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Climate change gets its first mention in G20 finance communique of Trump era

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Finance
officials from the world’s 20 biggest economies (G20) on Sunday referenced
climate change in their final communique for the first time in US President
Donald Trump’s administration but stopped short of calling it a major risk to
the economy.

The United
States blocked including climate change on a list of downside risks to global
growth that had won agreement by nearly all other G20 delegates, but ultimately
agreed to permit a reference to the Financial Stability Board’s work examining
the implications of climate change for financial stability.

US Treasury
Secretary Steven Mnuchin played down the importance of the language included,
calling it a “purely factual” reference to work being done by the FSB. But
several G20 sources said it marked progress toward greater recognition of the
economic risks posed by climate change.

“I did not
bend to pressure from the Europeans,” Mnuchin told reporters after the release
of the communique, bristling at the characterisation of one reporter.

Saudi
Finance Minister Mohammed al-Jadaan, hosting the meeting in Riyadh, told
reporters that climate change remained a very important issue on the Saudi G20
presidency agenda and that there had been discussions related to “financial
risks at large” linked to the issue.

Discussions
related to “climate change and environmental protection” would continue at
ministerial meetings and in technical groups throughout the year, he said.

One of the
G20 sources said it was the first time a reference to climate change had been
included in a G20 finance communique during Trump’s presidency, even though it
was removed from the top of the joint statement.

US officials
have resisted naming climate change as an economic risk since Trump took office
in 2017. One of his first acts as president was to announce Washington’s
withdrawal from the Paris climate accord.

Delegates
worked out the compromise this weekend after Washington objected to a proposal
to add “macroeconomic risk related to environmental stability” to a list of
downside risks to global growth, two G20 diplomatic sources said.

The final
version of the communique eliminated those words from the first paragraph,
leaving the only mention of climate concerns in the context of the work being
done by the FSB further down in the document.

That passage
reads: “Mobilising sustainable finance and strengthening financial inclusion
are important for global growth and stability. The FSB is examining the
financial stability implications of climate change.”

“We welcome
private sector participation and transparency in these areas.”

G20 finance
ministers and central bankers met in the Saudi capital on Saturday and Sunday
to discuss top global economic challenges, including the spread of coronavirus.

Concerns about
the economic impact of climate change have escalated in recent years and
pressure is mounting on business to accelerate the shift to a low-carbon
economy ahead of United Nations climate talks in November.

A report
issued last week forecast the world’s financial services sector risks losses of
up to US$1 trillion if it fails to respond quickly to climate change and is hit
by policy shifts such as the introduction of a carbon tax.

The
International Monetary Fund included climate-related disasters in a list of
risks that could derail a “highly fragile” projected recovery in the global
economy in 2020.

It estimated
that a typical climate-related natural disaster reduced growth by an average of
0.4 percentage points in the affected country the year it occurred.

“We should
not hide away from what is going on. The climate crisis is upon us,” IMF chief
Kristalina Georgieva told a conference in Riyadh on Friday ahead of the G20
talks.

In a
statement after the meetings ended, Georgieva called for concerted action “to
scale up climate change mitigation and adaptation.”

The communique forecasts a modest pick-up in global growth this year and next, but cites downside risks to this outlook stemming from geopolitical and remaining trade tensions and policy uncertainty.

source: Reuters

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