Leaders of leading industrial nations at the Japan-hosted G7 summit in Hiroshima made a series of announcements in support of their Paris Agreement commitments to limit global temperature rise to 1.5°C, including supporting the development of the International Sustainability Standards Board’s (ISSB) upcoming sustainability and climate-related corporate reporting standards, calling for an end of construction of new unabated coal-fired power plants, and supporting initiatives to ramp climate transition finance to developing countries.
One of the key climate-related issues highlighted in the communique released Saturday by the leaders of Canada, the EU, France, Germany, Italy, Japan, the UK, and the US, was the need to mobilizing finance to facilitate emissions reductions and climate resilient development, “especially including private finance focusing on further implementation and development of clean technologies and activities,” alongside the G7’s commitment “to consistent, comparable and reliable disclosure of information on sustainability including climate.”
In last year’s meeting in Germany, the G7 leaders supported mandatory climate-related financial disclosures, and welcomed the inauguration of the ISSB. The ISSB was launched in November 2021 at the COP26 climate conference, with the goal to develop IFRS Sustainability Disclosure Standards, in order to provide a global baseline of disclosure requirements that can be used by jurisdictions on a standalone basis or incorporated into broader reporting frameworks. The board released the first exposure drafts for its first two reporting standards, covering general requirements for sustainability-related financial information and climate-related disclosures in March 2022, and recently announced that the new standards will be effective as of January 2024, with companies beginning to issue disclosures against the standards in 2025.
In its communique, the G7 announced its support for the ISSB initiative, writing:
“We support the International Sustainability Standards Board (ISSB) finalizing the standards for general reporting on sustainability and for climate-related disclosures and working toward achieving globally interoperable sustainability disclosure frameworks. We also look forward to the ISSB’s future work on disclosure on biodiversity and human capital, in line with its work plan consultation.”
The G7 leaders also recognized the need for corporates to implement Paris Agreement-aligned net zero transitions “based on credible corporate climate transition plans.”
The communique included several energy transition-related announcements, including for the first time committing to “work towards ending the construction of new unabated coal fired power generation.” The leaders also recognized that low-carbon and renewable hydrogen should be developed to help decarbonize hard-to-abate sectors in industry and transportation, along with the need to develop standards and certifications, including a methodology to calculate emissions, for hydrogen production. In addition, the communique highlighted the goal – unveiled last month by G7 climate and energy ministers – to increase offshore wind capacity by 150 GW and to increase solar PV to more than 1 TW by 2030.
While highlighting the G7 commitment to accelerate the phase out of unabated fossil fuels, the communique also said that “publicly supported investment in the gas sector can be appropriate as a temporary response,” to accelerate the shift away from reliance on Russian energy following the invasion of Ukraine.
Additional energy transition and private sector decarbonization-related factors addressed in the communique included an acknowledgement that Carbon Capture, Utilization and Storage (CCUS) “can be an important part of a broad portfolio of decarbonization solutions” where industrial emissions can’t be avoided, and support for initiatives to develop high integrity carbon markets and carbon pricing.
Click here to access the G7 Communique.