By Emma Rowland, Media and Policy Intern
This weekend, the leaders of the G7 countries will be hosted by Boris Johnson in Carbis Bay, Cornwall.
They will be joined by special guests India, Australia, Singapore and South Africa, the most recent of the United Kingdom’s trading or potential trading partners. They may help Boris feel less outnumbered sitting next to his European and US counterparts, with whom he is currently not particularly popular, and will help to elevate the UK’s slightly diminished reputation as a global collaborative player.
The G7 being a tough group of countries to compete with in terms of coastline, Carbis Bay was chosen not for its stunning beaches, the pasties, or the Barbara Hepworth Museum, but its ability to show off the centre of the UK’s Green Technology sector ahead of COP26 in November, which will be held on the other side of the country in Glasgow. Cornwall has cut its carbon footprint by almost a fifth, and cut two thirds of emissions by leveraging decarbonising electricity. The area is also home to the innovative Eden Project, and is hatching plans for an offshore windfarm that could create thousands of jobs for the south west. Plus, the lulling oscillation of the waves on the sand might provide a pacifying soundtrack for such discussions as tax, trade, and vaccinations, and mitigate any rogue comments about Brexit.
The buzz-phrase of the year is ‘Build Back Better’. From a British perspective this means the return of growth following the pandemic through investment in infrastructure, skills, and innovation. This plan will support the vision of Global Britain, the levelling up agenda, and the transition to Net Zero. If the Prime Minister can bring the rest of the G7 leaders on board with these strategies, we can finally be convinced of the fact that they’re not just a set of slogans. But in fact, ‘Build Back Better’ is central to many of the policy priorities the G7 leaders will discuss, particularly in driving coronavirus recovery, tackling climate change, and promoting free and fair trade.
Following this tumultuous year, the top of the list is of course the response to the COVID-19 pandemic, and the plan for recovery. The focus of this agenda item will be mostly forward looking, with the view to boosting the vaccination progress globally, and strengthening resilience against future pandemics. At the beginning of the year the vaccination rollout was the source of much political contention, but this only emphasised the importance of global collaboration. After all the pandemic seeped into every corner of the planet, and its legacy will be one of shared experience, whether through financial pressure, mental strain, or the loss of friends and family. The united effort is vital, and the Prime Minister has called on the G7 leaders to get straight to the point and vaccinate the world by the end of the year.
Equally as crucial is the battle against climate change. Under the keen and watchful eye of the Extinction Rebellion, who will convene in Carbis Bay, the G7 will discuss the necessity of achieving Net Zero. With all of the leaders having already committed to reaching net carbon zero emissions by 2050 at the latest, this weekend will see that promise take shape into attainable policies. For example they will agree to phase out funding for fossil fuels and transition to greener energy solutions, with the first step being to end all new finance for coal power by the end of 2021.
Businesses can be at the forefront of the effort against climate change, and one thing the IoD is, and will continue pushing for, is that global leaders should implement the Taskforce on Climate-related Financial Disclosures as the basis for which organisations should report on climate-related issues. This common reporting framework would support the race to net zero by allowing directors to take responsible action on behalf of their business in order to minimise further impact on the environment.
An anticipated topic up for debate is Biden’s corporation tax reform proposal, which, if implemented, would set a minimum global corporation tax rate of 15%. The whole proposal is clearly a stab at multinational companies who exploit loopholes, normally in the form of havens in the Pacific, in order to get away with paying less tax. Though the Chancellor hasn’t come out with anything concrete, estimates suggest that setting a minimum tax rate could raise £7.9 billion for the treasury. The reforms still have to go through the G20 and then the OECD, but that’s a significant sum that could be directed towards sustainable projects, and the COVID-19 recovery strategy.
Furthermore, firms with profit margins of at least 10% would have to pay 20% of profits above the 10% margin in the countries where they make the sales. Big tech firms with very high profit margins, namely Facebook, Apple and Google are most certainly in the line of fire here. But even those with lower margins may not be able to dodge the bullets, with experts expecting to see the inclusion of a segmentation clause to target parts of certain businesses that produce higher margins. Is this a sly means of ensuring Amazon’s low margins don’t get away with this unscathed? It is questionable whether setting a global minimum tax rate based solely on specific companies is really the way forwards, but the potential capital produced from the reforms may make up for any doubts raised.
The central narrative of this G7 summit is the importance of international cooperation. Our ‘special relationship’ with the US is on slightly shaky grounds, though not quite as shaky as that with Europe. But this is an opportunity to set aside any political differences and focus on forward looking issues that actually, each attendee is aligned on. After a year that has given us the worst global disaster since the world wars, the rhetoric of the combined effort should resonate louder than ever. And this would be a huge combined effort: the nations attending represent over 2.2 billion people, and more than half the world’s economy.
The G7 official website:
2021 G7 Summit – UK Presidency (g7uk.org)
IoD response to the TCFD consultation:
IoD calls on business to voluntarily adopt climate-related financial disclosures as soon as possible | Institute of Directors | IoD
IoD Sustainable Business Hub:
Sustainable Business | IoD