G7 (2023) Special webpage

The G7 Sapporo Ministerial Meeting on Climate, Energy and Environment communiqué mentions the aim to establish a ‘G7 platform for net-zero and well-being in life’ (paragraph 53). As a background, transforming lifestyles and consumption has recently become well known to play a crucial role in achieving the 1.5 °C climate target. The 2022 report of the IPCC Working Group III highlights the potential for demand-side mitigation measures, including lifestyle changes, to reduce greenhouse gas emissions by 40%–70% by 2050, depending on the sector. India, which holds the G20 presidency this year, has also emphasised a lifestyle change and proposed a ‘Lifestyle for the Environment’ initiative.

Additionally, The United Nations’ One-Planet Network is considering ways to enhance cooperation with the G20, G7 and other stakeholders to promote the adoption of decarbonised lifestyles.

The IPCC report provides convincing evidence that the wealthiest 10% of the global population are responsible for half of the world’s carbon footprint. However, it would be premature to conclude from this information alone that significant reductions can be achieved through lifestyle changes or that our focus should be on reducing excessive consumption and energy usage by the wealthy. The report focuses primarily on establishing a service provision systems that enables all individuals to lead a decent life.

Reducing energy consumption is not a universal solution because a large proportion of the global population lacks reliable access to clean energy for meeting their essential needs, such as cooking. Lower energy demand and greenhouse gas emissions are typically observed in societies where individuals, including those who are economically disadvantaged, have access to essential services such as food and transportation necessary for a decent life. Therefore, achieving decarbonised lifestyles does not involve simply reducing each person’s excessive consumption and energy use but rather requires establishing provision systems that can facilitate universal access to the goods and services necessary for a decent life, enabled by low-emission goods and services.

Until now, the goods and service supply system has centred on acquiring resources at minimal cost, processing them inefficiently, distributing them globally and disposing of them when no longer required. This complex and specialised system makes it difficult to trace the origin of goods and services such as food, energy, health and transportation and to understand the impacts of the process on the environment, workers’ health and poverty levels.

Recently, there has been an increasing trend towards the establishment of a ‘circular economy’, in which resources are recycled and reused rather than discarded. Although resource circulation and long-term utilisation are essential, they alone cannot create a system that enables everyone to lead a decent life. A key strategy for realising a service supply system that fosters resource circulation and provides universal access to a decent life is to mix the roles between those who produce and deliver goods and those who consume them. By emphasising functional utilisation rather than ownership, implementing collection systems that encourage reuse rather than disposal and promoting locally led food and energy production, we can conserve and circulate resources while redefining the roles of producers and consumers.

Although these initiatives can be seen here and there, they are frequently specialised, requiring significant effort and sacrifice from passionate individuals or catering to a limited number of individuals who can afford expensive and time-consuming services. It is essential to foster new points of contact between the government, businesses and citizens or consumers if we are to assume roles as co-creators and co-owners in constructing a decarbonised society where everyone can live securely and not merely as consumers or beneficiaries of goods and services.

IGES intends to leverage the emphasis on decarbonised lifestyles within the G7 and G20 frameworks as an opportunity to pursue the realisation of a vision that goes beyond decarbonisation achieved solely through individual behavioural change and instead focuses on decarbonisation achieved through the collective effort of creating secure and equitable lifestyles.

It requires additional financial resources to achieve the new and ambitious targets to tackle the triple crisis in pollution, climate change, and biodiversity loss pledged at the G7 Minister’s Meeting on Climate, Energy, and Environment in Sapporo on 15-16 Apr. 2023. However, we didn't see an announcement in the Communique that can be considered a big achievement or a breakthrough related to finance beyond reiterating previous commitments to mobilizing financial resources at scale, and leveraging all financial and policy measures. Let us take an example. One of the critical areas to mobilize funding for climate change is to provide financial services and products to high-emitting industries in hard-to-abate sectors to support their net-zero transitions in line with the temperature goal of the Paris Agreement, namely "transition finance."

Actually, the Japanese government has been trying to scale transition finance by developing "Basic Guidelines on Climate Transition Finance.; "Technology Roadmap for Transition Finance" for high carbon emission sectors, including oil, gas, and steel, and conducting model transition finance projects. Other G7 countries are also establishing an enabling environment to mobilize private finance through transition finance frameworks and tools, such as considering "transition taxonomies" in the EU and Canada.

In the international arena, for example, the International Platform on Sustainable Finance (IPSF), composed of 19 national financial authorities, proposed a set of 9 voluntary transition finance principles that was also an input for developing the G20's sustainable finance framework; And at the market level, the International Capital Market Association (ICMA) published the Climate Transition Finance Hand Book. According to a non-exhaustive overview by IPSF, over 20 frameworks or guidance for transition finance have been developed by regions, countries, or financial groups as of the summer of 2022 (IPSF, 2022 P42).

The G7 recognizes the importance of transition finance as stated in P55 of the Communiqué, but more specific measures are not described for the next steps in promoting it. We think that G7 can play an important role in this regard, such as supporting the implementation of the G20 transition finance framework developed and endorsed by the G20 in 2022. For instance, at the 1st meeting of the G20 Finance Ministers and Central Bank Governors in India1,2, February 24-25, 2023, called, among others, for further efforts to advance the G20 transition finance framework through scaling up capacity building and technical assistance. The transition finance framework outlines 22 high-level principles for jurisdictions and financial institutions to consider voluntarily across 5 pillars, including identifying transitional activities, reporting information on transition activities, transition-related finance instruments, designing policy measures, and assessing and mitigating negative social and economic impacts. We think the G7 can play an important role in this regard by assisting other G20 member countries in developing and implementing local versions of transition finance policy frameworks considering the unique local context of different jurisdictions while keeping the basic principles of the G20 transition finance framework. We hope that the G7 and G20 member countries will promote this kind of cooperation to expand the scale of transition finance internationally toward realizing the 1.5℃ target.

1. https://dea.gov.in/sites/default/files/%5BFebruary%202023%5D%20G20%20Chair%27s%20Summary%20%26%20Outcome%20Doc-%20First%20FMCBG%20meeting.pdf
2. https://g20sfwg.org/wp-content/uploads/2023/03/SFWG-Presidency-and-Co-Chairs-Note-on-Agenda-Priorities.pdf

The G7 Ministers’ Meeting on Climate, Energy and Environment adopted the Circular Economy and Resource Efficiency Principles (CEREP) for companies eager to advance resource efficiency and circular economy. Japan advocated these common guidelines to inculcate a shared understanding of the importance of enhancing resource efficiency and circularity along value chains and to emphasise the decoupling of economic growth from environmental degradation and primary resource use. CEREP will aid in addressing common global challenges such as the triple planetary crisis, climate change, biodiversity loss and environmental pollution. The use of resources and their impact must be considered holistically if human societies are to achieve a more sustainable future. The public and private sectors must work jointly to advance circular economy. CEREP aims to encourage companies to establish voluntary circular economy initiatives. It offers management structures and guidelines to facilitate the efforts of enterprises to shift towards a circular economy. It can be used to help companies, financial institutions and other entities understand, assess and initiate a circular economy. Based on CEREP, the G7 anticipates advancing cooperation with the engagement group Business 7 (B7) and other private sector stakeholders. CEREP is expected to strengthen the public-private partnerships essential for the achievement of a circular economy with the inclusion of the Japan Partnership for Circular Economy (J4CE) and the industry-government-academia partnership planned by the Ministry of Economy, Trade and Industry. The significance of resource efficiency and circular economy was reaffirmed from the perspective of establishing sustainable value chains and resource security. This meeting incentivised sustainability and resilience in value chains by issuing the commitment to ‘the enhancement of transparency and reporting throughout supply chains and strengthening the green public procurement’. In so doing, it highlighted the importance of measuring circularity and environmental impacts and sharing and utilising data along entire value chains. Notably, the Five-Point Plan for Critical Mineral Security was developed to ensure the availability of critical minerals necessary for the decarbonisation of technologies such as batteries in electric vehicles. G7 has also demonstrated its commitment to the domestic and international increase in the supply of critical materials. These materials will be recovered and recycled from electronics and other recoverable and recyclable materials where national recovery and recycling capacity complies with strong environmental standards. In addition, the G7 attended to the issue of plastics and committed to ‘end plastic pollution, with the ambition to reduce additional plastic pollution to zero by 2040’. This statement will become relevant to future discussions during the upcoming second session of the Intergovernmental Negotiating Committee on Plastic Pollution (INC-2).

Biodiversity continued to attract an increasing share of attention. In the introductory Climate, Energy, and Environment Joint Section of the Communiqué, biodiversity featured prominently, emphasizing the importance of the historic and recently adopted Kunming-Montreal Global Biodiversity Framework (GBF) and Treaty of the High Seas to protect the ocean, tackle environmental degradation, fight climate change, and prevent biodiversity loss (BBNJ). Entire sections of the Communiqué’s introductory text were also dedicated to nature-based solutions, as well as forests and land degradation. Biodiversity was the opening component of the Environment section of the Communiqué, where it presented the first G7 Communiqué text to build off the outcomes of the GBF and BBNJ. G7 countries affirmed their intention to lead global efforts to conserve biodiversity, in line with these international agreements. Considerable space in the Communiqué was focused on increasing the proportion of national budgets allocated to biodiversity, including through generating biodiversity co-benefits of climate financing, to achieve these aims. Further, the Communique announced the establishment of a G7 Alliance on Nature Positive Economy to share knowledge among state and non-state actors, particularly the private sector, in line with the GBF and the Taskforce on Nature-related Financial Disclosures (TNFD).

The G7 Climate, Energy, and Environment Ministers’ Communiqué has a passage devoted to the first Global Stocktake (GST).

The Communiqué emphasises that the outcome of the first and ongoing GST should give clear direction to the next round of NDCs to be communicated by 2025, which should reflect economy-wide absolute reduction targets, including all GHGs, sectors and categories.

In this statement, G7 commits to actively contributing to securing ambitious outcomes of the first GST and to building political momentum to address the need for the world to increase climate action in this critical decade and beyond.

The GST outcome must provide a concrete roadmap and possible measures to be taken and send a strong political signal to promote stronger action, rather than just showing the gaps in achieving the goals of the Paris Agreement. G7’s commitment to the first GST represents a significant milestone in generating global political momentum toward COP28. All eyes are now on the upcoming G20 meeting and the UN Climate Ambition Summit in September to learn what further progress will be made.

The meeting actively discussed support for developing countries that are especially vulnerable to climate change. The fact that the ‘G7 Inventory on Climate Disaster Risk Reduction, Response and Recovery’ aggregates existing and committed support formed in response to a growing international demand to assist with loss and damage caused by climate change was exceptional. Moreover, it was emphasised that the G7 supports developing countries in their efforts to make climate risk-informed decision-making, promote adaptation to climate change impacts and address loss and damage, which will support the implementation of the Paris Agreement. The agreement to establish a new financial arrangement for loss and damage was approved at the 27th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP 27). Furthermore, this communiqué, in addition to the successfully implemented fund, also indicated that the G7 countries are committed to addressing loss and damage issues through various methods.

Regarding financing to address adaptation and loss and damage, another important message emphasised the recognition of the role of the private sector. This included strengthening the resilience of infrastructure and value chains, providing products and services adapted to the adverse effects of climate change and enhancing their role in these areas. Today, it is known that a gap still exists between international adaptation finance mainly provided by the public sector and the needs of developing countries that are vulnerable to climate change. The G7’s encouragement of continued and accelerated mobilisation of funds and the efforts of various donors, including non-G7 countries and the private sector, to expand adaptation funding are crucial signals for addressing the gap. I hope that these messages from the G7 will be taken on board by all actors and lead to actions.