Reforming the Global Financial Architecture to Drive a Resilient Net-Zero Transition

07 July 2023


Nicola Ranger, Fulvia Marotta, Sam Fankhauser & Brian O’Callaghan

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Global climate goals need continued attention in good times and in bad. However, the effects of recent global shocks have delayed progress on the net-zero transition, climate change adaptation and wider sustainability goals. Delay will increase the economic expense of transition and environmental damages. The global community can and must embed shock-proofing and shock-responsive approaches into fiscal policies and the evolving global financial architecture so that shocks no longer inhibit progress—this is referred to as a resilient net-zero transition. The G20, through its fiscal policies, financial regulation, and the Bretton Woods institutions, has a crucial role to play in shaping the architecture for a resilient net-zero transition. This Policy Brief recommends the creation of a dedicated financing facility for emerging and developing economies to help maintain progress on climate goals during crises; and that the G20 aligns the global financial system, including fiscal and development finance, with climate-resilient development.