Hope Springs Eternal as Global Finance Meets to Chat Climate

By Barry Johnston, Co-Founder at Purpose Union

Is it too late to avert climate catastrophe? Nearly, but not quite. That’s the verdict of the head of the UN’s climate negotiations, Simon Stiell, who raised blood pressure and eyebrows with a stark assessment that we’ve got 24 months to avert the climate endgame. 

It was with the sound of the ecological clock ticking that finance and economics experts and decision makers from around the world gathered in Washington DC last week for a twice-yearly set of meetings at the World Bank and IMF. The April convening is known as the Spring Meetings - a hopeful title evocative of green shoots, renewal, brighter days ahead. Did I leave Washington DC with a spring in my step? Well, yes and no.

Many populist governments are wilfully ignoring the climate crisis

The first positive is what was once a meeting of fiscal and monetary wonks has become a climate conference in all but name. At a time when inflation remains high, geopolitical tension is choking trade and many populist governments are wilfully ignoring the climate crisis to focus on demonizing immigrants/ women/ woke young people (delete as appropriate), the “serious” men and (admittedly still fewer) women in gray suits recognise that climate change must be a driving force behind the reform of our global economic infrastructure. That’s created space for some genuinely exciting new ideas to gain traction within institutions that are designed almost by definition to smother new ideas in the cradle.

Once such an idea is being spearheaded by our old friends at ICRICT - who had not one but two Nobel prize winning economists at their event making the case for a global wealth tax. Joe Stieglitz, Co-Chair of ICRICT made the quite basic point that only a Nobel laureate Columbia professor can get away with by pointing out that taxing the rich makes sense because they are the ones with the money. Esther Duflo expanded a little on this by talking about the moral debt rich countries owe developing nations due to climate change, and as an economist would, put a monetary value to that debt of about $500 billion per year. More interestingly still - they weren’t being laughed out of town. The Brazilian and the French governments are both looking closely at the links between tax and climate finance.  Perhaps time to update that old quote, “The only things certain in life are death and taxes … and climate change”. 

What could a genuinely different global system look like if different people were in charge?

A few blocks over in a packed-out, windowless room at the Rockefeller Foundation you got a glimpse of what a genuinely different global system could look like were different people in charge. Barbados PM Mia Mottley has become the emblematic leader of the developing world’s increasingly assertive demands for climate justice. Her speech demonstrated that moral clarity and force of argument can bring clout where geopolitical power is lacking. Around her, a loose collection of similarly affected nations is gathering in informal coalitions like the V20 - a group of nations most vulnerable to the impacts of climate change. These countries aim to play bigger powers off against each other, leveraging support for initiatives like climate insurance and prosperity plans to build climate resilient, sustainable economies. 

In the formal agenda, the headline announcement was a new energy partnership for Africa, aiming to bring electricity to 250 million people by 2030, doubling investments in renewables and greening old energy infrastructure. Of course, every silver lining has its cloud and this pledge comes shrouded in foggy details and the usual vague assertions that the private sector will wrap itself around the initiative to plug the funding gaps.

Poor countries tipped over into net creditors to wealthy countries in 2023

And some real storm clouds were spotted on the horizon by those monitoring the longer trends in financial flows. Those good old number crunchers at the ONE campaign pulled out the stat of the week by estimating that poor countries tipped over into net creditors to wealthy countries in 2023, with $50 billion per year now flowing out of poor and vulnerable countries. 

That number should focus minds. While we should recognise modest progress in some areas, we need to be watchful of backsliding in others. To align our economy with the resources of our planet is a marathon that we must now run as a sprint. That race continues next week as African heads of government gather in Kenya to set out their demands for the World Bank’s next big round of fundraising.  

At that point, we’ll have 23 months left to save the world. 

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