Climate justice: critics call for tangible action after financing summit
Margaret TaylorThursday 7 September 2023
When French President Emmanuel Macron hosted his Summit for a New Global Financing Pact (the Summit) in June, his goal was very clear. He wanted to create a new contract between the Global North and the Global South as a means of addressing the climate crisis.
Spurred on by the Bridgetown Initiative spearheaded by Barbadian Prime Minister Mia Mottley, who is calling for development finance to be reformed so that rich countries can better help poorer countries cope with and adapt to the climate crisis, Macron announced the Summit at the end of the 27th UN Climate Change Conference (COP27) last year. The intention was to agree a new financial system that addresses issues such as poverty and health inequalities as well as the climate crisis ahead of this year’s COP, which takes place in Dubai in November–December.
40 heads of state, over 100 non-governmental organisations and figures including UN Secretary-General António Guterres attended the Paris meeting but, as only two G7 nations – France and Germany – were represented at the highest level, the Summit fell short when it came to revamping global financial systems. Indeed, while a call was made for multilateral development banks such as the World Bank and the International Monetary Fund (IMF) to increase their lending capacity over the next ten years, no concrete progress was made on reforming how they operate.
In addition, while IMF Managing Director Kristalina Georgieva used the Summit to announce that $100bn of Special Drawing Rights (SDRs) – foreign exchange reserves that can be used for transactions such as repaying loans or loan interest – had been reallocated from advanced to vulnerable countries, in reality the sum has only been promised rather than signed off by some of the developed countries involved. The US, for example, has pledged to contribute $21bn of its SDRs, but that commitment has yet to be approved by the country’s Congress.
We have to be very clear and look at how countries use finances – is some going to corruption?
Beth Michoma
Advocate, High Court of Kenya
Unsurprisingly, following the Summit several civil society organisations noted that the agreements made won’t go far enough or fast enough considering the scale of the challenges being faced by the poorer nations of the Global South. Climate Action Network International, whose members include Action Aid and Oxfam, said the summit ‘merely dressed the old in new packaging’, adding that what was needed was an agreement on ‘far-reaching actions to raise more money from taxing the super wealthy, taxing multinational corporations and making polluters pay’.
Lara Douvartzidis, a project lawyer in the IBA Legal Policy and Research Unit who attended last year’s COP as an observer, says there’s a sense that wealthy nations use high-level summits and gatherings to make bold commitments on climate finance but there are few checks in place to ensure they follow through on their promises. ‘One thing we’re seeing a lot of is that it’s all well and good for these pacts to be made but there’s a consistent pattern of Global North countries committing to funding that does not eventuate’, she says. ‘There’s a bitterness that we’ve seen, particularly at COP27, for developing countries waiting for decades for financing promises that haven’t materialised. The commitment itself is always a welcome thing, it’s just whether or not there are mechanisms to monitor or enforce it.’
At the same time, while World Bank President Ajay Banga told the Paris Summit that a so-called ‘pause clause’ would be introduced to allow developing countries to pause debt repayments during times of ‘crisis or catastrophe’, Douvartzidis says more needs to be done to ensure vulnerable countries are not paralysed by their debt burdens the rest of the time. ‘African nations have huge amounts of debt that hamper their borrowing powers and so their ability to rebuild what is destroyed by hurricanes or other natural disasters’, she says. ‘It’s [a] mix of getting the funding that’s already promised but also taking a fresh look at the way debt is structured.’
Even if the commitments made in Paris are honoured and lead to further action at COP28 in Dubai, there’s a feeling that more has to be done around how financial pledges are managed once they have been made.
Sahar Iqbal, a partner at Pakistani firm Akhund Forbes, says the impact of climate-related flooding over the past two years has had a profound impact on her country’s economy, disrupting its expected move from developing to developed status. However, while she agrees that better debt and funding agreements need to be made to help countries such as Pakistan build resilience in the face of the climate crisis, she says it’s not good enough for development banks to hand over vast sums of cash and then walk away. They have a responsibility to ensure it’s being spent on what it’s intended for too, she says.
‘Pakistan is predominantly an agricultural country’, she says. ‘We’re not as a nation the cause of climate change, we’re the victim – our industrialisation has not been enough to cause global warming. Over the last few years developed countries have become aware that our country, among others, is going through this crisis, although it happened a lot earlier and more suddenly than anyone could have expected.’
After the country suffered particularly severe flooding in 2022, some financial aid was given to Pakistan, ‘but it wasn’t enough to compensate and it wasn’t utilised properly’, adds Iqbal. ‘It’s not just important to give aid to a country, it’s also important to supervise how that money is being allocated and used. That aid is a finite amount of money and it will finish one day or another; we need to tackle the right cause.’
Beth Michoma, an Advocate of the High Court of Kenya who in 2021 was the recipient of the IBA Women Lawyers’ Interest Group Outstanding Woman Lawyer Award, agrees. ‘Several countries in Africa – Kenya, Morocco, Senegal and South Africa – have got climate funding but from a Kenyan perspective I don’t know [how] much was allocated or what it was used on’, she says. ‘It’s not clear whether the money has been used for mitigation; there’s a lack of clarity on what exactly it is being used for. We have to be very clear and look at how countries use finances – is some going to corruption? Is some going to capacity building? We need to make sure that the countries that have pledged money forward the money but also to make sure that the countries that are advanced the money spend it in the way they should and not in other areas.’
Image credit: Rain and flood disaster in Pakistan. Ali Magsi/AdobeStock.com