in: T7 Task Force Wellbeing, Environmental Sustainability, and Just Transition Policy Brief (April 2023)
This year, 2023, offers political momentum for strengthening the global climate finance architecture under and outside the United Nations climate change regime. In November 2022, the 27th Conference of the Parties (COP27) to the United Nations Framework Convention on Climate Change (UNFCCC) marked a breakthrough on loss and damage with an agreement for establishing new funding arrangements, including a fund. Parties also recognized the need for rethinking development finance and endorsed a plea to reform multilateral development banks (MDBs). In addition, parties to the UNFCCC and the Paris Agreement are currently negotiating a new collective quantified goal on climate finance, which is to be agreed by 2024. Japan, holding the 2023 Group of Seven (G7) presidency, carries a key responsibility for initiating relevant processes to revive the climate finance agenda together with the G7 partner countries. As the G7 countries are the main providers of adaptation finance, as well as the major shareholders having voting power to enable reforms of the MDBs, the G7 Hiroshima Summit must catalyze a debate for a systemic transformation and chart a long-term strategic outlook for the G7 states as global leaders on climate action. This policy brief makes three proposals to that end: (i) strengthen multilateral funding under the United Nations climate change regime; (ii) reinforce efforts to balance climate finance flows; and (iii) push for reforming the MDBs to strengthen their role and effectiveness in providing finance for adaptation and loss and damage.