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G20 looks to align finance with people, planet & sustainable prosperity
The Group of 20 (G20) process is hosted this year by Italy. The Italian G20 Presidency is focusing on a “3P” approach—prioritizing people, planet, and prosperity in the design and deployment of COVID recovery plans.
The Global Partnership for Financial Inclusion met on March 24 and 25. According to the G20 newsroom:
The focus of the meeting was on the best strategies to increase citizens’ and businesses’ awareness of digital finance opportunities and of the safeguards aimed at protecting them from the risks of financial exclusion. The institutions of the GPFI were also called upon to monitor the measures that countries have adopted to overcome the emergency and promote more effective financial education activities and more inclusive consumer protection policies.
Access to financial and banking services, and reliable consumer protection are critical in the fast-moving deployment of trillions of dollars in COVID recovery funds. If the deeper inequality and economic hardship seen during the pandemic become entrenched, real economic recovery will be much harder to achieve, and more costly.
The Sustainable Finance Study Group met on March 26. The US and China co-chair the Study Group, with coordinating support from the UN Development Programme (UNDP). The meeting opened a discussion on design of a multi-year G20 Roadmap for Sustainable Finance. The Study Group will report on the following key deliverables:
approaches to identify sustainable investments (“taxonomies”);
the role of international financial institutions in supporting the Paris Agreement.
We have seen nonlinear compounding risks turn into catastrophic costs, due to the COVID-19 pandemic and related economic disruption. The world now faces increased food insecurity, major losses in economic production and human wellbeing, making unsustainable debt a systemic threat, and suggesting resilience-building debt relief is now critical for addressing the broader resilience imperative.
UN Secretary-General Antonio Guterres says without meaningful debt relief for developing countries:
the risk is that we compromise the recovery of the economies of the developing world with catastrophic consequences for people’s lives, with an increase in hunger and poverty and dramatic problems with health and education systems, in many cases leading to instability, social unrest and, at the limit, conflict. Everything is now interlinked.
In a new report linking response and recovery to the SDGs, the United Nations calls for
Workouts from a sovereign debt crisis [that] aim to restore sound public debt management, while preserving access to financing resources under favourable conditions [and] the ability of debtor countries to achieve sustainable development and the SDGs.
In a 2018 Resilience Intel brief to the G20, we called for recognition of and action on pathways toward XROI (external returns on investment). We wrote that “everyday activity is eroding resilience and accelerating vulnerability.” To achieve operational resilience intelligence, we would need to ask (and answer) these questions:
Are we building resilience? How do we know?
Can smart choices achieve gains in multiple relevant areas simultaneously?
Can such successes be replicated, diversified, and mainstreamed?
We need to ensure the everyday economy leverages non-market drivers of value to secure future wealth. To achieve this, leaders in the public, private, and multilateral sectors should integrate the following accelerators of future value into their portfolios:
Incentives for climate-smart finance at all levels.
Resilient infrastructure planning and deployment.
Support for market-wide investment in soil ecology resilience and sustainable farming.
Incentives for upstream contributions to the sustainable (ecologically resilient and pollution-free) ocean economy.
Carbon-related fiscal dividends to households.
The “3P” approach taken by the Italian G20 Presidency has the potential to steer the world’s leading economies toward these necessary improvements in the way we design for and go about the building of new value. Success will mean XROI and integrative value creation become mainstream; failure will mean the risks of resilience failure continue to rise.
UPDATED—Monday, March 29, 2021