Finance officials from the world’s 20 biggest economies (G20) meeting in Riyadh on Sunday reached agreement on the wording of a final communique that includes for the first time a reference to climate change, G20 diplomatic sources said.
Compromise language hammered out to overcome U.S. objections retained a reference to the Financial Stability Board’s work examining the implications of climate change for financial stability, although it dropped climate change from its list of downside risks to global economic growth.
One of the sources said it was the first time a reference to climate change had been included in a G20 finance communique, even though it was removed from the top of the joint statement.
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 $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 on the eve of the G20 talks.
U.S. officials have resisted naming climate change as an economic risk since President Donald Trump was elected in 2016. One of Trump’s first acts in office was to announce Washington’s withdrawal from the Paris climate accord.
G20 officials completed work on the communique on Sunday morning, the sources said. The final wording was not immediately available.
Delegates worked out a compromise after Washington objected to the initial proposed language, which had included “macroeconomic risk related to environmental stability” in a list of downside risks to global growth, two G20 diplomatic sources said.
A third source said the document would include no reference to fighting climate change, focusing instead on the risks emanating from such shifts.
“In the end it’s not in the first paragraph but in the ninth, very discreet and indirect, but still the first time the word finds its way into a communiqué since this U.S. administration,” the source said.
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.