During the G7 summit held in Hiroshima, the leaders of the world’s leading industrial nations made a series of statements to uphold their commitments under the Paris Agreement, which aims to limit global temperature rise to 1.5°C. These announcements included endorsing the development of sustainability and climate-related reporting standards by the International Sustainability Standards Board (ISSB), advocating for a halt to the construction of new unabated coal-fired power plants, and supporting initiatives to increase climate transition finance for developing countries.
One of the crucial climate-related issues emphasized in the leaders’ communique was the necessity of mobilizing finance to facilitate emissions reduction and promote climate-resilient development. This involved focusing on private finance for the implementation and advancement of clean technologies and activities. The G7 also reaffirmed its dedication to promoting consistent, comparable, and reliable disclosure of sustainability and climate-related information.
In the previous year’s meeting in Germany, the G7 leaders expressed support for mandatory financial disclosures related to climate and welcomed the establishment of the ISSB. Launched in November 2021 at the COP26 climate conference, the ISSB aims to develop sustainability disclosure standards based on the International Financial Reporting Standards (IFRS), providing a global foundation for reporting requirements that can be adopted independently or incorporated into broader reporting frameworks. In March 2022, the board released the initial drafts of its first two reporting standards, covering general requirements for sustainability-related financial information and climate-related disclosures. It was recently announced that these new standards will take effect in January 2024, with companies expected to issue disclosures in accordance with the standards starting in 2025.
In their communique, the G7 leaders expressed their support for the ISSB’s initiative, endorsing the finalization of standards for general sustainability reporting and climate-related disclosures. They also emphasized the importance of achieving globally interoperable sustainability disclosure frameworks. Additionally, the G7 leaders welcomed the ISSB’s future work on biodiversity and human capital disclosure, aligned with the board’s consultation process.
The leaders acknowledged the need for companies to adopt net-zero transition plans in line with the Paris Agreement. They also made several announcements related to the energy transition, including a commitment to work towards discontinuing the construction of new unabated coal-fired power plants. The leaders recognized the importance of developing low-carbon and renewable hydrogen to decarbonize challenging sectors such as industry and transportation. They also stressed the necessity of establishing standards, certifications, and methodologies for calculating emissions in hydrogen production. Furthermore, the communique highlighted the G7’s goal of increasing offshore wind capacity by 150 GW and solar photovoltaic (PV) capacity to over 1 TW by 2030, as announced by the G7 climate and energy ministers the previous month.
While emphasizing the G7’s commitment to accelerating the phase-out of unabated fossil fuels, the communique acknowledged that publicly supported investment in the gas sector could serve as a temporary response to expedite the transition away from dependence on Russian energy following the invasion of Ukraine.
The communique also addressed additional factors related to the energy transition and decarbonization efforts in the private sector. It recognized Carbon Capture, Utilization, and Storage (CCUS) as an important part of a comprehensive range of decarbonization solutions in cases where industrial emissions cannot be entirely avoided. The G7 leaders also expressed support for initiatives aimed at developing high-integrity carbon markets and implementing carbon pricing mechanisms.