A window into what we’re reading at the Wilson Center’s Environmental Change and Security Program 

Member States Adopt Pact of the Future (United Nations)

The United Nations hosted the Summit of the Future earlier this week, which led to a new agreement between member states which acknowledged the shortcomings of the UN’s current role and abilities. The Pact of the Future encourages member states to reaffirm, reestablish, and renew global cooperation—and create new solutions to address today’s escalating polycrises.

The new Pact’s emphasis on a range of inter-linked issues—such as peace and security in the face of growing conflict—called forth a range of proposals: improving global financial pathways to encourage climate action toward Our Common Agenda;  prioritizing human rights; broadening inclusion to create greater roles for key groups  (gender, youth, and future generations); and reforms in global governance. The agreement also incorporated a Global Digital Compact—a comprehensive framework for the governance of emerging technologies like AI.

The Pact also introduced the Declaration on Future Generations that aims to ensure that member states account for securing the needs of those not yet born, while also fulfilling the needs of the present generations. The declaration also provides for the appointment of an Envoy for Future Generations who will track and disseminate national progress and decision-making on its stated goals. 

READ | The UN Security Council Debates its Role in Tackling Climate Security

Global Debt is Rising Exponentially (Reuters)

The Institute of International Finance (IIF)’s Global Debt Monitor tracks indebtedness by sector across markets and economies, and the most recent edition offers startling news: global debt has reached a record-breaking $312 trillion, with a rise of $2.1 trillion in the first half of 2024. The IIF’s report new suggests that borrowing increased in developed and emerging countries the United States, China, Russia, and India), but fell in Japan and European countries.

While the global debt-to-GDP ratio (which compares a nation’s debt with its economic output) has stabilized, it only reached balance due to inflation in major economies. This same ratio has increased in emerging economies in the post-COVID era. In addition to the global economic recovery, infrastructure developments, and other persistent challenges, the path to Net Zero climate emission stood out as a common denominator of increasing debt among all nations. Indeed, increasing climate shocks are projected to account for a third of the rise in borrowing by 2050. 

Increases and risks associated with rising sovereign debt may create future problems in this context. The IIF report warns that business as usual will create an increase in borrowing from $92 trillion to $145 trillion by 2030—and an eventual level of  $440 trillion by 2050. These researchers observe that political will, sound leadership, and reform in international financial systems will be crucial for countries to counter the unprecedented socio-economic impacts of unprecedented sovereign debt on their citizens.

READ | Climate Finance: Taking Stock of Investments and Opportunities to Sustain Peace

Wall Street’s Message for Climate Week NYC  (Bloomberg)

The “financial path to Net Zero,” was a topic for vigorous debate during New York City Climate Week—which occurred in tandem with the recent UN General Assembly. Redefining the role of financial institutions in supporting member states to achieve their climate goals has never been so important—especially as rising uncertainties have led Wall Street climate leaders to raise concerns about the efficacy and viability of those targets.

Climate Week sessions saw a number of Wall Street observers reaffirm their faith in advancing renewable energy technologies. Yet they warn that the required pace of developments will not align with country targets, even if their financial needs are met. While financiers expect some fluctuation in investments, their viewpoint as bankers is that the climate crisis is only one social challenges that must be addressed in global finance.

Asset managers in the United States have been reducing their support for climate shareholder proposals of late. It is a trend that demonstrates both reduced corporate interest and shifting shareholder priorities. Public-private partnerships shaped by targeted policymaking will prove crucial in reversing this concerning development in the US and beyond.

READ | Climate Finance: Can Integrity and Transparency Prevent Environmental Catastrophe?