G7 Commits to Multi-Year Effort to Support Net-Zero Global Economy and to Move to Mandatory Climate Risk Reporting | Mayer Brown – Tax Equity Times

On June 5, 2021, in their daily communiqué of the G7 UK 2021 To meet,1 the G7 finance ministers and central bank governors made a number of statements on climate change.

To express their support for a global recovery from Covid-19:

“We will continue to work together to ensure a strong, sustainable, balanced and inclusive global recovery that builds better and greener from the Covid-19 pandemic and recognize the disproportionate impact of the pandemic on certain groups, including women, youth and the at risk Population groups. We are committed to maintaining political support for as long as necessary and investing to fuel growth, create quality jobs and tackle climate change and inequalities. “

Noting that international climate finance will be critical to climate change and adaptation:

“We reaffirm the common goal of developed countries to mobilize US $ 100 billion annually from public and private sources for developing countries, in connection with meaningful mitigation measures and transparency in implementation. We are committed to increasing and improving our climate finance contributions by 2025, including increasing adaptation finance and funding nature-based solutions. We welcome the commitments already made by some G7 countries to increase climate finance. We look forward to further commitments at the G7 Summit or in the run-up to COP26. We urge all Multilateral Development Banks (MDBs) to set ambitious dates for the Paris Orientation ahead of COP26, and we welcome their work in helping client countries. We urge the MDBs to mobilize more climate protection financing, including from the private sector, and to strengthen their support for a clean energy transition, adaptation and resilience as well as nature. We welcome the increasingly important role of the IMF in assisting members in managing climate risks and moving to net zero, including through surveillance. We are committed to including climate reporting in our countries’ bilateral IMF surveillance reports, and we urge others to do the same. “

Regarding their support for a net-zero world economy:

“We are committed to multi-year efforts to bring about the significant structural change required to meet our net zero commitments and environmental goals in a way that is positive for employment, growth, competitiveness and fairness. We are committed to properly embedding climate change and biodiversity loss considerations into economic and financial decisions, including managing macroeconomic impacts and making the best use of various policy levers to price carbon. “

Reference to the risks of climate change for the solvency of financial institutions and for financial stability:

“We recognize that climate change poses increasing physical and transitional risks for regulated financial institutions and for financial stability, and that these risks have different characteristics that we need to consider. The G7 authorities believe it is important that financial companies manage the financial risks of climate change using the same risk management standards that apply to other financial risks. The G7 central banks will assess the risks to financial stability from climate change and, if necessary, use the scenarios published by the Network for Greening the Financial System. Central banks will share insights into how climate-related risks are incorporated into their own operations and balance sheets, as appropriate, and look forward to discussing later in the year how to make their own disclosures based on the recommendations of the TCFD [Task Force on Climate-related Financial Disclosures]. We fully support the FSB in developing an ambitious roadmap to identify and address climate-related financial risks, including by taking steps to encourage comparable disclosures, address data gaps, improve vulnerability assessments, and promote consistent regulatory and oversight practices. We also support the Sustainable Finance Working Group in developing their G20 roadmap for sustainable finance with an initial climate focus. “

Regarding such an embedded climate change, it says:

“We emphasize the need to make the global financial system greener so that climate considerations are taken into account in financial decisions. This will help mobilize the trillions of dollars in private sector funding needed and strengthen government policies to meet our net zero commitments. We support the transition to mandatory climate-related financial information that provides consistent and decision-relevant information for market participants and on the [TCFD] in line with national regulatory frameworks. Investors need high-quality, comparable and reliable information on climate risks. We therefore agree that a global basic standard is required for sustainability reporting, which the legal systems can further supplement. We welcome the International Financial Reporting Standards Foundation’s work program to develop this baseline standard under solid governance and public oversight, built on, and closely engaging with, the TCFD framework and the work of sustainability standards setters, to deliver the global best promote convergence, practice and accelerate. We encourage further consultations on a final proposal that will lead to the establishment of an International Sustainability Standards Board prior to COP26. “

For more general impact reporting:

“In addition, we recognize the growing need for more information about the impact of companies on the climate and the environment. We recognize that many jurisdictions and organizations are already developing impact reporting initiatives, including but not limited to reporting on net zero and broader sustainability metrics. We will work closely and with our international partners to determine the best approach to ensure global consistency. “

Express their support for the Nature Financial Disclosures Task Force:

“We look forward to establishing the Nature Financial Disclosure Task Force and recommendations.”

1 On June 5, 2021, the G7 finance ministers met in London and were supported by the heads of the International Monetary Fund (IMF), the World Bank Group, the Organization for Economic Co-operation and Development (OECD) and the Eurogroup May 28, by the Financial Stability Board (FSB).

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