G7 must invest $ 10 trillion for sustainable recovery: report

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The Group of Seven countries are expected to collectively spend $ 1 trillion a year over the next decade to put the world on a path to sustainable growth, a report commissioned by the British Prime Minister said on Monday.

As rich countries, still reeling from a pandemic that saw global gross domestic product drop 4% in 2020, shift from bailout to recovery, investment must go in the right direction, the author said. Principal Nicholas Stern, former Chief Economist at the World Bank and author. of the historical Stern journal on the economics of climate change.

Shifting from brown energy to green energy, protecting and restoring nature, reducing social inequalities, facilitating the deployment of vaccines in developing countries – all these goals must be pursued at the same time, notes the report.

“The world faces a complex set of interlocking challenges,” Stern told reporters on a Zoom press call as the report was released. “Unless you approach them together, you’re not going to do very well with any of them.”

“Do it right, and we have a much more attractive way to grow and develop,” he added.

“Get it wrong, and we have a lost decade of development, stuttering growth, increasing social cohesion issues in the richer world, and we are undermining the future of climate and biodiversity for generations to come. come.”

A G7 rally in England from June 11 is an opportunity for rich countries to take the lead, he added.

Formed in the mid-1970s, the G7 club of major industrialized countries includes the United States, Germany, Great Britain, Japan, France, Canada and Italy.

A trillion dollars a year spread across those seven economies would translate into about 2% of their pre-pandemic GDP, according to the report.

The independent report, set in motion by British Prime Minister Boris Johnson, said G7 countries should not leave the June meeting without closing the $ 20 billion funding gap for COVAX, the effort led by the UN to vaccinate the developing world against COVID-19.

Symbol of reliability

The consortium is also expected to redouble its efforts to cover the gap in rich countries’ long-standing commitment to provide $ 100 billion a year in climate finance by 2020.

The exact amount that has been provided in recent years is hotly contested, but even the most generous amounts are less than tens of billions.

“One hundred billion dollars is little compared to overall investment demand,” Stern said in an interview.

“But it’s important symbolically because it was a commitment from the rich world to help transition to the poor world. It’s a symbol of reliability.”

The report calls for structural policies that leave no doubt about the direction of things.

These include the rapid elimination of fossil fuel subsidies totaling hundreds of billions of dollars per year; increase the price companies pay for carbon pollution; and mainstreaming climate resilience and environmental protection into all development policies.

Disclosure by companies of exposure to climate risk – currently done on a voluntary basis – should become mandatory, according to the report.

A recent report from CDP, a nonprofit that tracks corporate environmental policy, found that half of financial institutions had not assessed the impact of their portfolios on climate change.

Plans announced by dozens of countries representing more than half of the global economy – including the United States, China and the European Union – to become carbon neutral by mid-century must also be postponed. in question.

The November climate summit to be hosted by Britain in Glasgow, COP26, “will be a test of whether delivery plans are credible,” Stern said.

“Countries not only need to set goals, but also how you get there.”

The report was prepared by Stern and a team from the London School or Economics and Political Science, where Stern is a professor.

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