During a summit aimed at reimagining the global financial system, French President Emmanuel Macron emphasised on Thursday that no nation should be forced to make a decision between addressing poverty and addressing climate change.
The Summit for a New Global Financial Pact is aimed at finding the financial solutions to the interlinked global goals of tackling poverty, curbing planet-heating emissions and protecting nature.
In his opening remarks Macron told delegates that the world needs a "public finance shock," a global push of innovation and financing -- to fight these challenges, adding the current system was not well suited to address the world's challenges.
"Policymakers and countries shouldn't ever have to choose between reducing poverty and protecting the planet," Macron said.
Ugandan climate campaigner Vanessa Nakate took the podium after Macron and asked the audience, which included oil-rich Saudi Arabia's Crown Prince Mohammed bin Salman, to take a minute of silence for people who are suffering from disasters.
She slammed the fossil fuel industry, saying they promise development for poor communities but the energy goes elsewhere and the profits "lie in the pockets of those who are already extremely rich".
"It seems there is plenty of money, so please do not tell us that we have to accept toxic air and barren fields and poisoned water so that we can have development," she said.
Economies have been battered by successive crises in recent years, including Covid-19, Russia's invasion of Ukraine, spiking inflation, debt, and the spiralling cost of weather disasters intensified by global warming.
Leaders attending the summit include Barbados Prime Minister Mia Mottley, who has become a powerful advocate for reimagining the role of the World Bank and International Monetary Fund in an era of climate crisis.
"What is required of us now is absolute transformation and not reform of our institutions," said Mottley, whose country has put forward a detailed plan for how to fix the global financial system to help developing countries invest in clean energy and boost resilience to climate impacts.
#UPDATE Barbados Prime Minister Mia Mottley told global leaders in Paris on Thursday that the international financial order needs "absolute transformation" at a summit on aimed at overhauling the lending system for an era of climate change ➡️ https://t.co/77ag8JAeUA pic.twitter.com/2eJKw6FNuZ
— AFP News Agency (@AFP) June 22, 2023
"We come to Paris to identify the common humanity that we share and the absolute moral imperative to save our planet and to make it livable," she said.
Inequalities
According to UN Secretary-General Antonio Guterres, developing countries are facing significant challenges. He noted that over 50 nations are currently in or close to debt default, and many African countries are allocating more funds towards debt repayments than healthcare.
Guterres said the post-World War II global financial system was failing to rise to modern challenges and now "perpetuates and even worsens inequalities".
"We can take steps right now and take a giant leap towards global justice," he said, adding that he has proposed stimulus of $500 billion a year for investments in sustainable development and climate action.
And IMF director Kristalina Georgieva acknowledged the desire for concrete outcomes from the summit and shared that a significant commitment had been fulfilled. Specifically, $100 billion of "special drawing rights" meant to increase liquidity had been redirected towards a fund dedicated to addressing climate change and poverty.
"Ultimately it is the future of humanity that is being discussed here," she told reporters.
Macron also said he was hopeful that a 2009 pledge to deliver $100 billion a year in climate finance to poorer nations by 2020 would finally be fulfilled this year, although actual confirmation the money has been delivered will take months if not years.
Financial challenges
The summit comes amid growing recognition of the scale of the financial challenges ahead.
Last year, a UN expert group said developing and emerging economies excluding China would need to spend around $2.4 trillion a year on climate and development by 2030.
Several nations are urging multilateral development banks to facilitate investments in climate-related initiatives and to substantially augment their lending capacity. They emphasize that new debt agreements should contain disaster clauses, similar to the ones implemented by Barbados, which would enable countries to temporarily suspend repayments for up to two years in the aftermath of a severe weather event.
Other ideas on the table include taxation on fossil fuel profits and financial transactions to raise climate funds.
France backs the idea of an international tax on carbon emissions from shipping, with hopes of a breakthrough at a meeting of the International Maritime Organisation in July.
Observers are also keenly awaiting details of a plan from South American countries to create a global structure for so-called debt-for-nature swaps.
Kenyan President William Ruto said all these ideas should be explored and urged delegates not to see the challenges facing the world as divided between the global north and south.
"Climate change will consume all of us," he said.
(with wires)
