Laser Talk: Bretton Woods Reforms

Laser Talk: Bretton Woods Reforms

THE PROBLEM: The International Energy Agency (IEA) and Intergovernmental Panel on Climate Change (IPCC) have shown that the fossil fuel infrastructure that is planned or already under development will exhaust the remaining carbon budget. We need a planned retreat from fossil fuels now.

PRIVATE FINANCES MUST BE LEVERAGED: Public money (tax dollars) can’t fund the net-zero transition and currently private sources of capital aren’t sufficiently incentivized to fill the gap. For example, the Glasgow Financial Alliance for Net Zero (GFANZ) banks and insurers, with more than $140 trillion of assets, committed to net-zero emissions by 2050. But just a fraction of that money has been invested. Sadly, GFANZ financial institutions have poured out $270 billion for new fossil fuel infrastructure according to a new report “Throwing Fuel on the Fire”.

END FOSSIL FUEL COLONIALISM: At COP 27 in Egypt, Prime Minister Mia Mottley of Barbados and Vice President Al Gore called out fossil fuel colonialism in the global financial system. They both shared a statistic that crystalised the problem. On average, firms in the Global South pay seven times the interest rates compared to companies in Canada and the USA. How are Global South countries ever supposed to transition their economies? Help is needed now with overcoming several investment hurdles including debt-crises in the emerging economies, credit-rating constraints, and foreign-exchange risks.

REFORM IS COMING: Earlier in 2022, the World Bank was tasked by the U.S. Treasury—its largest shareholder—with developing a comprehensive ‘Evolution Roadmap’. In January 2023 it was released. Here is a statement from the World Bank.

“On January 11, the World Bank Group’s Boards of Executive Directors discussed with Management an Evolution Roadmap for the Bank Group to better address the scale of development challenges such as poverty, shared prosperity, inequality, and cross-border challenges including climate change, pandemics, and fragility, conflict and violence, that all affect the Group’s ability to achieve its mission. The Board expressed preliminary views on Management’s initial draft, Evolving the World Bank Group’s Mission, Operations, and Resources: A Roadmap.

THE TRANSFORMATION POTENTIAL IS HUGE: The World Bank and the IMF must step in and they are about to do so. On January 17, 2023, in Bloomberg News it was stated that “the World Bank is set to wield huge influence over how the energy transition is financed, potentially dwarfing the promised efforts of Wall Street giants like JPMorgan Chase & Co. or BlackRock Inc. to help eliminate emissions.”

At COP 27, PM Mia Mottley introduced a plan for 500 billion dollars of public money to be invested to unlock five trillion dollars in investment. For perspective, at COP 26, PM Mia Mottley cited a statistic that by November 2021 nine trillion dollars of public money was used to buffer economies globally during the COVID pandemic.

The public money at the World Bank belongs to the people of this planet. It is our right to kindly ask that it be used to create an equitable and thriving planet.

IN A NUTSHELL: Trillions of dollars of private sector money could be leveraged at the World Bank Group towards a thriving and equitable planet. It is our right and responsibility as citizens all over the world to help with this transformation. It is our money.

SPECIAL INTERNATIONAL ACTION: If you are curious, your CCI colleagues have a Bretton Woods Action Team. Alex in Montreal, Caterina in KW, Sol in NCR and Cathy in Sudbury are on the team. Go here to find out more, or attend one of CCI Global Check-in calls this month on Tuesday, March 14.

Go back to Laser Talks Page.