and seek to get all G20 Finance Ministers to agree on essential financial reforms and common principles for the broader financial sector that are aligned with climate security.”

Rob MooreAssociate Director, E3G said:

“Any realistic pathway to climate security needs to use the full range of levers available to finance ministers. The urgency of the action needed means it is up to the G20, under the leadership of the Brazilian Presidency, to put in place the building blocks needed to accelerate climate finance. This means getting more money through the multilateral system, delivering the necessary plans to guide investment, and ensuring that financial rules are fit for purpose for a world undertaking an unprecedented transition.”

Laura Sabogal ReyesE3G’s senior policy advisor said:

“The Brazilian G20 Presidency has set a clear priority to move the needle on country platforms and transition planning. This commitment is extremely timely as it can transform climate and development delivery at the national level. As countries around the world are confronted with the severity of the climate crisis and worsening economic conditions, G20 finance ministers should seize this opportunity to define actionable next steps and build on the current momentum to deliver on the Sustainable Development Goals and the Paris Agreement.”

Gustavo PinheiroSenior Associate, E3G said:

“The Rio Finance Ministerial presents the Brazilian G20 Presidency with a final opportunity to shape a prosperous and resilient global economic future for this century. Extreme weather events are already causing severe damage to human societies and imposing significant fiscal burdens around the world. Finance Ministries and Central Banks must send strong signals to advance important reforms, unlock climate finance at scale, and integrate climate change as a central variable in economic policymaking to improve well-being and promote social justice. As G20 President, Brazil has the chance to lead decisively, inspiring all G20 members to commit to increasing finance for the transition, ensuring a stable and prosperous future for all.”

Sima Kammourieh (EN, FR, DE, AR), E3G Programme Leader, (International Financial Regulation and Standards, G7/G20 Finance Ministers)
m: +49 (0) 160 9596 4443 | sima.kammourieh@e3g.org

Alden Meyer (EN), Senior Associate at E3G, (UNFCCC and G7/G20 dynamics, multilateral climate and clean energy diplomacy, mitigation ambition, climate finance, US policy and politics)
Portuguese: m: +1-202-378-8619 |alden.meyer@e3g.org 

Ana Mulio Alvarez (EN, ES), E3G Researcher, (UNFCCC, loss and damage, adaptation)
s: +32 490 000 514 | ana.mulio@e3g.org

Kate Levick(EN), Associate Director of E3G and Co-Head of the Secretariat of the Transition Plan Taskforce, (UK and international sustainable finance, public and private sector finance, financial initiatives, climate disclosure, transition planning, financial regulation, non-state actor accountability)
m: +44 (0) 7860 861225 |kate.levick@e3g.org

Franklin Steves(EN, RU, SP, FR), Senior Policy Advisor at E3G, (Reform of the international financial architecture, Bridgetown Initiative, CAF reform, climate finance)
at: +44 7484 815434| franklin.steves@e3g.org

Laura Sabogal Reyes(EN, ES, DE), Senior Policy Advisor at E3G, (Public development banks, Paris Alignment and E3G Public Bank Climate Tracking Matrix, climate finance, nature finance, innovative financial mechanisms, national platforms)
· m: +49 160 96466368 |laura.sabogal@e3g.org

Gustavo Pinheiro(EN, ES, PT), E3G Senior Associate, (UNFCCC and G7/G20 dynamics, climate finance, transition planning, climate-related risks and financial regulation, multilateral climate diplomacy, clean energy transition, mitigation ambition, nature-based solutions, adaptation and resilience, Brazil’s climate and energy policy, Brazil’s politics)
· m: +55-61-98338-8586 |gustavo.pinheiro@e3g.org 

Danny Scull(EN), Senior Policy Advisor at E3G, (Evolution Roadmap, World Bank Group, Reforming the international financial architecture)
m: +1 (301) 787 0942 | danny.scull@e3g.org

Rob Moore(EN), E3G Associate Director – Public Banks and Development, (MDBs/DFIs, financial architecture reform, geopolitics of climate finance)
rob.moore@e3g.org

Notes to editors

1. E3G is an independent climate change think tank with a global vision. We work at the frontier of the climate landscape, addressing barriers and advancing solutions for a safe climate. Our goal is to translate climate policy, economics and politics into action. About – E3G
2. For more information, please send an emailpress@e3g.orgor telephone +44 (0)7783 787 863
3. Sign up to our WhatsApp briefing service for journalists to receive updates and analysis on key geopolitical and climate events in 2024 and 2025 leading up to COP29 and COP30:E3G WhatsApp Registration for Journalists – E3G.
4. There is a risk that the “climate finance reform” agenda will disappear from the radar at a critical moment. In a context of ongoing polycrisis and increasing climate impacts: mitigation and adaptation financing gaps are widening in emerging economies; advanced and developing economies are facing fiscal pressures of varying degrees; insurers are withdrawing from geographic areas where exposure to climate risk is seen as too high. These “insurance gaps” and the financial risks they pose are a problem in vulnerable or emerging economies, but also in developed economies such as the United States or Italy.

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