Debt for climate: towards environmental social justice
The pandemic has brought us a needed moment of reflection, in light of the evidence of our systems’ failure in the past. Faced with an economic recession, the financial instability that entails a considerable increase in debt risk and the pressing economic, social and environmental crises we are undergoing, the time has come to discuss a new ecological perspective in the global financial architecture.
The G20 plays a central role in this reflection as a forum for cooperation that has demonstrated an understanding of the world’s reality and enjoys a privileged capacity and position to mobilise ideas and resources for global development.
Pope Francis himself has warned us that there is no ecological sphere separate from the social crisis or the need to rethink the pillars of the international financial architecture. In that spirit, we should hold a common dialogue on how to think about a common project in our common home.
The Argentine Republic has put climate and environmental action at the centre of its convictions. In this regard, we announced our intention to increase our nationally determined contribution by 27.7% compared with 2016; that represents two additional percentage points more than our NDC presented in 2020. These are steps consistent with the goal of a 1.5°C temperature limit and carbon neutrality by 2050. We committed to developing 30% of the national energy matrix using renewable energies, and we designed a plan of efficiency measures for industry, transportation and construction.
Likewise, we will promote the adoption of technologies to reduce methane emissions, promote a hydrogen-producing and exporting complex, adopt measures to eradicate illegal deforestation and classify it as an environmental crime, send a new Bill on Minimum Standards for Environmental Protection of Native Forests, and promote a fast-track approach to the Federal Environmental Education Law.
All these actions are necessary but not sufficient. Debt swaps for climate action, payment mechanisms for ecosystem services, the concept of environmental debt and the ranking of environmental creditors of less developed countries are other keys to overcoming the current crisis. The recognition of common but differentiated responsibilities must be considered and put into practice through concrete measures.
We need regional and international development organisations to commit at least 50% of their loan portfolio to environmental actions.
Mechanisms such as swaps or debt-for-climate swaps have shown their effectiveness in the past, despite having been implemented experimentally, helping to reduce the indebtedness of developing countries by $6 billion, with tangible results in improving environmental health.
We need to rethink the credit rating system, so that vulnerable countries already facing the consequences of climate change are not punished. In view of this, we must establish appropriate market and tax incentives, so that private investment focuses on environmental priorities with social impact and on building a new circular economy.
The challenge to achieve this consists of the committed and coordinated involvement of these four key actors: debtor countries, creditor countries, international financial institutions and the private sector.
Wealth throughout the world must be considered from a new perspective, and not merely measure the national gross domestic product without taking into account the carbon footprint or indicators of a drop in environmental damage. We need to value environmental assets and think about metrics that go beyond predatory and extractive growth. We cannot measure the world’s growth using the same yardstick used during the polluting industrial age. We also need to define advances in clean technologies as global public goods, strengthening a concept of environmental multilateralism.
So far, the global governance system has not proven effective in mobilising resources for developing countries, either in sufficient quantity or quality. We need to apply more agile, transparent and bold responses. The time to act is now: the pace of planetary destruction is not going to stop unless we build a new development paradigm. The fate of this requires bold global leadership and joining the ministries of the environment with those of finance and economy around the world. The G20 is equipped to meet this challenge.
We need a change in the financial paradigm to advance resilient and low emission development, supporting countries in implementing the Paris Agreement. Our national ambition must succeed in transforming itself into a new global solidarity. In short, we need environmental, social justice, which is the new name for development in our region and on our planet.