Research-based
policy recommendations
for the G7

German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)

The German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE) is one of the leading research institutions and think tanks for global development and international cooperation worldwide. It is located in the UN City of Bonn. DIE’s work is based on the interplay between Research, Policy Advice and Training. DIE is building bridges between theory and practice.

Research at DIE is theory-based, empirically driven and application-oriented. It provides the basis for the activities in policy advice of the Institute. DIE develops policy-relevant concepts, advises ministries, governments and international organisations, and refers to current policy issues. The training programmes of the Institute for university graduates and young professionals are integrated into the research and advisory process.

The DIE has about 140 employees, two thirds of them work as researchers. The Institute is headed by the Board of Directors with Director Prof. Dr. Anna-Katharina Hornidge, Deputy Director Dr. Axel Berger and Margret Heyen as Head of Administration.

DIE’s institutional agreement ensures the principle of scientific independence of the Institute. The shareholders of the Institute – the Federal Republic of Germany (75 %) and the State of North Rhine-Westphalia (25 %) – appoint the Board of Trustees of the DIE.

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Publications

A socially just transformation through integrated social protection ‘plus’ programming

Increasingly, the world’s 2-3 billion poor and vulnerable people face multiple overlaying crises – climate-related disasters, conflict, the Covid-19 pandemic and others. The complex challenges resulting from the ambition to become carbon-neutral by 2050 and tackle these crises in tandem will adversely affect vulnerable people and communities as well as groups suffering from intersecting inequalities that can be exacerbated. To achieve its ambitious goals, not least in climate and health, the G7 should lead a global campaign in favour of  integrated social protection programmes and the concept of ‘growth from below’ as cornerstones of development strategies.  This will enable a green recovery and fair transition towards sustainability in G7 countries and beyond, while helping and protecting vulnerable people and households against at least some of the many risks they face. This approach would not only contribute to reducing poverty rates and preventing impoverishment but also address multidimensional inequalities, working towards the 2030 Agenda’s mandate of leaving no one behind.

Addressing the Debt Crisis in the Global South: Debt Relief for sustainable Recoveries

A debt crisis is looming in the Global South. High levels of public debt service and insufficient fiscal and monetary space are threating recoveries and impeding much-needed investments in climate resilience and the Agenda 2030. This policy brief makes seven recommendations for the G7 to address the debt crisis in the Global South and provide all countries with the opportunity to invest in sustainable recoveries: (1) Reinforce efforts to increase transparency of public and private sovereign debt. (2) Push a reform of the International Monetary Fund (IMF) and World Bank’s Debt Sustainability Analysis (DSA) to fully include climate and sustainability risks and investment needs. (3) Encourage the IMF to create an option for all sovereign debtors to request an updated DSA as a basis for negotiations with its public and private creditors. (4) Create legal safeguards for debt restructurings and limiting opportunities for holdouts to derail negotiation processes and outcomes. (5) Increase incentives for private creditor participation in debt reprofiling and restructuring, respecting the principle of comparable treatment of creditors. (6) Initiate a dialogue with sovereign debtor groups representing climate-vulnerable nations. (7) Assure policy coherence by fostering the alignment of new debt issuance with the climate and sustainability targets.

G7 Countries Must Urgently Phase Out Fossil Fuel Subsidies

The world’s governments have pledged to fight climate change, yet many still subsidize fossil fuels, the combustion of which increases GHG emissions. Phasing out these subsidies is thus vital to combating climate change. What this Policy Brief proposes is that G7 Governments reaffirm their commitment to end their fossil fuel subsidies by 2025 at the latest, and financial support in any form for coal production or consumption by mid-2023. Parallel to these efforts, the Policy Brief calls upon G7 Governments to take the lead in providing full inventories of their fossil fuel subsidies, including those provided through their tax systems, and undertake comprehensive evaluations of those support measures. Improving transparency on the real costs and benefits of fossil fuel subsidies is necessary for informing public policies and triggering public debate. The results of these evaluations should then be used to drive comprehensive, evidence-based reforms of fossil fuel subsidies.

Global Transformation towards Planetary Health

We are at a tipping point: the health of the world’s people and the health of the planet’s natural resources on which all life depends are facing unprecedented threats. The human led drivers of economic development, industry and globalisation are causing climate change, pollution of air, soil and water, and biodiversity loss year after year, and these in turn are destroying the animal and human health gains of the last century. In the Anthropocene where humankind have made the world an insecure and precarious place to live, planetary health provides a framework to take rapid, globally-connected action, setting  a system in place which can steer the individual investments towards universal health coverage, pandemic preparedness, climate neutrality, clean air, and the reduction of poverty and inequality. The common goal of healthy people flourishing on a healthy planet, which is the vision of the Sustainable Development Goals, is a necessary pursuit.  To achieve this we suggest that the G7 utilises planetary health to create a global framework expanding on One Health initiatives. Such a framework can be supported by the G7 in the form of i) better coordination between health and environmental agencies, ii) the development of standards and indicators for planetary health, iii) the better alignment of new global health monitoring initiatives and iv) the prioritization of planetary health in the new pandemic treaty.

Issue Paper: G7 Measures to Enhance Global Health Equity and Security

Our world has changed drastically, and multilateral institutions and ways of working must also change. The G7 represents the world’s leading industrial countries. Its members want to be recognised for a commitment to democracy, the rule of law, economic prosperity, and working collectively to solve global problems. Even so, in 2022 the G7 stands at a crossroad. One path involves the G7 stepping up to provide leadership at a critical point in time and taking definitive action to tackle the challenges our international community confronts from an irrevocably altered geopolitical environment, a war in Europe, the certainty of future pandemics, and a shifting climate. The other path involves the G7 being increasingly sidelined, its legitimacy continually challenged, its multilateral efforts impeded, and growing skepticism about its members’ motivations and agendas.

To meet the global health challenges ahead, we propose the G7 resolutely pursues the first path, actively taking up its global responsibility through the development and adoption of a G7 Global Health Compact 2030 that proactively pursues a transformative agenda informed by democratic values, equity, inclusion, sustained investment, accountability and global solidarity structures. There is an urgent need for new measures, arrangements and approaches that will better prepare the world for the future. The G7 Global Health Compact 2030 must be embedded within an unwavering commitment to multilateralism, the SDGs, determined support to the World Health Organization, and swift, unified action, starting with the implementation of already agreed measures. The Compact must reaffirm global solidarity, increase credibility of the G7, and strengthen reciprocal trust. These measures are needed not only to deal with the global health challenges we face, but also to restore the multilateral system’s capacities to deliver.

This issue paper builds on the various proposals and discussions held between January and May 2022 as part of the T7 Taskforce on Global Health process. It is not a consensus document; but rather seeks to distill months of deliberations by expert groups into practical, policy-relevant strategic proposals (the T7 Global Health Taskforce Policy Briefs) for the G7. They are addressed to not only ministers of health – who we consider as the strongest advocates for the G7 Global Health Compact 2030 – but also ministers of foreign affairs, development, and finance, and of course, G7 Leaders. Prior to this document being finalised, a draft version was also shared with experts from low- and middle-income countries (LMICs). The feedback we received via a subsequent dialogue that was organised by Amref with over 160 LMIC participants has been incorporated into the final version of this paper, but the key message was the critical importance of ensuring the inclusion of voices of those with lived experiences in all national, regional and global health initiatives.

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Reinforcing United Nations Funding: How the G7 can Strengthen Multilateralism

The Group of 7 (G7) comprises some of the largest donors to the United Nations (UN). This is why the G7 is uniquely positioned to address challenges stemming from a UN revenue profile that heavily relies on unpredictable forms of voluntary finance. If the G7 is serious about wanting a more effective UN system for managing an expanding list of global threats – in line with the programme of the German G7 presidency – individual UN entities must be solidly financed to ensure their independent capacity to act. The need to strengthen the UN has become even more urgent with Russia’s war against Ukraine that represents a major challenge to the legitimacy and effectiveness of a rules-based international order. With regard to UN funding, the G7 should work towards (1) raising assessed contributions across the UN system, starting with the World Health Organisation; (2) tweaking the formula used to calculate each member state’s share of assessed contributions to give due consideration to evolving global challenges; (3) ensuring that the formula is fit for delivering on the global functions of the UN; and (4) reinforcing mechanisms for penalising arrears. Such financing reforms would strengthen the UN’s role as a foundational global public good through which transnational challenges can be tackled.

Research, Evidence and Learning – The Need for a Global Infrastructure

Covid-19 has put the lives of millions of people at risk, creating uncertainties and heightening existing fragilities, particularly where social inequities and inequalities are most pronounced. Global health requires equitable, inclusive responses, informed by research, data and evidence. Existing global health research infrastructure is afflicted by weak institutional mechanisms and perpetuation of evidence hierarchies and silos and excludes and devalues different knowledges and lived experience. Major challenges include unevenness of financial support to global health research, evidence generation, and learning, policy engagement with too narrow a range of evidence; and insufficient investment in infrastructure for promoting international learning and exchange of health-related knowledge, evidence and data. Recommendations for action by G7 members to address these challenges include: (1) a jointly negotiated quota of 0.5% of G7 members’ national GDP for R&D funds administered through multilateral channels; (2) establishing a centralized health research clearing-house with joint governance for communication and action; (3) establishment of Pandemic Centres of Excellence  in all world regions providing collaborative, regional mechanisms for medical research, social science research relevant to health, and vaccine production, distribution and delivery; (4) support to collaborative research networks that represent different forms of knowledge and experience, and use a diversity of research approaches and methodologies; and (5) investment in adaptive, agile national and regional systems for monitoring, early warning, and crisis preparedness, underpinned by open data and digital utilities. The paper also offers practical suggestions for implementing these recommendations in the short, mid and longer term, including G7 members working jointly with the UN, G20 and other international actors to join a global call for a 2023-2032 UN Decade for Health Research.

Safeguarding the Blue Planet – Eight Recommendations to sustainably use and govern the Ocean and its Resources

Over 30% of the world’s population lives within 100 km of the oceanic coast. More than three billion people rely on fishing and other ocean-related livelihoods. The ocean is a biodiversity hotspot and moderates the climate, having absorbed around 40% of the world’s total carbon emissions. Oceanscapes provide an essential cultural good, offer recreational opportunities, health benefits, artistic inspiration and an entire cosmology and way of life for indigenous communities. However, anthropogenic pressures have seriously impacted the ocean and threaten its ability to provide human societies with the required climatic and ecosystem conditions for life on earth. The German G7 presidency has proposed a G7 “Ocean Deal” for the sustainable use, protection and effective governance of the ocean and its resources. Several ongoing global ocean governance processes require strong multilateral leadership and close alignment between the G7, in particular in this period of serious international tensions following the Russian invasion of Ukraine. At the One Ocean Summit in February 2022, global leaders have put forth first commitments to make 2022 a decision year for the ocean. Building on the final declaration of the summit and the UK G7 Ocean Decade Navigation Plan, we highlight that a G7 “Ocean Deal” should include provisions for 1) ambitious ocean governance to safeguard ocean health and climate (in the G7’s own waters and through leadership in international settings), 2) improving ocean observation, data infrastructure and knowledge sharing, and 3) financing the transition towards more sustainable interactions with the ocean. Specifically, we recommend that G7 states:

1a. Eliminate national subsidies that contribute to overfishing and push to finalize the related WTO agreement; step up international cooperation, financial & technical assistance to prevent IUU fishing.

1b. Reduce marine debris through a comprehensive global agreement on plastic pollution.

1c. Pause deep sea mining until risks are better understood and a transparent, inclusive and accountable institutional structure is in place that guarantees the effective protection of the marine environment.

1d. Expand marine protected areas in line with the proposed goal of at least 30% by 2030, and accelerate work in the coming months to successfully finalize negotiations for a legally binding instrument to conserve and sustainably use marine biological diversity in areas beyond national jurisdiction (BBNJ).

1e. Fully recognize the importance of the ocean-climate nexus and strengthen the ocean dimension in key climate negotiations.

2a. Adopt a legal framework and binding commitments for a sustained and shared global coordination of ocean observations and infrastructure on marine data, compliant with FAIR and CARE principles.

2b. Ensure long-term, guaranteed funding, clear institutional affiliations, coordinated and integrated data products to enable continuous, comprehensive observations supporting policy monitoring & evaluation

3a. Redesign and scale up ocean finance by increasing funding of early-stage, nature-positive  and science-based opportunities, and large-scale investment into zero-carbon, resilient and nature-based  coastal blue infrastructure, and by integrating ocean criteria into sustainability finance frameworks (EU Taxonomy, Task Force on Climate-related Financial Disclosures (TCFD), Taskforce for Nature-related Financial Disclosures (TNFD)).

Scaling up sustainable Finance to enable sustainable economic Recoveries

To enable sustainable recoveries from Covid-19 and meet the goals set out in the Paris agreement and in the Agenda 2030 for Sustainable Development, the global financial system needs to be rewired. Finance needs to properly account for sustainability risks and impacts, and it needs to be aligned with internationally agreed sustainability goals. To scale up sustainable finance and align all financial flows with climate and sustainability goals, this policy brief makes ten recommendations for the G7: (1) Intensify efforts to develop, align and implement science-based sustainable finance taxonomies across the G7. (2) Make disclosures of climate-related risks and opportunities mandatory for all publicly quoted companies, large private companies, and supervised financial institutions and introduce a harmonised standard across the G7. (3) Make the publication of net-zero transition plans mandatory for all publicly quoted companies, large private companies, and supervised financial institutions. (4) Introduce and advance mandatory climate stress testing. (5) Adjust prudential frameworks to account for climate-related and other environmental risks. (6) Decarbonise the portfolios and operations of all public financial institutions and central banks. (7) Enhance the role of national development banks (NDBs) and explore options for creating new NDBs to scale up financing for the SDGs. (8) Harness the potential of digital finance to scale up sustainable finance and investment and strengthen citizen-centric finance. (9) Promote the issuance of sustainability-linked and just transition bonds. (10) Scale-up sustainable and climate finance for developing countries.

Sustainable and Resilient Agricultural Value Chains: Addressing Multiple Vulnerabilities with a new Partnership Approach

The ongoing compound and acute crises of Covid-19 and the war in Ukraine meet longer-term but no-less pressing crises of social and environmental sustainability in and around agriculture, food and nutrition security. At the same time, they irritate existing frames on (and perceptions of) how to address trade and sustainability. External shocks must be increasingly considered when addressing food security, following the FAO’s observation that conflicts and migration have developed into major reasons for food insecurity and hunger.

Additionally, climate change, biodiversity loss and human rights are generally most challenging and partially conflicting for many developing countries. They have to address them by aiming at increased and more nutritious food production, job creation, poverty alleviation and resilience to shocks of a still strongly growing and urbanising population.

Many international mechanisms are already in place on agriculture and food systems which are almost unavoidably not (yet) sufficiently coordinated. A new generation of due diligence laws recently is added mostly by industrialised countries to that existing mix of policies in place addressing serious sustainability gaps of supply chains into these countries. However, these regulations also bear the risk of generating unintended negative consequences, particularly for smallholder farmers in poor countries.

Against this background, we conclude for proposals at different degree of specificity:

  1. Reacting to geopolitical risks: Immediate and long-term measures to safeguard food security in light of Russia’s War on Ukraine,
  2. Balancing and integrating food security and sustainability,
  3. Initiating a joint observatory on new due diligence measures, and
  4. Starting a process to improve harmonised global governance for agriculture and food systems.

The G7 and Multilateralism in Times of Aggression: Maintaining and Strengthening Cooperative and Inclusive Approaches for the Global Common Good

President Putin’s aggression against Ukraine is, in the first place, a disaster for the people of Ukraine. At the same time, it is an attack on peace and security, international law, and a cooperative world order. Russia’s war in many ways also jeopardizes the efforts to maintain and strengthen other global public goods and to address humanity’s common and collective challenges, which have been growing over the past years with a steep rise during the ongoing pandemic. It will also affect international forums that are needed to facilitate cooperative action. Other concerns and the concerns of others are in danger of being massively overshadowed – to the detriment of global solidarity in times of aggression. Preventing this is
a core task of the G7 in 2022. The G7 under the German Presidency should position itself in a way that responds to Russia’s aggression without throwing its medium- and long-term priority agenda overboard as the addressed challenges remain equally pressing. While the summit and the ministers’ meetings will very likely show a strong focus on the response to Russia’s invasion of Ukraine, the G7 should overall stick to the five priority areas rolled out by the German Presidency – sustainable planet, economic stability and transformation, healthy lives, investment in a better future and stronger together. It should at the same time supplement, adapt, and link them to the evolving situation and necessities, including by supporting measures that address the negative economic and social impacts of the war and the sanctions on third countries. When implementing its policy initiatives, we recommend that the G7 takes an extra effort and invests its political and economic clout in intensified international cooperation for the global common good. The G7 should do so by linking up its activities with other partners, by bolstering inclusive global governance institutions, and through tethering plurilateral and multi-stakeholder formats to a strengthened United Nations and other multilateral organisations.

Towards an inclusive climate alliance with a balance of carrots and sticks

As G7 countries generate 25% of world greenhouse gas emissions, an open and cooperative G7 climate alliance can accelerate international climate policy in a transformative and inclusive manner. Building upon a proposal of the German Government (2021), we propose the following design elements for such an alliance:

  1. Membership conditions that benefit all members and are sufficiently ambitious to enable a pathway to genuine ‘net zero’

Reaching ‘net zero’ emissions globally by mid-century is key to enable limiting global warming to 1.5°C – the core objective of the Paris Agreement. The alliance must adopt membership conditions that keep the aim of 1.5°C alive. These include:

  • a differentiated carbon price with a common floor, e., an effective price set in accordance with criteria that reflect different economic capacities, with a floor at 50 € in 2025 and 100 € in 2030.
  • common energy sector policies consistent with a pathway to genuine net zero, including a 2024 removal of fossil fuel subsidies, a 2030 phase-out date for coal-fired electricity generation for OECD members that join the alliance and a commitment to immediately end the new development of upstream coal, oil and gas supply infrastructure;
  • a joint effort sharing mechanism to achieve emission reductions based on Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC).

 

  1. Apply a ‘carrot and stick’ approach based on Article 6 and a differentiated CBAM to encourage alliance participation

‘Carrots’ should be designed as an open means to incentivize decarbonization outside of the alliance and encourage participation in the alliance. We recommend using international carbon markets under Article 6 of the Paris Agreement as a carrot, providing an additional financial incentive to non-members of the alliance for low carbon development. A differentiated carbon-border adjustment mechanism (CBAM) is the crucial ‘stick’ to avoid carbon leakage, with differentiation based on development status and clear exemptions for Least Developed Countries (LDCs). Additional carrots should include differentiated carbon border levy refunds as well as targeted industry and energy partnerships.

  1. Use a ratcheting mechanism to raise ambition

A roadmap to ratchet-up the ambition of measures within and beyond the alliance is essential. Such roadmap should align with five-year NDC update cycles under the Paris Agreement, adjustable to align with national and global net zero targets and set clear milestones for expansion regarding sectors (from heavy industry and energy to land use) as well as countries (from G7 to G20 and beyond). Ensuring institutional continuity of the alliance requires a legally binding agreement that is independent from annually changing G7 presidencies and governed by a secretariat hosted by one or more volunteering member states, with a slim administration and explicit inclusion of a wide range of civil society representatives.

WTO 2.0 – Making the Multilateral Trading System Fit for the 21st Century and How the G7 Can Help

The World Trade Organization (WTO) is in its deepest crisis since its creation. This relates to each of its three pillars: 1. trade liberalization and rules-setting, 2. trade policy monitoring, and 3. dispute settlement. Germany’s G7 Presidency will require a careful balancing between addressing long-standing issues such as aligning the WTO with the Agenda 2030 for Sustainable Development and reforming the dispute settlement process on one hand side and focusing on the immediate challenges presented by the geopolitical crisis as well as recovery from the Covid-19 pandemic. This requires, more than ever, multilateral collaboration and innovative and interdisciplinary solutions. The G7 countries, in close cooperation with their partners, have a unique opportunity to articulate a new vision for trade and the multilateral trading system. The G7 can lead by example while also incentivizing and supporting other nations to raise the level of ambition in aligning trade policies with current world challenges. As such, the goal should not be to try to re-establish the status quo but rather to adapt the world trading systems and its rules to the realities and necessities of the 21st century and the new geopolitical context. What is needed is a WTO 2.0 that responds to the world’s peace, health and environmental challenges and proactively contributes to solving them.

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