IRSG sets out financial services priorities for UK’s G7 presidency to aid post-pandemic recovery
G7 leaders are being urged to ensure the economic recovery from COVID is green, sustainable and equitable in a new report by the International Regulatory Strategy Group (IRSG), which is co-sponsored by the City of London Corporation and TheCityUK.
Financial Services Priorities for the UK’s G7 Presidency calls on G7 finance ministers meeting in London from 4-5 June to harness the same global regulatory cooperation seen in the aftermath of the 2008 financial crisis.
The 47th G7 Summit in Cornwall’s Carbis Bay [11-13 June] is set to focus on the global recovery, with discussions taking place on how countries can ‘build back better’ by tackling climate change and ensuring free and fair trade
The IRSG report makes a number of suggestions in relation to financial services when it comes to the global regulatory landscape, climate change and sustainable finance as well as the digital agenda. It highlights outstanding issues hindering global trade and recovery, including regulatory fragmentation, emerging protectionism, differing international standards and the growing issue of cyber-crime.
- ask the Financial Stability Board to convene a forum of its membership to share best practice and draw up a plan on securing corporate recapitalisation at scale.
- take steps to preserve an open, and resilient financial system, by promoting global trade through a strengthened collaboration with the WTO and championing of its agenda.
- broker a principles-based approach to data localisation, with jurisdictions accepting that the free flow of data should be the default, with only specific narrow exceptions that are objectively justified.
- promote green and responsible finance for the recovery by developing a set of guiding principles for sustainable product naming/labelling, guiding consumers and investment flows towards sustainable assets, and leveraging public-private partnerships to a pipeline of investable opportunities, as well as mobilising climate finance into emerging markets.
- drive global commitment among the G7, the G20 and beyond towards net zero targets, with the scaling of voluntary carbon markets and robust carbon pricing and net zero finance strategies including with green job creation, ahead of COP26.
- support the development of Core Carbon Principles by the Task Force on Scaling Voluntary Carbon Markets alongside the set-up of a governing body.
- foster global regulatory coherence on climate-related and sustainability-related risk reporting and disclosures by building global consensus on disclosures and tackling the gaps in TCFD adoption amongst jurisdictions, with driving global commitment towards TCFD reporting and around the IFRS Foundation’s proposal on sustainability reporting, making progress on issuer disclosure standards, in collaboration with private standard setters.
- agree to commission, in partnership with the G20, the development of a common set of core/guiding principles to inform the design of sustainable taxonomies, enabling interoperability, and the mapping of transition as well as ‘transited’ activities.
- support continuity on G7 policy on digital taxation, by calling for an agreement on the OECD’s digital taxation framework this year.
- address the lack of a global data standard, and to agree to examine a framework that could improve the global governance framework for data flows. This may include a new global body to create and manage a global data standard on data governance.
- lead on combating economic crime, corruption and illicit finance by tasking the G7 Cyber Expert Group to develop methodologies to achieve a common regulatory and supervisory approaches to achieve global beneficial ownership reform.
The report also urges the G7 to leverage the COP26 UN Climate Conference in Glasgow in November, ensuring climate and sustainability goals are aligned with work being undertaken as part of Italy’s G20 presidency.
Deputy Chair of the IRSG, Catherine McGuinness said:“
As the world tackles recovery from Covid let’s seek to “build back better” by working more closely together on issues that affect us all: climate change, cross-border data and capital flows, and the growing threat of cyber-crime, to name but a few.
“With the upcoming summit in Cornwall and COP26 in Glasgow later this year, the UK - as a champion of free and open trade – has an opportunity to show continued international leadership in promoting global regulatory cooperation and driving forward the green, sustainable, finance agenda.
“Fragmentation and protectionism are in no one’s interests in the long term, and I hope G7 leaders will carefully consider the recommendations outlined in this report.”
Tamara Cizeika, Counsel, Allen & Overy Financial Services Regulatory group and Member of the IRSG Global Regulatory Coherence Standing Committee said:
“We have a unique opportunity right now for a private-public partnership on climate change. Banks and global financial services firms appreciate, just as much as governments and the public, the importance of making real progress. Now is the time for bold leadership and action, and with the G7 presidency, we’re really asking the UK to make that happen.
“It’s understandable that, in the post pandemic recovery, some countries or regions may lean towards protectionism. But we want the UK to use the G7 presidency to continue to make the case for the benefits of international co-operation and openness.”
Dr Kay Swinburne, Vice Chair of Financial Services for KPMG UK and former Vice Chair of the European Parliament’s influential Economics and Monetary Affairs Committee, has been appointed the new Chair of the IRSG and will take up the position in due course. The role was previously held by former City Minister Mark Hoban.
Notes to editors:
About the International Regulatory Strategy Group
The International Regulatory Strategy Group (IRSG) is co-sponsored by TheCityUK and the City of London Corporation. It is a practitioner-led body comprising of leading UK-based figures from the financial and related professional services industry from within TheCityUK membership.