Written on 06 Jul 2022.
We are very pleased to share a new Think7 policy brief by Irene Monasterolo, Professor of Finance at EDHEC Business School, EDHEC-Risk Institute on how to address the debt crisis and promote a sustainable recovery in the Global South; a report co-authored with Ulrich Volz (SOAS University of London & German Development Institute - DIE), Kathrin Berensmann (German Development Institute / Deutsches Institut für Entwicklungspolitik - DIE), Sara Burke (Friedrich-Ebert-Stiftung), Kevin Gallagher (Boston University Global Development Policy Center), Stephany Griffith-Jones (Initiative for Policy Dialogue at Columbia University), Martin Kessler (Finance for Development Lab).
This report makes 7 recommendations for the G7 to address the debt crisis in the Global South and provide all countries with the opportunity to invest in sustainable recoveries:
As an immediate step, the German G7 Presidency should therefore invite representatives of climate-vulnerable sovereign debtor groups to the G7 Summit and initiate a dialogue on debt restructuring options for climate-vulnerable nations.
Finance needs to properly account for sustainability risks, and it needs to be aligned with internationally agreed sustainability goals.
In this regard, it is important that G7 countries not only work towards a consensus for basic sustainable banking and finance standards, taxonomies and regulations, but also make sure that their domestic sustainability standards apply to overseas financing activities of domestic financial institutions. While establishing common standards through harmonised taxonomies is fundamental, and enhancing stress tests is crucial, a more proactive regulatory approach by policy makers and supervisors is needed, ruling out the financing of harmful activities that undermine the achievement of the Paris climate goals and thereby threaten global prosperity, says Irene Monasterolo, Professor of Climate FInance, EDHEC Business School, EDHEC-Risk Institute
Access the policy brief "Addressing the Debt Crisis in the Global South: Debt Relief for Sustainable Recoveries".
On April 30, they published a second policy brief entitled: "Scaling up Sustainable Finance to Enable Sustainable Economic Recoveries".
To scale up sustainable finance and align all financial flows with climate and sustainability goals, this policy brief makes ten recommendations for the G7:
Think7 is an engagement group of leading think tanks from the G7 countries. It works to develop and propose research-based policy recommendations to support the German G7 presidency. The Think7 process is jointly coordinated by the Global Solutions Initiative and the German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE) during the German G7 presidency 2022.
The T7 Task Force on Sustainable Economic Recovery will develop research-based policy advise for Germany’s G7 Presidency on formulating national and global policies that will not only enable and sustain rapid economic recoveries, but also help the achievement of the Agenda 2030 for Sustainable Development and the Paris Climate Goals. The Task Force will develop policy ideas for re-establishing growth momentum for the world economy; the scaling up of green investment; for addressing the debt crisis in the Global South; for reinvigorating global trade and building more resilient supply chains; and on the role of international cooperation and international organisations in supporting these goals.