The evidence supports this claim. The current state of the climate is the single most significant risk that we, as a global community, face. To that end, the challenge of the 21st century will be to achieve the objectives of the Paris Agreement and make the most of the opportunities presented by climate change.
Many governments can solve this problem by themselves. We can conquer this obstacle when we work together.
When world leaders converged on Bretton Woods in 1944, as the second world war was approaching, they presented themselves with a challenging assignment.
Their mission was to devise a structure for the worldwide monetary system that would lead to a more stable international political climate than the one that plagued the first half of the 20th century. This would be accomplished by reducing the frequency and severity of global economic downturns and instability.
The end outcome was not perfect, but it was astonishing. The establishment of World Bank as well as International Monetary Fund in the second half of the 20th century was a significant factor that contributed to a period of increased stability during that time period.
If a new Bretton Woods system were being negotiated now, there is no doubt that there would be consensus that the current challenge is far more difficult than the one that was faced in the 20th century. This challenge consists of constructing a global financial architecture that assists the globe in remaining as close as possible to a temperature increase of 1.5 degrees Celsius.
As the ministers of climate change for Australia, Canada, and New Zealand, we are holding out hope that it is still possible to make an immediate course correction and achieve significant, quick reductions in emissions across all relevant sectors and systems. However, it is essential that we establish the appropriate conditions for all nations to flourish and not fall behind in the race.
We need a global financial architecture that can assist in addressing the existential threat posed by climate change while also supporting the development goals of individual nations, providing a response to the millions of people who are falling back into poverty, and preserving the stability of the global financial system.
The island nations of the Pacific and the Caribbean are leading the way for us. Their leadership has been instrumental in boosting global climate ambition, including advocating for adequate and reliable flows of climate funding. Their leadership has also been instrumental in driving global carbon emissions reductions.
A recent appeal for “transformation in our multilateral development funds and institutions” came from Mark Brown, Prime Minister of the Cook Islands and Chair of the Pacific Islands Forum. This exemplifies the transition that each of us acknowledges is essential.
We are also motivated by the way that Barbados is led by Prime Minister Mia Mottley, who is a relentless advocate for the reform of international financial architecture in order to assist the nations who are the most susceptible to the effects of climate change. This includes low-lying island nations that are likely to experience a chain reaction of negative effects on their economies as a direct result of climate change.
The ability of developing countries to absorb the costs of tackling the terrible repercussions of climate change on their own is being hindered by the growing debt burdens these countries are carrying. Because of this, we acknowledge the necessity of increasing support for adaptation and the response to effects of climate change in countries. In addition, we stress the importance of developing nations actively participating in the aforementioned reform activities. The goals that we have set for the environment and for development need to be pursued simultaneously.
Due to the significant role that they play, multilateral development banks are in a position to exhibit leadership that is unmatched by any other institution. Our three countries are pleased with the delivery of initial changes, notably the recent announcement to free up US$50 billion in loan capacity over the course of the next ten years at the World Bank.
However, there remains a substantial amount of additional work.
Given how urgent it is to provide climate finance at rates that are affordable, we need to make a collective effort to ensure that climate change becomes a bigger factor in the balance sheet of each multilateral development bank. At the same time, it is important that the banks maintain their preferred creditor status and AAA credit rating, so this must be done while keeping in mind how important it is that the banks maintain these ratings.
The fact of the matter is that climate money from these global institutions continues to be spotty and, at times, inaccessible to the nations who require it the most, in particular those in the Pacific and small island states located all over the world.
We have to make that adjustment. The value of climate funding that is difficult to acquire is minimal.
It is important for the portfolios of multilateral development banks to become more aligned with the Paris Agreement and to boost the amount of concessional funding that is provided. That involves incorporating concerns about climate change and its repercussions into all of their actions. It includes increasing attempts to leverage and unlock increased investment from the private sector as a result of interventions, as well as streamlining access, eligibility, and the delivery of projects and programs.
This moment is fraught with peril as well as potential for reward.
The meeting for a new global funding deal is currently taking place, and as such, it provides an opportunity to concentrate on strategies to advance climate and nature-friendly reforms across the global financial architecture. Also, the annual meetings of the World Bank and the International Monetary Fund will be held in Marrakech, Morocco, in October. These meetings will provide an opportunity to formalize the development of the World Bank, which we believe will result in significant action. We also offer our support to the United Arab Emirates in their role as president of the COP28 and express our shared desire to collaborate closely with them in order to make the reform of multilateral development banks a primary focus of their agenda throughout their term in office.
We must each go “all in” on this endeavour. And all of the international financial institutions fall under this category.
