The G20 Can Use the Current Crisis To Its Advantage

As we enter a more complex phase of the economic, geopolitics and climate crises, the Group of Industrialized countries G20 prepares to host its annual in person summit in November 2022 under the leadership of Indonesia President. The G20 comprises Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union. These countries account for 80% of global economic output, 75% of exports and 60% of the world population. While the Presidents and Prime Ministers of these countries have been meeting annually since 1999, except for the 2008 financial crises, the G20 has become a little more than a photo opportunity. Last year G20, the first in person meeting since Covid started, hosted by the Italian Prime Minister, did not move the needle of international cooperation.

What happened in 2021?

The 2021 G20 took place in Rome, Italy under the former Italian Prime Minister Leadership. This summit had a bigger task than usual, given that the global economy lost more than $ 8 trillion in GDP since Covid began in 2020. That summit became the facto the opening ceremony for the COP26 Climate Summit which started on November 1st in the UK. While the G20 meetings helped consolidate the sense of urgency to restore economic stability and manage climate risk, it did not deliver a clear path to accelerate decarbonization and climate resilience. The G20 fell short on any tangible steps in the decarbonization and resiliency efforts. This was well captured in the communication by the UN Secretary general who said ” I leave Rome with my hopes unfulfilled”. To make my point even clearer, just twelve G20 members have committed to reach net zero by 2050, which means that almost 50% of the countries responsible for the largest portion of global carbon emissions are not willing nor able to implement what they have agreed in Paris in 2015.

This time is different

Under the Indonesian Presidency, the 2022 G20 will meet in Bali, after the Egypt Climate Summit COP27 , to promote the Indonesia selected theme, ‘Recover Together, Recover Stronger’. The Indonesia President wants this summit to be actionable and to accelerate the global economic recovery while investing in a more health resilience marketplace. The G20 will also stick to its agenda of accelerating global decarbonization efforts as envisioned by the 2015 Paris Climate Accords. It will also push for a stable correction of supply chain imbalances ensuring that all leaders are at the table regardless of their geopolitical differences. Will these efforts succeed?

Will Self-interest prevail?

I continue to argue that the crises experienced since 2020 should not be wasted as the markets and consumers are ready for bolder actions to address these challenges. The current markets have changed dramatically to justify a return to pre-covid business as usual. Economies are in decline; Europe is threatened by war and natural disasters inflation is starting to bite. All of this is eroding families purchasing power and bringing millions of people back to poverty.

The G20 should demonstrate it is a relevant organization that has both policy and business power to effectively mitigate the crises impacts and promote economic policy coordination and adjustment. I expect the European Union, supported by Indonesia, the US and Canada will play a strong hand in the G20 negotiations to correct the energy inflation caused by the Kremlin’s brutal invasion of Ukraine. This is also a time for China to showcase its international business credentials and commitment to cooperative and resilient economic growth.