On May 3rd, 2017, the B20 officially handed over its Policy Recommendations to German Chancellor Angela Merkel in Berlin. Developed under the theme “Building Resilience – Improving Sustainability – Assuming Responsibility”, the B20 Policy Recommendations span the entire scope of the G20 process: from the need to maintain an open, rule-based trading system, to facilitating sustainable finance and increased efforts to widen the inclusiveness and resilience of the labor market in the face of technological change.
Germany assumed the G20 Presidency at a time of growing uncertainty around the world. The business community stands ready to take responsibility and do its part. The recommendations are the product of a yearlong process of seven Taskforces and Cross-thematic Groups, which comprise over 700 members from all G20 economies.
Key Message to the G20
Shaping an Interconnected World
Almost ten years ago, the international financial system stood at the brink of collapse. G20 leaders took decisive action that prevented the global economy from spiraling into a deep depression. Not only did the G20 coordinate macroeconomic policies, the leaders also committed to a standstill and rollback on protectionism, which – albeit not fully implemented – helped to preempt beggar-thy-neighbor policies. The G20 thus played a vital role in preventing a repetition of the Great Depression of the 1930s. Through trade, investment, financial integration, data flows, and migration, our economies are growing more and more interdependent. This interdependence is a driver of economic growth and prosperity. However, it also means that crises can spread more easily, from country to country and region to region, and that existing opportunities can only be fully leveraged through joint efforts. In our interconnected world, international cooperation is key – to realize the benefits but also to tackle the challenges.
The financial and economic crisis revealed many shortcomings in financial regulation and supervision. Since then, the G20 has come a long way in building a stronger and safer international financial system. Recent regulatory reforms, both domestic and international, have made markets more resilient. While the stability and resilience of financial markets have greatly improved, global economic growth remains subdued. Many countries are still struggling with high unemployment rates – especially among young people – and socioeconomic inequalities. There has been a worrisome increase in protectionist measures worldwide, dampening growth and productivity while reducing welfare and purchasing power. In addition, geopolitical conflicts, climate change, terrorism, and mounting questioning of the international order make 2016–2017 one of the most uncertain periods in decades. Recent elections and referenda in both emerging and developed countries have shown that a growing proportion of our citizenry seem to be discontent with the political establishment. This has manifested itself foremost in the opposition to globalization – be it trade, investment, or migration – as well as a rejection of global governance. Trust in public institutions seems to be eroding. For too long, we have ignored these trends.
The global business community is strongly convinced that globalization is beneficial. However, common rules, strong institutions, and international cooperation are necessary to shape the outcomes of globalization and ensure that everyone has the chance to benefit from its opportunities. Therefore, the themes of this year’s G20 presidency are well chosen: Building Resilience, Improving Sustainability, and Assuming Responsibility. They are essential to ensure that growth is not only dynamic but also inclusive and sustainable.
Building Resilience: A resilient economy is characterized by three aspects: First, our economies must have sufficient coping mechanisms to absorb crises. Second, our economies need to have the capacity to adapt. They need the ability to change in order to minimize potential damages and to take advantage of emerging opportunities. Third, they need to have transformative capacity – in other words, they should be able to fully react to change, if necessary by overhauling existing institutions, rules, and practices. Resilience is not just an issue of the financial system. Cybersecurity, energy access, and infrastructure connectivity are just some examples of fundaments for resilience. Particularly important for a strong, resilient economy are Small and Medium Enterprises (SMEs). For many countries, they form the back-bone of their economies and societies. Today, resilience can only be achieved through international collaboration. Approaches to address or hedge risks need to be coordinated. Isolated national measures risk causing fragmentation and fragility.
Improving Sustainability: Sustainability rests on three pillars: economic sustainability, social sustainability, and environmental sustainability. Sustainability means managing natural resources in a way that meets the needs of the present generation without compromising the ability of future generations to fulfill their needs. There should also not only be equal opportunities of social advancement for the current, but for future generations. Business can make an important contribution to ensuring that all three components of sustainable development go successfully hand in hand. Around the globe, businesses are major innovators, tax contributors, employers, and educators. From technological developments that reduce air pollution, to life-long learning, to responsible business conduct: businesses are fundamental enablers of sustainability. For business to play its part, it needs an enabling international level playing field: fair competition, clear and transparent rules, and investor certainty.
Assuming Responsibility: Being responsible is characterized by thinking ahead and by anticipating the effects of an action on future generations and beyond national borders. Rather than echoing the populist discourse that scapegoat’s globalization for all kinds of problems – from economic downturn to security concerns – we need to advocate real solutions. Responsibility also means responsiveness. Politicians, business leaders, and leaders from civil society have to listen carefully to what people have to say. This also concerns the current anti-globalization sentiment. While the increasing interconnectedness through the flow of goods, services, people, capital, and information has significantly contributed to wealth and welfare, we must not ignore that globalization and greater competition have contributed to displacements and increasing uncertainty. Leadership means addressing these concerns and incorporating them in future policies – also at the G20 level. Business is ready to carry its share of responsibility, through employment creation, education and vocational training, responsible business conduct, and innovation.
This is not the time for national solo runs. This is a time for international cooperation. If the G20 did not exist today, we would need to create it. The G20 is the premier forum for international economic cooperation and is increasingly becoming the central forum for all questions of global governance. It holds the necessary weight and legitimacy: Its members are not only responsible for 85 percent of global gross domestic product (GDP) and three-quarters of global exports (goods and services), but also represent about two-thirds of the world’s population.
As business, we want to play our part and support the endeavors of the G20: We want to assume responsibility and contribute to finding the best solutions for today’s challenges and opportunities such as climate change, digitalization, or sustainable growth. We aim to be responsive to the varying needs and concerns in all sectors and countries of the G20. And we want to build resilient, future-oriented economies. As a family entrepreneur, I work under the premise: “The economy serves the people – not the other way around.” I am convinced this is also true for the bigger picture of the G20 business community.
20 to 20 – B20 Recommendations to the G20
Building Resilience
Recommendation 1: Strengthening an Open and Inclusive Trading System – The G20 should confirm its unconditional commitment to open and inclusive trade that is underpinned by transparency and robust adjustment assistance programs, resistance to protectionism in all forms, and a strong, nondiscriminatory rules-based global trading system.
Recommendation 2: Making Use of Digital Trade Potential – The G20 should facilitate an enabling environment for digital trade by accelerating capacity building, encouraging implementation of interoperable and nondiscriminatory e-commerce-related policies, and by calling for a WTO negotiation man-date on digital trade.
Recommendation 3: Facilitating SME Participation in Trade – G20 members should facilitate SME participation in trade and global value chains (GVCs) by systematically including their voice and needs in trade agreements, by fostering capacity building, and by easing business travel.
Recommendation 4: Fostering Global Connectivity – The G20 should foster global connectivity through the definition of a harmonized cybersecurity baseline framework, by supporting norms for responsible state behavior, by enabling free and trustworthy cross-border data flows, and by fostering investment in ICT infrastructure as well as in skill and capacity building.
Recommendation 5: Strengthening Industry 4.0 and the Industrial Internet – The G20 should support the dissemination of Industry 4.0 and the Industrial Internet (I4.0&II) by fostering innovation, ICT infrastructure deployment, and the development and use of global standards.
Recommendation 6: Embracing Artificial Intelligence – The G20 should support the evolution of human-centric artificial intelligence (AI) and related technologies by ensuring informed public dialogues on opportunities and challenges, by supporting the development and deployment of innovation, and by accelerating the rollout of smart infrastructure.
Recommendation 7: Building Digital Capacities and Capabilities for SMEs – G20 members should facilitate SME access to the digital economy by strengthening digital infrastructure outside industrial centers and expanding SME capacity building as well as knowledge exchange.
Recommendation 8: Designing Growth-Enhancing Financial Regulation – The G20 should reaffirm its support for international cooperation, while calling on international financial standard-setting bodies and national regulators to increase regulatory coherence, transparency in the development and implementation of regulation, and accountability to all G20 objectives, as well as to facilitate the digitalization of finance.
Recommendation 9: Advancing Financial Inclusion for SMEs – G20 members should ensure implementation of the G20/OECD High Level Principles on SME Financing, the G20 Action Plan on SME Financing, and the G20 High Level Principles for Digital Financial Inclusion, in particular by strengthening financial market infrastructure and enhancing access to diversified financial instruments.
Improving Sustainability
Recommendation 10: Curtailing Climate Change – The G20 should curtail climate change by implementing the Paris Agreement, developing consistent and robust carbon pricing, as well as by fostering green finance.
Recommendation 11: Fostering the Global Energy Transition – The G20 should accelerate the market readiness and deployment of low-carbon technologies through effective and predictable energy policies, a joint innovation agenda, and strengthened Energy Access Action Plans.
Recommendation 12: Advancing Resource and Energy Efficiency – The G20 should advance resource and energy efficiency by establishing a Resource Efficiency Platform and translating the Voluntary Energy Efficiency Investment Principles into a policy toolkit.
Recommendation 13: Fostering Investment Facilitation – The G20 should foster a reliable legal environment, enhance sustainable investment facilitation, and identify the benefits and drawbacks of a multilateral investment framework.
Recommendation 14: Boosting Infrastructure Finance – G20 members should boost infrastructure finance by developing and promoting bankable and investment-ready infrastructure project pipelines and by enhancing the role of Multilateral Development Banks as catalysts for private sector investment.
Assuming Responsibility
Recommendation 15: Promoting Open, Dynamic and Inclusive Labor Markets – G20 members should promote open, dynamic and inclusive labor markets by removing structural and legal barriers, promoting diverse forms of work and female employment, and by bringing labor migration policies in line with labor market needs.
Recommendation 16: Harnessing Technological Change – G20 members should harness the potential of technological change through better education and training, entrepreneurship, and innovation frameworks.
Recommendation 17: Creating a Global Level Playing Field and Promoting Fair Competition – G20 members should ensure better implementation and enforcement of legislation to prevent human rights infringements, while creating a global level playing field, based on the principles of the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises.
Recommendation 18: Establishing Beneficial Ownership Transparency – G20 members should increase their efforts to implement beneficial ownership transparency so that risks related to the ultimate owner(s) can be identified.
Recommendation 19: Recognize Compliance Efforts – G20 members should be supportive of a company’s proactive engagement by providing positive recognition of effective anti-corruption and compliance systems.
Recommendation 20: Enhance Responsible Business Conduct in Infrastructure Projects – G20 members should increase transparency and accountability at all stages of the project cycle in order to mitigate the risk of corruption and increase efficiency.
To read the full – B20 Summary Document (The recommendations) – click here
To read the – B20 Trade & Investment Policy Paper – click here
To read the – B20 Digitalization Policy Paper – click here
To read the – B20 Small and Medium-Sized Enterprises Policy Paper – click here
To read the – B20 Energy, Climate & Resource Efficiency Policy Paper – click here
To read the – B20 Financing Growth & Infrastructure Policy Paper – click here
To read the – B20 Employment and Education Policy Paper – click here
To read the – B20 Responsible Business Conduct & Anti-Corruption Policy Paper – click here
Source: B20 Germany
Image: BDI, Christian Kruppa