This week President Macron of France hosts a summit on remaking the global financial system. As the gap between the unfolding polycrisis and global governance grows, the need for a fundamental paradigm shift in global economic governance is becoming more urgent.

There is a manifest need for a paradigm shift in global economic governance broadly, and the trade regime in particular, to advance a just, sustainable transition to a climate-safe world. This framing paper outlines the context around this challenge, identifies a number of policy tools and reforms that could help address it, and considers the question of how to build political coalitions within and across countries to advance this paradigm shift. Throughout, the paper considers, in particular, the interests of developing countries and their agency to drive change.

Climate change is reshaping the world economy in significant ways, from affecting critical sectors in vulnerable economies, to heightening the race by major economies to dominate green and climate technologies. To address these challenges and also secure the emerging opportunities, many countries are increasingly adjusting trade rules around climate goals. While discussion has mainly focused on the global North, as well as major emerging economies such as China, these changes have significant implications for other countries, especially those in the global South. For African countries which have adopted and begun implementing ambitious regional economic integration initiatives, climate-proofing its development is an imperative.

Against this background, this policy memo outlines proposals for an African green trade and investment strategy. It draws on extensive mapping of the institutional, policy and diplomatic landscape, and also considers emerging and long-term trends. As such, Africa would need to embed climate in trade and investment institutions, otherwise it will not achieve its development goals in a world shaped by climate change.

While the proliferation of net-zero targets represents progress toward reaching our global climate goals, targets vary enormously in quality. This report proposes four governance tools to steer net-zero targets toward higher integrity.

As the world economy rapidly decarbonizes to meet global climate goals, the export credit sector must keep pace. Countries representing over two-thirds of global GDP have now set net zero targets, as have hundreds of private financial institutions. Public and private initiatives are now working to develop new standards and methodologies for shifting investment portfolios to decarbonization pathways based on science. However, export credit agencies (ECAs) are only at the beginning stages of this seismic transformation. On the one hand, the net zero transition creates risks to existing business models and clients for the many ECAs, while on the other, it creates a significant opportunity for ECAs to refocus their support to help countries and trade partners their climate targets. ECAs can best take advantage of this transition, and minimize its meet risks, by setting net zero targets and adopting credible plans to decarbonize their portfolios. Collaboration across the sector can be a powerful tool for advancing this goal.

• To achieve global climate goals and build a more resilient economy, the rules and institutions of global economic governance must align around a green transition.

• This report describes a package of 11 ideas for reforms across the global trade and investment regimes, broadly understood, that can remove barriers to, and create drivers for, climate action. Some are mature efforts already in progress; others are new areas of work that require more research and strategizing.

• The package elements fall into three categories: steps that can be taken within existing structures, options that pioneering governments can advance unilaterally or in small groups, and broader reforms of governance arrangements.

• This package of ideas is not exhaustive. Many other potential avenues and proposals are being explored elsewhere in scholarly and policy debate. Some proposals are not mentioned here as they already attract considerable attention and focus from a diversity of stakeholders and some governments.

• Whilst ensuring that economic responses to COVID-19 are climate friendly remains of immediate and paramount importance, we must not lose sight of the direction of travel needed over a more extended time horizon. With this in mind, these reforms target outcomes that could feasibly be delivered over the next 12-36 months.