G20 Policy Paper

February 2012

Recommendations for Los Cabos, Mexico Summit

G20 leaders meeting in Los Cabos, Mexico in June must take bold steps to encourage good governance and transparency and remove impediments for economic growth which further impoverish the worlds most vulnerable populations. This policy paper, compiled by a G8/G20 Task Force consisting of more than 40 non-governmental organizations, offers recommendations on core areas from food security and climate change to anti-corruption efforts. Task force members represent NGOs, think tanks and trade unions, all with the same goal of fighting poverty and making governments more accountable and transparent. The current financial crisis has affected G20 members commitments to developing nations. The United States should play a leading role in encouraging the G20 to take the following steps: Food Security, Agriculture and Nutrition 1. Scale up investment in social protection and safety net programs to blunt shocks from food crises and prioritize investments that improve nutrition and reach small-scale producers. 2. Integrate civil society partnerships with a gender analysis and resilience to climate change into food security plans. 3. Abandon biofuel mandates and subsidies in order to help reduce food price volatility. 4. Adopt rules that would, like the Dodd-Frank legislation, institute position limits1 and requirements for transparency on commodity speculation, especially those labeled over the counter. 5. Support efforts to create a comprehensive code of conduct for food reserves to determine the viability and potential benefits of strategic buffer food reserves in countries vulnerable to food price volatility. Anti-Corruption 1. Implement and enforce laws criminalizing foreign bribery and prohibiting off-book accounts by the end of 2012. 2. Strengthen no safe haven and asset recovery policies and deny non-cooperative jurisdictions access to G20 financial systems. 3. Take practical steps towards establishing transparent, accountable public financial management systems, including for budget and procurement, by the end of 2012. Climate Change 1. Support limiting the increase of global average temperatures to as far as possible below 2 degrees C, and ensuring that by 2050 emissions are at least 80 percent below 1990 levels. 2. Call for the ICAO (International Civil Aviation Organization) and the IMO (International Maritime Organization) to develop revenue-raising, market-based mechanisms (emissions trading systems or levies) for the international maritime and aviation sectors by the end of 2013, with revenues used for international climate finance;

Please refer to page five for contact information for the principal authors of the individual policy sections.

This document is also available in Spanish at www.interaction.org

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and supports ensuring no net incidence (i.e., burden) on developing countries economies. 3. Commit G20 members to concrete steps to create and implement a global financial transaction tax that would help fund a number of global priorities, including climate change and poverty alleviation programs in the Global South. 4. Agree to develop implementation action plans with clear timelines and transparent reporting on implementation of their commitments to reform fossil fuel subsidies. 5. Revise the G20 criteria for selecting regional projects proposed by the High Level Panel on Infrastructure to emphasize environmental and social sustainability as threshold criteria. Financial Inclusion The U.S. should lead the G20 in ensuring that the Financial Stability Board and the Global Partnership for Financial Inclusion target the following priorities in their work: 1. Promote collaboration among a diverse group of stakeholders when creating national financial inclusion strategies. 2. Ensure national financial inclusion targets set by policymakers include a full range of financial services and involve marginalized groups. 3. Promote a focus on addressing client needs within financial inclusion policies. 4. Establish comprehensive national identification documentation and credit bureaus that can provide coverage for all citizens. 5. Support and incorporate lessons from the microfinance industrys efforts on client protection. Accountability 1. Establish a permanent G20 Accountability Framework. To enhance credibility and ensure effectiveness the framework must be rigorous, transparent and inclusive. 2. Publicize the terms of reference, names and affiliation of all members of Expert and Working Groups six months prior to each Summit, release meeting notices in advance, and list G20 commitments and outcomes under review. 3. Require all G20 Working Groups to seek input from international organizations, governments and civil society on a regular basis. 4. Ensure reporting evaluates results against consistent and specific indicators with timetables and recommendations for future action.
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Background
Food Security
1. Scale up investment in social protection and safety net programs to blunt shocks from food crises and prioritize investments that improve nutrition and reach small-scale producers. Fund-

2. Integrate civil society partnerships with a gender analysis and resilience to climate change into food security plans through impact and risk analy-

ing for nutrition activities severely lags overall funding for agriculture, agro-industries, forestry and fishing. To ensure tangible results, G20 leaders must rebalance donor funds to improve nutrition and reach small-scale producers, especially women farmers. We strongly encourage G20 nations to participate in and support the Scaling Up Nutrition (SUN) movement to better prioritize direct nutrition interventions and nutrition-sensitive development in nations with high rates of child malnutrition.

3. Abandon biofuel mandates and subsidies in order to help reduce food price volatility. In

sis. Vulnerability assessments should be conducted to identify and target the most vulnerable populations and help them develop increased adaptive capacity. Ensure civil society, including local and non-governmental organizations and vulnerable populations and communities, are full partners in food security planning and program implementation, monitoring and evaluation.

4. Adopt rules that would, like the Dodd-Frank legislation in the U.S. and similar proposals in the EU, institute position limits and requirements for transparency on commodity speculation, especially those labeled over the counter. Another

2010, the G20 commissioned a study by 10 leading international organizations.2 on how to reduce food price volatility. The study revealed that strong global demand for biofuels contributes to food price volatility and recommended that the G20 abandon biofuel mandates and subsidies. It is time to implement this recommendation.

key driver of food price volatility is excessive speculation on food commodity markets.3 The deregulation of commodity markets in the U.S. allowed large institutional investors to treat food and energy commodities as another asset in their investment portfolios. Between 2002 and 2008, there was a rapid influx of large sums of money into these relatively small mar-

5. Support efforts to create a comprehensive code of conduct on food reserves to determine the viability and benefits of strategic buffer food reserves in countries vulnerable to food price volatility. Strategic buffer reserves would allow gov-

kets.4 Holdings in commodity indices jumped from $13 billion in 2003 to $400 billion in 2011.5

ernments to spur domestic production by procuring stocks for those reserves from local and regional farmers; they could also be used to temper rising prices by releasing grain into the market, or to raise domestic producer prices by expanding government procurement.

Anti-Corruption We welcome the November 2011 first monitoring report by the G20 Anti-Corruption Working Group. But there needs to be stronger efforts to fully implement the 2010 Anti-Corruption Action Plan. The plans proposed reforms are critical for achieving a sound, stable and sustainable global financial system that helps meet the Millennium Development Goals and protects the worlds most vulnerable people. We also recommend extending the mandate for the Working Group by two years to oversee implementation of the action plans commitments. To ensure effective implementation of the action plan, the U.S. should press the G20 to:
1. Implement and enforce laws criminalizing foreign bribery and prohibiting off-book accounts by the end of 2012, as recommended in the Novem-

3. Take practical steps towards establishing transparent, accountable public financial management systems, including for budget and procurement, by the end of 2012. Transparent manage-

financial systems. Furthermore, corrupt officials should not be allowed to conceal and enjoy illicit gains abroad. G20 members should deny safe haven to corrupt officials, their assets and those who have supported their corrupt activities. We welcome the progress on revising the Financial Action Task Force (FATF) standards for combating money laundering, developing a framework, and designating contact points to support asset recovery. However, more concrete steps are needed to stem illicit flows and facilitate the World Bank and the UN Office on Drugs and Crime (UNODC) Stolen Assets Recovery Initiative. These include ensuring FATF standards are effectively enforced, adopting and enforcing a legal framework for asset recovery and responsible repatriation, and developing mechanisms to promote the transparent use of returned funds by the end of 2012. G20 countries should also create registers that disclose the beneficial ownership of companies and the beneficiaries of trusts.

2. Strengthen no safe haven and asset recovery policies and deny non-cooperative jurisdictions access to G20 financial systems. Global illicit

ber 2011 monitoring report. Bribery undermines economic growth, diverts development assistance, subverts environmental, health and safety controls, and threatens political stability and national security. Consistent and vigorous enforcement of anti-bribery laws is necessary to effectively reduce foreign bribery in international business and development. While some G20 countries have enacted anti-bribery laws, G20 countries should strengthen implementation and enforcement of such laws. G20 countries not party to the OECD Convention on Bribery of Foreign Public Officials should become signatories by the end of 2102 and participate in its peer review process.

ment of public finances permits public oversight and improves the likelihood that limited resources are used as intended. G20 countries should promptly adopt and enforce standards for procurement and public financial management consistent with Article 9 of the UN Convention Against Corruption and the OECD recommendation on Enhancing Integrity in Public Procurement. These include developing and implementing principles for financial disclosure by public officials.

financial flows present a massive outflow of wealth, estimated at over $1 trillion6 a year, from developing nations that undermines development. The G20 should deny non-cooperative nations access to their

Climate Change The G20 has a key role to play in reaching political agreement on climate change and on how to scale-up financing for developing countries to address climate change. A G20 agreement on climate change would help to drive negotiations under a number of multilateral bodies, including the UN Framework Convention on Climate Change (UNFCCC), the International Maritime Organization (IMO), and the International Civil Aviation Organization (ICAO). According to current estimates, addressing climate change will require several hundreds of billions of dollars each year. In 2009, developed country leaders agreed to jointly mobilize $100 billion per year in public and private finance to help developing countries fight climate change. Sufficient public financing will be essential to ensure that funding reaches poor
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countries and communities where there is little incentive for private investment. Additionally, public funding can catalyze financing actions that help developing countries prepare for the impact of climate change and actions that will reduce greenhouse gas emissions as well as leveraging private sector investments. Governments must ensure sufficient public financing starting in 2013, when the fast-start finance period agreed upon in 2009 ends: scaling up tenfold from $10 billion in public finance per year to $100 billion per year by 2020. Removing fossil fuel subsidies, as agreed to by the G20 in 2010, will help to free up resources governments can redirect to urgent needs such as food security, climate action and poverty alleviation. Given the challenges of increasing finance from traditional government sources, especially in the context of the global economic crisis, other innovative sources of funding must also be quickly agreed to and implemented. To this end, the leaders communiqu should include language that:

1. Supports limiting the increase of global average temperatures to as far as possible below 2 degrees C, and ensuring that by 2050 emissions are at 2. Calls for the ICAO (International Civil Aviation Organization) and IMO (International Marine Organization) to develop revenue-raising, market-based mechanisms (emissions trading systems

least 80 percent below 1990 levels.

Financial Inclusion We applaud the work of the G20 leaders to support financial inclusion efforts for all. Improving the range and quality of financial services available to previously excluded individuals strengthens their ability to overcome shocks and participate fully and productively as economic citizens. It also encourages national financial stability. We support policies that foster a comprehensive approach to financial inclusion, defined as a state in which everyone who can use financial services has access to a full range of products that encompass credit, savings, insurance and payments. Products are affordable, convenient, suited to the needs of clients, and offer client protection. Financial services are delivered by a range of providers, in a stable, competitive market to clients who are financially capable. Mexico is a leader in financial inclusion and we support the financial inclusion agenda proposed by the Mexican Presidency. The focus on National Strategies for Financial Inclusion, Financial Education, and Consumer Protection is in line with our vision for full financial inclusion. To this end, the U.S. should lead the G20 in ensuring the Financial Stability Board and the Global Partnership for Financial Inclusion target the following priorities in their work:
1. Promote collaboration among a diverse group of stakeholders when creating national financial inclusion strategies such as policymakers, investors,

3. Commits G20 members to concrete steps to create and implement a global financial transaction tax that would help fund a number of global

or levies) for the international maritime and aviation sectors by the end of 2013, with revenues used for international climate finance; and supports ensuring no net incidence (i.e., burden) on developing countries economies.

2. Ensure national financial inclusion targets set by policymakers include a full range of financial services and includes marginalized groups. This

donors, commercial banks, microfinance institutions, NGOs, mobile operators, retail networks, technology and infrastructure providers, clients and support organizations.

4. Commits G20 members to develop action plans

priorities, including climate change and poverty alleviation programs in the Global South.

5. Revises the G20 criteria for selecting regional projects proposed by the G20 High Level Panel on Infrastructure to emphasize environmental and

with clear timelines and transparent reporting on implementation of their commitments to reform fossil fuel subsidies.

3. Promote a focus on addressing client needs within financial inclusion policies by incorporat-

means financial inclusion strategies should address savings, credit, insurance and payments. The strategies need to focus on excluded segments such as the poor, rural households, women, persons with disabilities and other vulnerable populations. ing demand-side metrics that track quality and use of financial services. The policies should facilitate national financial capability strategies, and promote transparent and competitive markets for financial services. provide coverage for all citizens, avoid credit bubbles, alleviate over-indebtedness, and decrease the costs

social sustainability as threshold criteria, recognizing that infrastructure operations have profound social implications, including gender-differentiated impacts7, and lock in patterns of carbon emissions for generations.

4. Establish comprehensive national identification, documentation and credit bureaus that can

5. Support and incorporate lessons from the microfinance industrys efforts on client protection represented by initiatives such as The Smart

of providing credit. This will increase both financial inclusion and financial system stability, while ensuring client protection.

Campaign, Microfinance Transparency, and the Social Performance Task Force.

3. Require all G20 Working Groups to seek input from international organizations, governments and civil society on a regular basis and develop

reports, assessments and recommendations 60 days before each Summit to allow for public comment to the Working Groups.

Accountability In 2011, for the second consecutive year, the G20 boldly declared, We hold ourselves accountable for our commitments and will review progress at our next Summit.8 G20 leaders have recognized that to strengthen its ability to build and sustain the political consensus needed to respond to challenges; the G20 must remain efficient, transparent and accountable.9 Whether G20 leaders make good on their rhetoric by establishing a permanent accountability mechanism to monitor G20 commitments, particularly those in the Seoul Multi-Year Action Plan on Development, remains an open question. We are encouraged by G20 intentions to build on an innovative global development partnership that will focus on concrete and sustainable results, deepening our engagement with the private sector and civil society.10 However, there is no substitute for a regular and rigorous review of progress towards reaching G20 commitments. It is time for the G20 to commit to establish a permanent G20 Accountability Framework. The United States should lead by example by establishing transparent and effective accountability mechanisms for tracking U.S. implementation of each G20 commitment. To that end, the U.S. government should vigorously support accountability measures including:
1. Establish a permanent G20 Accountability Framework. To enhance credibility and ensure effectiveness, the framework must be rigorous, transparent and inclusive. The diversity of the G20

4. Ensure that reporting evaluates results against consistent and specific indicators with timetables and recommendations for future action including resources pledged and delivered.

systems for on-going transparent consultations. This should include the disclosure of expert group and commissioned reports to permit government officials, civil society, affected communities, and the private sector to provide timely comment.

Whenever possible on-the-ground monitoring of program implementation and outcomes should inform reporting. Please address comments and questions on specific policy sections to the following individuals:
Accountability Rob Lovelace, Senior Fellow Trade Union Sustainability Development Unit [email protected] Anti-Corruption Shruti Shah, Senior Policy Director Transparency International USA [email protected] Climate Change Keya Chatterjee, Director, International Climate Negotiations World Wildlife Fund [email protected] Financial Inclusion Anita Gardeva, Senior Analyst ACCION International, Center for Financial Inclusion [email protected] Food Security, Agriculture and Nutrition Marie Brill, Senior Policy Analyst ActionAid USA [email protected]

2. Publicize the terms of reference, names and affiliation of all members of Expert and Working Groups six months prior to each Summit. Meet-

provides an opportunity to open new avenues of inclusiveness with international organizations, governments, civil society and the private sector to improve the efficiency and effectiveness of the G20s contribution to development cooperation.

ing notices should be released 20 days before scheduled meetings and include a list of the G20 commitments and outcomes under review. The G20 should disclose expert group documents and commissioned

While the statement is not designed to be a consensus position of the contributors, it has been endorsed by InterActions
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leadership. Each set of recommendations was developed by a team of task force members who are listed below. Background papers on each issue will be available on the InterAction web site: www.interaction.org.
Accountability ActionAid Family Care International InterAction Oxfam Partnership for Maternal, Newborn and Child Heath Trade Union Sustainable Development Unit World Vision Anti-Corruption Global Financial Integrity Global Witness InterAction Oxfam Transparency International USA Climate Change ActionAid Heinrich Boell Foundation-North America InterAction Oxfam World Wildlife Fund Financial Inclusion ACCION International, Center for Financial Inclusion CARE FINCA International InterAction Opportunity International Oxfam Food Security, Agriculture and Nutrition 1000 Days Advocacy Working Group ActionAid Bread for the World InterAction Oxfam Save the Children World Vision

End Notes
1 Position Limits: The Dodd-Frank financial overhaul bill, enacted last year, gave the Commodity Futures Trading Commission the authority to limit trading in over-the-counter commodity swaps as well as exchange-traded futures. 2 FAO, IFAD, IMF, OECD, UNCTAD, WFP, World Bank, WTO, IFPRO, and UN-HLTF on Global Food Security, Price Volatility in Food and Agricultural Markets: Policy Responses, June 2011, http://www. oecd.org/dataoecd/40/34/48152638.pdf 3 UNCTAD (2009) Trade and Development Report, http://www.unctad. org/en/docs/tdr2009_en.pdf; De Schutter (2010) Food Commodities Speculation and Food Price Crises, http://www.srfood.org/images/ stories/pdf/otherdocuments/20102309_briefing_note_02_en_ok.pdf 4 UNCTAD (2009) Trade and development report, chapter II, http:// www.unctad.org/en/docs/tdr2009_en.pdf 5 De Schutter (2010) Food Commodities, supra., p 3; FAO (2011) Food Outlook, June, (p 55), http://www.fao.org/docrep/014/al978e/ al978e00.pdf 6 Illicit Financial Flows from Developing Countries: 2000-2009, January 2011, Global Financial Integrity 7 Gender-differentiated impacts: the impact of differentiated rights, roles and responsibilities of men and women. 8 Cannes Summit Final Declaration, Building Our Common Future: Renewed Collective Action for the Benefit of All 89, http://www.g20. utoronto.ca/2011/2011-cannes-declaration-111104-en.html 9 Ibid, 92 10 2011 Report of the Development Working Group, 68, http://www. mofa.go.jp/policy/economy/g20_summit/2011/pdfs/annex01.pdf