The G7 Summit: What Businesses Can Do
Last week, leaders from the UK, US, Canada, Germany, France, Italy and Japan met alongside representative from bodies including the UN, EU, and IEA, as well as other major and emerging economies at the G7 Summit. Germany holds the G7 presidency and has set the goal of “progress towards an equitable world”. Key outcomes include the launch of a new Global Alliance on Food Security and the formation of a ‘Climate Club’. This article will provide an overview of the summit outcomes and what businesses can do to support the commitments made.
A Climate Club
The G7 agreed on the formation a ‘Climate Club’ by the end of 2022. The goal of this club will be “to drive urgent, ambitious, and inclusive action” in alignment with the goals of the Paris Agreement. It will be open to countries outside of the G7 and will have three pillars: developing a common way to measure efforts toward mitigation, decarbonising industry, and boosting international ambition through cooperation. Ministers are set to provide concrete arrangements by the end of the year.
Accelerating the international climate change agenda
For the very first time, the G7 have committed to achieving decarbonised electricity supply by 2035 and pledges to end coal-fired power generation. The setting of a date for decarbonising electricity supply is a big step, however, no date was set for ending coal use. Unabated coal phase-out by 2030 was debated and but was dropped in the final statement. The G7 recognised the need for more support for vulnerable countries in coping with the effects of climate change and has promised further efforts to achieve the annual 100 billion US dollar climate finance pledge. However, only Germany and Canada made additionally financing commitments.
Alliance for Global Food Security
In reaction to the hunger crisis, the G7 announced the creation of a new Global Alliance, in partnership with the World Bank and the EU. It will set up a platform for global cooperation that extends beyond the G7. The Alliance is committing $4.5bn of additional funding for food security over the next 12 months. It also intends to ensure that food from Ukraine reaches the world market, while keeping its agricultural markets open and boosting global food production.
Securing the supply of energy
The G7 have agreed to end energy dependence on Russia, while encouraging expansions in renewable energies, renewable hydrogen, and energy efficiency. It is also considering price caps to stabilise the energy markets. The G7 reaffirmed its previous commitment to end direct international public financing of fossil fuels by the end of 2022, with some exceptions to safeguard national security and geostrategic interests.
Global partnerships for infrastructure and investment
The G7 agreed to collectively mobilise up to 600 billion US dollars in public and private investment over the next five years through its national and regional initiatives. It will also implement a Joint Energy Transition Partnership (JETPs) with South Africa and will initiate negotiations on further ambitious partnerships with India, Indonesia, Senegal and Vietnam.
Global economy and inflation risks
As well as further commitment to the 100 billion US dollar target of 2021, the G7 aims to support developing countries. Additionally, it will coordinate with the OECD on security of supply of critical raw materials, aiming to invest in establishing responsible, sustainable, and transparent supply chains.
Key message
A key message from G7 summit is its aim to “take on global responsibility and work together towards equitable, inclusive, and sustainable solutions to global challenges.” Though commitments are vague in areas, steps have been made towards this ambitious goal.
What can businesses do?
Work towards net- zero by setting a net-zero target and having a roadmap to reaching it.
Invest in the long-term value of the low-carbon economy by investing in innovative solutions to the climate crisis.
Use lower-carbon transportation options, such as cycling to work, using electric lorries for deliveries, and choosing greener airlines for essential business travel.
Keep working towards the Sustainable Development Goals, which include ending hunger, advancing gender equality, and affordable, clean energy. See the Sustainable Development Goals website for more information on how to get involved.
Support conservation projects and follow government advice on how to protect the biodiversity in your local area.
How we can help
Orbis Advisory work across a broad range of sectors to develop and support ESG strategies to meet investor demands, prepare for upcoming legislative changes, and create tangible benefits both now and in the future. Please see our website to explore our full range of services. For any inquiries, send an email to info@orbisadvisory.com, or fill out an online enquiry form.
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