Finance Ministers from G7 countries are convening between May 23-25 2024 in a gathering, known as the G7 Finance Ministerial, where the politicians are expected to make decisions in organizing and delivering finance to developing countries.

The outcomes of the meeting as agreed upon will be included in a key outcome document at the G7 Summit set to take place on June 13-15 2024. The G7 Summit is where Heads of State meet deliberate then they issue a Communiqué setting out what they want to achieve as a group.

Notably, the G7 Finance Ministerial is taking place at the same time as negotiations get underway in Bonn about the new goal for climate finance.

Big debt, big picture

2024 is the finance year for climate action, which for civil society means rich polluting countries agreeing on what they owe developing nations and marginalized communities for the environmental damage they have caused and clearing this debt.

In the context of COP, COP29 is the place where a new international goal on what the Global North has to pay to the Global South will hopefully be adopted. For this to happen, and with the amount required, Global North countries need to recognize and accept how much they actually owe to the Global South for the harms caused by climate change and pay up. If they don’t, then there won’t be enough money for Global South countries to develop and protect themselves against climate change leading to more suffering.

On the sidelines, a big-picture conversation is happening about our current financial system. It is not fit for purpose as it only really benefits the richest people in the world at the expense of the poorest and the planet. At the heart of this conversation is debt and the need to have fairer taxes, also known as tax justice.

We need a new financial system that works for the majority and not the minority of people and one that does not ravage the planet. In essence, this would mean wealthier members of society along with corporations paying a rate of tax that is enough to achieve equality. Alongside this would be a better distribution of wealth, opportunities, and privileges than we currently have, and for every person to have their rights recognized and protected.

Global North countries currently have the most control and influence over how the financial system works. They have to see it is not operating as it should, and sort this out through bold decision-making,

Instead of doing this, the G7, as well as other developed countries, are making excuses to prevent this change to our financial system. They have been pushing the false narrative that climate finance and financial reform are too slow, too expensive, and too complex to organize, against a backdrop of austerity.

In addition, the G7 and other rich country governments have consistently failed to meet their fair share of climate action and their obligation to provide climate finance – and not due to a lack of money, but due to a lack of will, backward distribution, and a suffocating amount of toxic lobbying from big polluting companies.

The governments of G7 countries make up 27% of global oil and gas production and are the culprits of nearly half of CO2 emissions from new oil and gas production with the United States leading as the largest historical emitter of greenhouse gases. The same countries also spent upwards of US$1 trillion in 2022 in funding war and conflict globally, instead of prioritizing climate action.

Climate Action Network demands:

We need to see true, daring, and smart leadership from G7 countries, which means wise, ethical, and just decisions being made about paying back the Global South for the damage caused by climate change. In addition, the G7 needs to embrace the conversation on changing the current financial system so that it benefits all citizens, and not just the richest in the world.

Better finance for developing countries

G7 countries must use public finance, i.e. taxes and other government revenue, to pay the debt owed to the Global South. The money owed to developing countries needs to come in the form of grants, and not loans.

We all know fossil fuels cause toxic, expensive pollution. G7 countries have got to stop giving taxpayers’ money to the fossil fuel industry as it is the biggest contributor to climate change.

Boosting finance

The G7 has consistently failed to meet their fair share of climate action and their obligation to provide climate finance. This has to change.

They need to scale up their contribution to climate finance, in order to answer the growing needs of the Global South, including for Loss and Damage.

G7 countries need to fulfill their promise to increase the money needed for developing countries to adapt to climate change, reduce their vulnerability, and increase their resilience to cope with climate disasters like floods and droughts. Compared to 2019 levels, the G7 should provide double the amount needed for adaptation finance by 2025.

Make polluters and profiteers pay

Tax havens are a scourge on society and something the richest in the world use to their advantage at the expense of the majority of people and the planet. Our global tax system needs to be more inclusive, democratic, transparent, and accountable and that’s why the G7 needs to adopt the United Nations Framework Convention on International Tax Cooperation.

In line with this, the G7 has a role to play in encouraging discussions around a minimum tax on the super-rich within the G20.