Climate policy at the International Monetary Fund: No voice for the weak?

Climate policy at the International Monetary Fund: No voice for the weak?

The climate crisis prompted the International Monetary Fund (IMF), an international lender of last resort, to undertake major reforms to integrate climate policy into its activities. However, at the IMF, decision-making is dominated by select countries in the global North, which are also historically the largest emitters of greenhouse gases.

Against this background, can the Fund implement an ambitious and effective climate policy? And how are climate-vulnerable developing countries and their interests taken into account in the institution’s day-to-day decision-making processes?

A new journal article In Global politics by Lara Merling and Timon Forster draws on academic evidence on the political economy and legitimacy of international organizations to assess the IMF’s turnaround on climate change. An empirical analysis of 57 climate-vulnerable developing countries, referred to by the IMF and its Executive Board as the Vulnerable Group of 20 (V20), shows that these countries, which represent almost a third of the Fund’s members, have only 5.6 percent of the vote.

Key findings:

• Because of its extensive influence on development and its role in the global financial safety net, the IMF is in a unique position to shape climate change.
• The countries historically responsible for the highest carbon dioxide emissions have disproportionately large decision-making power in the IMF. However, the countries least responsible for and most affected by the climate crisis have little decision-making power in the IMF.
• Achieving fairer climate policies requires ambitious governance reforms that give developing countries vulnerable to climate change a greater say in decision-making, enable a just global transition and strengthen the legitimacy of the IMF.

The authors’ assessment of the IMF’s climate strategy reinforces concerns about equity in its climate policy. Without meaningful governance reforms that give climate-vulnerable developing countries more voice and representation, the IMF’s approach to tackling climate change is unlikely to translate into legitimate and effective climate policy.

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