V20 Ministerial Dialogue IX Statement delivered by Ms. Rachel Turner Director General of Foreign, Commonwealth, and Development Office U.K

Statement delivered by Ms. Rachel Turner Director General of Foreign, Commonwealth, and Development Office U.K

V20 MINISTERIAL DIALOGUE IX

16 October 2022

Ms. Rachel Turner, Director General of Foreign, Commonwealth, and Development Office U.K

Thank you very much, Chair.  Let me echo what Jürgen said.  I think we are all humbled and alarmed by the extent of the crisis facing the V20 countries.  And it’s been very important and very humbling to listen to the interventions made so far.

I want to congratulate the V20 and congratulate Jürgen and his team for the work they’ve done to pull this Global Shield together.  I think the case for the Global Shield has been well made and I think he’s well understood in this room. 

I think the arguments for fast, early action linked to delivery systems like shock responsive social protection, small farmer production schemes, public infrastructure.  I think those arguments are very well made.  But the scale is still too small.  Many have already spoken about the significant protection gap in the vulnerable countries compared to the much, much smaller gap in developed countries. 

And I think that’s absolutely fundamental to what we’re trying to do now with the Global Shield.  We hope, we have ambition, that the Global Shield will take this work on disaster risk finance to the next level.  It has an opportunity to scale for all of us to cover it, but the way it has been set up also has a very strong problem-solving design embedded in it, which we are very optimistic about.

So, I think well done to the V20 and Germany for the way you have put this proposal together.  It feels to us that it’s going to be something when we, you know, I hope we sit down in a year’s time, we’re already going to be seeing very strong stories and impacts from it. 

I think on the part of the U.K. I just wanted to make two points.  One about what we want to do in terms of contributing to the Global Shield.  But the other I think is just to say how important we think the structures are for bringing the private capital markets to the last mile to deliver risk coverage for the poorest people.  And I think it is important to understand in this disaster risk finance base that we have a significant opportunity to use the weight of the insurance and the reinsurance market to provide cover for shocks for those very poorest people. 

And I think the experience of both the Caribbean Risk Pool, which has 1.2 billion risk now transferred to the capital markets, the Africa Risk Pool with a billion transferred to the capital markets, I think make that clear.  Are those big numbers, are those small numbers, I mean we want them to scale up and we hope we can use the Global Shield to reach much bigger scale.

But I think the fact that the capital markets want to engage, that they want to diversify their risks, that they want to hold this risk and price this risk fairly, I think is an extremely important part of our overall sense of creating new and imaginative and innovative solutions to help manage climate risk.

On the part of the U.K., there are just four very quick things I wanted to say about our commitment to support the Global Shield.  We will support with technical advisory work.  We have specialist expertise that we’re going to attach to the Global Shield.  We will continue, we have already, but we will continue to subsidize insurance premiums, working both through the Africa bank who host a pool of subsidy premiums, but also through the World Bank.  We will continue to invest in the risk pools.  We have capital in the pools, but we will grow that capital.

And then finally, I wanted to just say that as COP President and as we move through to Sharm El Sheikh, we want to reinforce the Global Shield with a call to financiers of the multilateral banks, the IMF, other parts of the international financial system, to respond to the debt challenges and particularly to look at whether it’s possible to introduce climate resilient debt clauses into financing so that when shocks come, when shocks hit, that countries get an automatic deferral of payments. 

We think that the major opportunity to shift the debt from financing architecture through new structures for how debt is issued, and we’d like to attach that ambition to the ambition of the Global Shield.  So, thank you very much.  Thank you, Chair.

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