G20 @ TEN: An Urgent Need for Revival




Global Governance

By Gaurav Sharma

The G20 story

Bringing together 20 developed and developing economies and the European Union (EU) in a single platform, the G20 accounts for an impressive 90 percent of the world’s GDP and 80 percent of global trade. Its birth is a story of globalisation, financial crisis and a joint effort to save the world economy. Ten years ago, its first global summit was held to coordinate international macroeconomic policy and fiscal and monetary policies. It resulted in a common roadmap towards managing the financial crisis that had broken out two years earlier.

The first three G20 summits were dedicated to halting the global financial crisis, which accounted for a cumulative loss of one quarter of a year’s global GDP. The agreement to double the funds available to the International Monetary Fund (IMF), the development of the Framework for Strong, Sustainable and Balanced Growth and a gradual shift to quota share and voting power at the IMF towards the developing nation states all proved progressive and supported the recovery from the financial crisis. The G20’s comprehensive set of regulatory reforms reigned in the global financial markets and brought the global financial machinery back on track with an extraordinary amount of fiscal and monetary stimulus. While being effective in the short term, however, these measures are not a permanent fix.

The G20’s “handicap”

G20 policies and action plans are often sector-specific with an overreliance on economic growth and market-driven solutions. The composition of the G20 is framed by the business community with little or no role accorded to non-governmental organisations and activist groups. Therefore, the G20 does not represent the grassroots population and is often criticised as being exclusive. Engagement groups that are independent from governments and comprised of various stakeholders of the international community have hosted meetings relevant to the G20 only since 2014. They represent the business community (B20), civil society (C20), labour unions (L20), scientists (S20), think tanks (T20), urban cities (U20), women (W20) and youth (Y20) from the G20 members and make such contributions as drafting recommendations on their areas of interest. However, they too have a limited influence on governmental decision-making within the G20 as the voice of the wider population and advocacy groups.

The G20’s main goal of global financial stability has not been achieved due to the inability to regulate the financial markets more strictly and to frame and implement common rules, as well as the lack of a global financial architecture. The extended scope of issues tackled by the G20, such as anti-corruption, energy security, the green economy, climate change and development in Africa, has been appreciated, but has not led to common action. With ministerial meetings in fields such as agriculture, tourism, trade and others, the G20 agenda has appeared increasingly overstretched from 2013 to 2017. The last six G20 summits dealt with virtually all of the global challenges, from the Syrian chemical weapons attack in 2013, Russia’s attack on Ukraine in 2014, IS and refugees in 2015, the ratification of the climate change agreement by China and US in 2016 and financial regulation in Hamburg in 2017. However, its weak political outcome on global issues has made the G20 appear ineffective as an architect of global solutions. It does not hold any power under the democratic mandate of an open liberal framework as no pressure can be brought to bear for policymakers and no commitments are promised by any of the parties of the G20.

The G20’s “apprehensions”?

Although the G20 represents two thirds of the global population, its administrative structure does not reflect global diversity as it comprises 19 rich nation states and the EU. Its decision-making processes take place behind closed doors while affecting the fate of the other 178 nation states. The G20’s operational effectiveness is being called into question to an increasing extent, such as at the Osaka summit in Japan in 2019 at which the two items at the top of the agenda, promoting freer trade and investment and injecting impetus into the slow growth of the global economy, were downplayed due to the relentless trade war between the US and China and the rise of protectionism as an overall global phenomena. Thus the G20 has been criticised as a group of individualistic inward-looking economies preserving their individual interests rather than a force for good on the global stage. Due to its informal nature, the G20 has only a limited range of mechanisms to foster accountability and transparency, and it lacks a charter or formal mandate. As it changes its presidency every year and does not have a secretariat, its priorities shift far too quickly every year. In addition, any agreements or consensus reached at the G20 are not legally binding on any of its representatives.

Transparency is lacking as the G20 holds talks and discussions with no media presence. Its communiqué is prepared by a handful of official members and the action items proposed to its member states are not obligatory. The G20 has, at times, even reversed its commitments on important issues such as climate change, and the last three summits (2015 to 2017) have been ineffective as countries were not willing to surrender subsidies or bring about changes to domestic legislation and thus moved away from these commitments. The US government’s withdrawal from the Paris Climate Agreement in June 2017 has single-handedly defined the term “counter-institutionalisation”, by raising the interest rates in the US and reversing various climate change initiatives. Furthermore, it threatened the multilateral alliance of the EU in 2018 and started an all-out trade war with China since 2017. Emerging markets are likewise vulnerable and apprehensive about the G20 as “investors withdrew over 14 billion dollars from emerging markets in May and June of this year (2018)”, as stated in the IMF blog by President of the European Central Bank Christine Lagarde.

Climate change: a major global challenge that could revive the G20

According to a new report by the International Monetary Fund (IMF), the University of Cambridge and the University of Southern California², it has been estimated that a persistent increase in average global temperature by 0.04°C per year is set to reduce world real GDP per capita by 7.22% by 2100. In other words, if global GDP doubles or halves by 2100, the results suggest real GDP per capita would still be 7.22% lower than it would have been otherwise. As the 2018 World Employment and Social Outlook estimates, 1.2 billion jobs depend on services provided by the environment, for example agriculture, fisheries, tourism and forestry. A rise in temperature due to climate change will wipe out these jobs. Thus, climate change directly impacts jobs creation and slows down economic growth. The climate change challenge must become the G20’s primary instrument for ensuring global economic growth. The G20 is well positioned to act in steering reforms and safeguarding our planet. Climate change diplomacy coupled with new age technological developments could make the G20 join hands, mobilise joint and regional public and private financing towards climate adaptation and create new global governance structures that prioritise “global warning”.

G20 roadmap for the NEXT ten years

There is an urgent need to define a charter for the G20 and to establish a secretariat. The climate change crisis has the capacity to define the G20’s genuine commitment to multilateralism. Tying climate change to economic growth and financial benefits will reap long-term benefits for the planet and humanity. Saving the planet as a multilateral approach of the G20 and intertwining developmental policy would help place the focus on human development. A comprehensive approach to adhering to and fulfilling the climate change objectives of the Paris Climate Agreement and a dedicated, actionable policy framework on climate change would restore the international community’s faith in the G20 and could help to make the organisation relevant once again.

The G20 must position its members towards a more resilient, sustainable, equitable and climate-sensitive global economy. Investments in green energy, food security and empowering climate change initiatives will propel economic growth centred on people and the planet. This will present new opportunities for training, infrastructure development and international cooperation in a viable manner, thereby strengthening the G20 agenda. The G20 plays a vital role in consolidating democratic values and sharing fundamental values in this age of global chaos and disorder. This is the right time for the G20 to play its part with determination.

More information on the topic:

– Challenges and Opportunities for the G20: Weforum and IMF
– Global Growth and Inclusive Economies: IMF


About the author:

Gaurav Sharma works as an advisor for AI at GIZ and is active in several different forums, networks and platforms dealing with the climate crisis and structural unemployment, supporting young leaders in India and fostering exchange of ideas.

Published on February 14, 2020.

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