G20 Finance Ministers accelerate efforts on climate but need to go further and faster

The Finance Ministers and Central Bank Governors of the G20 held their final meeting of the year on October 23–24, 2024, during the Annual Meetings of the International Monetary Fund (IMF) and World Bank Group. Their final meeting formed part of the run-up to COP29 in Baku – where governments will negotiate a New Collective Quantified Goal (NCQG) on climate finance – and the G20 Summit in Rio de Janeiro.  

A suite of documents issued after the meeting included several notable developments, summarised below. This builds on E3G’s previous blog outlining multilateral development bank (MDB) outcomes from last week’s Annual Meetings. [The Finance Ministers’ Communiqué and its Annex are here, while the Ministerial Statement and Outcome Document from the Task Force for the Global Mobilization Against Climate Change (TF CLIMA), a collaboration between Finance and Climate Ministers, are here.] 

International financial architecture (IFA) reform 

The G20 Finance Ministers made substantial progress on reforming international financial architecture across the board, on topics ranging from multilateral development banks (MDBs) to the IMF to financial regulation. The Communiqué covers a wide range of climate-related topics, including recognising the macroeconomic and distributional challenges of the climate transition and proposing various forward actions.  

MDB resources and strategies 

The G20 Finance Ministers committed to reviewing MDB resources and strategies, and to measuring progress against a new MDBs Roadmap. The Communiqué tasks the IFA working group with establishing a monitoring and reporting process to ensure that progress is made.  

The G20 Ministers called for deeper reforms to the Capital Adequacy Framework (CAF) and opened the door in principle to new capitalisation for MDBs. However, they stopped short of making concrete commitments for new financing and did not adopt the aim of tripling MDB lending by 2030, a recommendation previously made by the G20 Independent Expert Group. Taking that further step, together with improving lending terms, would significantly enhance trust in the G20 among developing countries. 

Fiscal space and transition financing 

Creating additional fiscal space to finance the transition to a low-carbon economy in Emerging Markets and Developing Economies (EMDEs) requires ongoing commitment from leaders with support from Finance Ministers. The Finance Ministers’ Communiqué includes actions to address debt vulnerabilities, which may make it difficult for countries to take on additional lending for investment in the climate transition and other development goals. Streamlining innovative debt solutions, such as debt-for-climate swaps or climate-resilient debt clauses, may be an option to help free up fiscal space for EMDEs.  

The Communiqué also discussed fostering international tax cooperation, including dialogue on taxing ultra-high-net-worth individuals.  

We can expect to see more on both themes in 2025, as early signals suggest that South Africa will prioritise them during its upcoming G20 Presidency. 

Financial frameworks and transition planning 

The overall message from TF CLIMA was that a financial framework which combines global financial stability with increased capital flows from developed to developing countries is feasible.  

Building on this overall approach, the TF CLIMA Outcome Document and accompanying Ministerial Statement, together with the report of the Sustainable Finance Working Group, provide overarching principles for: 

1. Transition planning at the national level.
2. Design of country platforms to co-ordinate investment in national transition plans.
3. Private sector transition planning, building on the work of standards and frameworks created by ISSB, GFANZ, and TPT. 

Looking ahead 

The G20 Finance Ministers’ final publications for 2024, including the TF CLIMA outputs, demonstrate that climate change is increasingly viewed as a macroeconomic issue. It is also clear that Finance Ministers recognise this and are working to implement the tools at their disposal.  

However, with negotiations on a New Collective Quantified Goal on finance in Baku planned in November alongside the G20 Leaders meeting in Rio, a critical question remains: will this momentum be rapid enough to enable agreement on a new finance goal in Baku this year and to provide a springboard for key reform steps to be agreed by Leaders as they tee up next year’s agenda? Ensuring that the G20’s answer is “yes” will be a key task for South Africa and Brazil as they work together during their upcoming G20 and COP30 Presidencies to take this agenda further and faster in 2025.