G7 Host to G20 Participant: What can Canada offer the 2018 summit in Buenos Aires?
The two countries share an aligned vision on soil conservation, green bonds and infrastructure development.
Despite tension between the United States and the rest of the G7 countries at the G7 Charlevoix summit earlier this year, the final G7 communiqué made significant strides on girls’ education.
The Charlevoix summit, with contributions from Canada, the United Kingdom, Germany, the European Union (EU), and Japan — in partnership with the World Bank — was able to mobilize a CAD$3.8 billion investment for the education of women and girls in conflict and crisis situations.
The summit also made substantial strides for the blue economy, which is the sustainable use of ocean resources for economic growth. Canada aims to invest CAD$100 million on various efforts to clean up marine litter and plastic pollution, while investing another CAD$162 million to “promote sustainable oceans and fisheries, and support resilient coasts and coastal communities.”
Now, as Canada nears the end of its G7 presidency, it prepares to offer its support at the G20 summit next week. Although there isn’t a formal relationship between G7 and G20 hosts, Canada has worked closely with Argentina throughout the G7 process and leading into the G20 Summit, which runs November 30-December 1. Argentinian President Mauricio Macri attended the Charlevoix summit as an observer, where he and Canadian Prime Minister Justin Trudeau “reaffirmed their commitment to collaborating closely throughout their respective G7 and G20 presidencies in 2018 and discussed shared priorities of economic growth and job creation, gender equality and trade that benefits everyone.”
In addition to the support for those key themes, as well as standard support to strengthen the rules-based international order and fight protectionism, three niche areas present opportunities for Canada to significantly contribute to the upcoming summit in Buenos Aires: soil conservation, green bonds, and infrastructural development through the Global Infrastructural Hub (GI Hub).
Soil conservation is one example of the various issue areas where Canada can significantly contribute to the Argentinian G20 presidency. As the global leader in soil conservation science with a well-established agricultural industry, Canada assumed the leading role on soil conservation at the G20 Meeting of Agricultural Ministers held in July. Specifically, Canadian Agriculture and Agri-food Minister, Lawrence MacAulay, proposed the Canadian-led Agroecosystem Living Labs initiative, which is “an innovative, integrated approach to agricultural research, bringing scientists, industry and farmers together to develop, test and monitor new technologies and practices on farms.” This initiative is supported by the G20 member countries and was explicitly expressed in the G20 agricultural ministers’ declaration.
Another niche issue that Canada can push is increased commitments to green investments, which aim to promote projects that support the “conservation of natural resources, the production and discovery of alternative energy sources, the implementation of clean air and water projects, [and] other environmentally conscious business practices.”
This would stimulate economic growth, promote renewable energy, combat climate change, and build infrastructures. More specifically, Canada can push for the mainstream usage of green bonds for sustainable development projects. The funds acquired from these bonds can be used to build new environmentally-friendly infrastructure. This initiative can achieve several of the key goals laid out under the agendas of both the G20 and G7 summits.
Green bonds are rapidly growing; in 2017, an estimated US$57 billion were issued and both the European Investment Bank (EIB) and the World Bank rate them AAA. This means that not only are green bonds exceptionally credit-worthy, the high demand from investors signals major economic potential in this market. The projects will contribute to innovating new methods of renewable energy and curbing climate change.
Both Canada and Argentina are no strangers to green bonds. According to the G20 Green Finance Synthesis 2017 Report, Argentina’s La Rioja Province issued its first green bond in international capital markets, while in Canada, Quebec and Ontario launched the country’s first and third green bonds, respectively. As well, several other G20 countries have also issued their own green bonds. The G20 Green Finance Synthesis 2017 Report called for additional initiatives to advance the usage of green bonds, such as the call to promote international collaboration on cross-border investment in green bonds.
Promoting green bonds at the G20 summit can be advantageous for Canada in several areas. Green bonds currently have a high demand, especially in Canada. This would generate more investment in Canada, thereby boosting the economy and simultaneously combating climate change. G20 countries supporting, and subsequently issuing, green bonds would increase investor confidence in these bonds, thus generating domestic and global economic growth. Green bonds also offer an excellent avenue for public-private cooperation, which supports a key item on the G20 Buenos Aires summit agenda.
The presence of the World Bank at the G20 summit is key, as it is the first institution to issue a $1 billion global benchmark green bond and is working towards mainstreaming green bonds in the international market. The World Bank can provide expert knowledge to the G20 countries on the issuance of green bonds and can facilitate the international market of green bonds. Strong support from international organizations and G20 countries would boost investor interests in green bonds — this would generate positive results for the economy, sustainable development and climate change.
Canada can also significantly contribute to infrastructural development, another key priority of the Buenos Aires summit. The newly established Canada Infrastructure Bank and the Development Finance Institution — or FinDev Canada — present unique opportunities for Canada to meaningfully support infrastructural projects, particularly those in Latin America. These opportunities can be capitalized through the GI Hub, which, with support from the Canadian government, will establish an ancillary office in Toronto. Canada is in an excellent position to take an active role in supporting GI Hub initiatives, which work closely with G20 countries on infrastructure projects. Canada can significantly contribute to the commitments on infrastructure development, and potentially assume a leadership role, similar to the soil conservation initiative.
It is important to remain mindful that Canada is a participant at the G20 this year, not the host. Any form of contribution should be engaged in the spirit of supporting the Argentine agenda, rather than seeking to solely further the G7 Charlevoix initiatives. However, Canada and Argentina are both committed to very similar issue areas, specifically in development, utilizing natural resources, and preparing for the opportunities and risks that rapid technological advancement brings, making Canada well positioned to further advance initiatives that are core to its G7 vision.