Deutsches Institut für Entwicklungspolitik / Briefing Paper

Since the first meeting of the G20 at the leaders’ level in Washington in November 2008, trade has been an integral part of their agenda. This first meeting took place at the peak of the global financial and economic crisis, which led to a strong contraction of world trade. Remembering the global economic crisis after 1929 and the following wave of protectionist measures, the G20 countries made the commitment to not erect new trade and investment barriers. In addition, the verbal commitment to the conclusion of the Doha Development Agenda – the current round of multilateral negotiations under the auspices of the World Trade Organization (WTO) – has been part of the standard repertoire of G20 summit declarations.
Yet, since the last ministerial meeting of the WTO in Nairobi in December 2015, the future of the Doha Round is more uncertain than ever before. Important member states, notably the United States, declared themselves in favour of terminating the Doha Round, whereas many emerging and developing countries insist on its continuation.
Dissatisfied with the slow progress of the Doha Round, the major trading powers – first of all the United States and the European Union (EU) – are increasingly focussing on negotiating bilateral or regional trade agreements. Agreements such as the Trans-Pacific Partnership (TPP), which was signed on 4 February 2016 by the United States, Japan and 10 other Pacific countries, and the Transatlantic Trade and Investment Partnership (TTIP), which is currently under negotiation between the United States and the EU, cover large shares of global trade and investment flows and aim at regulating issues that go beyond the elimination of tariffs, such as investment, standards and the environment.
At the same time, the main trading powers are promoting so-called plurilateral agreements that focus on specific topics. The most prominent example is the Trade in Services Agreement (TiSA), which is negotiated outside the WTO. We argue that the role of the WTO as the central organisation for the governance of world trade is weakened by this wave of mega-regional and plurilateral trade deals.
Until now, reforms of the world trading system have only played a subordinate role at the G20 summits. The summit declarations contain only vaguely drafted commitments to strengthen the multilateral trading system, or commitments that bilateral, regional and plurilateral trade agreements should be complementary and in conformity with the rules of the WTO.
We argue that the G20 should assume a more proactive role with regard to the future of the WTO and the reform of the world trading system. Such a reform is needed in light of the growing fragmentation of the system. At the same time, the 2030 Agenda for Sustainable Development of the United Nations calls for sustainability to be the core principle of global cooperation, including in the context of international trade. Among other things, the 2030 Agenda calls for “a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the World Trade Organization”. Bridging the gap between the realities of the international trading system and the aspirations of the 2030 Agenda is a formidable challenge that cannot be tackled effectively either in the context of the WTO or the UN and the 2030 Agenda alone. The G20 is a suitable forum to bridge that gap.

Eight years after its formation at the leaders’ level, the Group of 20 (G20) has consolidated its status as the power centre of global economic governance. The informal club of 19 nation-states plus the European Union has set itself ambitious goals. They want to lead the global economy towards “strong, sustainable and balanced growth”. Opinions on the success and the broader implications of the G20 diverge widely in global conversations (Bradford & Lim, 2011). Critical voices point to the fundamental lack of legitimacy for the self-selected group of global powers. Other sceptics call into question the effectiveness of the G20 in balancing national interests and managing the world economy. In a more positive assessment, the G20 is given credit for moderating trade conflicts and averting currency wars. Sympathisers also acknowledge the G20’s role in nudging the global system towards a post-Western constellation by integrating large (re-)emerging economies beyond the Organisation for Economic Co-operation and Development (OECD).
Clearly, the G20 is not mandated, nor does it operate under the guidance of the United Nations (UN), the universal body of ultimate legitimacy. Looking at the G20 from the perspective of effective global governance, the big question to ask is: Do member states see their group as a concert of great powers or are they ready to act as guardians of global well-being? The latter would imply that the G20 anchors its entire work in three transformational documents adopted by world leaders last year at the UN: the 2030 Agenda for Sustainable Development, the Addis Ababa Action Agenda and the Paris Climate Agreement.
The G20 at the leaders’ level has come about in response to the severe financial disorder of 2008. It adopted the membership formula of the G20 of finance ministers, which was set up by governments from all parts of the world in 1999 with a similar intent of crisis management (regarding the Asian financial crisis of that time). The 19 member countries plus the European Union represent a diverse cosmos of old and new economic powerhouses, selected more on the economic exigencies of the outgoing 20th century than on the basis of criteria that would reflect representativeness and the preparedness to live up to international responsibilities. While Europe is strongly represented, other regions lack adequate inclusion. From Sub-Sahara Africa, only South Africa was selected, and Saudi Arabia is the sole member from the Arab world (Fues & Wolff, 2010).
The strengths, as well as weaknesses, of the G20 lie in its informality and flexibility. The group has no legal status, no charter and no permanent secretariat. It is driven by annual summits, which are hosted by yearly rotating presidencies. Two parallel tracks – under the guidance of sherpas and finance ministers, respectively – structure the process (see Box 1). Over time, the G20 has established a myriad of working groups and work streams, such as on infrastructure, development, employment and trade. As a result, the overall coherence of the G20 architecture leaves much to be desired (Dubey, 2015). The workload of attending to an ever-increasing number of policy fields stretches the capacities of most national bureaucracies to the limit.

“Our struggle for global sustainability will be lost or won in cities.” With these words Ban Ki-moon, Secretary-General of the United Nations, opened the High-Level Delegation of Mayors and Regional Authorities in New York City on 23 April 2012.
A little more than three years later, at the United Nations (UN) Summit in 2015, the 2030 Agenda for Sustainable Development was adopted. In the Agenda, 17 Sustainable Development Goals (SDGs) define the key areas and mech-anisms for a future global development partnership. One of these goals (SDG 11: “Make cities and human settlements inclusive, safe, resilient and sustainable”) distinctly alludes to urban development. The urban community has widely celebrated the adoption of this “stand-alone urban goal”. The step is perceived as reflecting an increased awareness of the important role of cities for global development pathways.
Although sharing in this positive assessment, this briefing paper ar¬gues that for an effective follow-up to Agenda 2030, issues of urban and local governance ought to be addressed in further detail and as cross-cutting issues. This applies to the “urban” SDG 11, which does not have a distinct target on (good) governance. It is also true for the “governance” goal, SDG 16, which, while referring to institutions “at all levels”, does not spell out local or urban responsibilities. And it is pertinent for many sectoral goals, such as SDGs 13 (action towards climate change) and 9 (build resilient infrastructure), both of which strongly hinge on local- or city-level implementation.
Against this background, the briefing paper identifies urban governance issues that are presently neglected in the SDGs and require further elaboration. This may occur in the process of the supplementary methodological work envisaged by the Inter-Agency and Expert Group on Sustainable Development Goal Indicators for the coming months (UN Economic and Social Council, 2016, p. 9).
Even more importantly, the task of concretising the urban governance dimension – and thereby easing SDG implementa-tion – must also be related to other global policy processes and events. Notably the New Urban Agenda (NUA), which is to be formulated at the 2016 World Conference on Housing and Sustainable Urban Development (Habitat III) in Quito, Ecuador, from 17–20 October 2016, can be considered a key vehicle in this regard.
Following are three decisive urban governance dimensions to be focussed on in the NUA:

1. Urban governance frameworks: Since urban governance is exercised at different governmental levels, defining the roles and responsibilities of – and coordination between – these levels is essential. Decisive elements are national urban policies among other institutional frameworks; multi-level and -sectoral cooperation and coordination mechanisms; and formal and informal linkages beyond city borders.
2. Intra-urban partnerships: Effective partnerships and co¬oper¬ative practices between local authorities, the private sector and civil society constitute the backbone of good urban governance. In particular, mechanisms and space for the participation of disadvantaged groups in collaboration and decision-making processes must be defined and the related capacities built.

Transformative urban governance: In order to effectively confront global challenges in the sense of truly transformative development, key elements of climate-friendly governance at the city level must be defined, relating to both mitigation and adaptation measures.

By 2022, two billion people will be living in informal settlements according to the United Nations. Although per capita energy consumption in informal settlements is comparatively low, the benefits of energy efficiency uptake – enhanced energy system sustainability, economic development, social development, environmental sustainability, and increased prosperity (International Energy Agency [IEA], 2014) – stand to equally benefit these communities. Yet despite these benefits, informal settlement households – as so many others – have been slow in taking up energy-efficient technologies. This can be partly attributed to behavioural barriers: Consumers often do not invest in energy efficiency in an economically rational manner. Recent research findings point to effective means of implementing behavioural insights for energy efficiency in informal settlements. Building upon this precedence, governments, international organisations and implementing agencies should en¬courage the application of potentially low-cost behavioural insights to energy efficiency initiatives in informal settlements to improve intervention efficacy. It is easy for energy efficiency to be lost in the challenging demands of daily life in informal settlements – sourcing water, managing irregular employment opportunities, or basic health and safety concerns, compounded by risk aversion and the discounting of future-based benefits. This is why it is essential to integrate behavioural insights to facilitate energy-efficiency uptake. This may be done, for example, by making information on energy efficiency simple and meaningful, by focussing on context-specific benefits, by bringing the economic benefit of uptake closer to the consumer while spacing the cost over time, or by appealing to social norms.
While most evidence on the importance of behavioural insights for energy efficiency stems from the OECD member country context, the topic is equally relevant in the developing country informal settlement context. Here, the cost-benefit analysis of energy efficiency is further complicated by the fact that many households informally consume electricity without paying for it or by paying a flat rate. This presumably removes the traditional pecuniary motivation – electrical bill savings – upon which to influence energy-efficiency implementation. What entry points then exist for energy-efficient products which invariably have a higher upfront purchase cost when there are – prima facie – no financial benefits to be realised? The higher durability of energy-efficient products in the context of the instable electricity supply occurring in many developing countries could be an obscured benefit. It accrues not just at the societal level but also at the individual level, further building the economic case for energy-efficiency uptake.

The European Union (EU) is in crisis mode. Its capacity to implement domestic reforms and its position as a global power are being severely undermined by centrifugal forces within Europe and the risk that the EU will disintegrate. Euroscepticism and populism abound; the reactions to the refugee crisis suggest that solidarity among member states is weak; the Euro crisis has exacerbated social tensions and economic power disparities throughout the continent; while persistent environmental problems such as the ongoing loss of biodiversity have no easy solutions.
Europe is in dire need of a new and positive narrative for its future development that resonates with European citizens and presents Europe as a constructive force for sustainable domestic and global development.
This is even more urgent in light of the increasingly blurred boundaries between domestic and external agendas. Europe’s sustainable development cannot be promoted nor its own interests protected in isolation from the EU’s response to the aspirations of emerging and developing countries and global public goods challenges. The refugee and migration crisis as well as the terrorist attacks in Paris show that the lack of sustainable development and peace in other parts of the world also threaten Europe at home. Moreover, because of the size of its market and its economy, Europe’s domestic development pathway considerably impacts both its external legitimacy and sustainable development in third countries, for better or worse.
The 2030 Agenda for Sustainable Development with its 17 Sustainable Development Goals (SDGs) puts the interdependence of domestic and external policy-making center stage. The 2030 Agenda is an action plan for people, planet, peace and prosperity that reflects core European values and interests: It is crucial for Europe and the rest of the world.
Given the scope and universal nature of the 2030 Agenda, its implementation requires a new quality of cooperation with greater inter-departmental work and whole-of-government approaches that encompass all dimensions of EU internal and external policies.
Linking the core ongoing European strategy processes – including the EU Global Strategy on Foreign and Security Policy (the EU Global Strategy) and the revision of the Europe 2020 Strategy (the New Approach beyond 2020) – to the 2030 Agenda can help to create more coherent policies. This could also address frictions and trade-offs between individual policy fields. Progress on the SDGs in Europe and abroad will foster the success of both domestic and foreign policies.
We recommend that

• EU heads of state and government jointly commit to implementing the 2030 Agenda across internal and external fields of action ahead of the UN High-level Political Forum on Sustainable Development scheduled for July 2016,
• the New Approach beyond 2020 and the EU Global Strategy should serve as umbrella documents for domestic and external  implementation of the 2030 Agenda, linking both dimensions under the leadership of Vice-Presidents Timmermans and Mogherini.

In view of the currently increasing demands and expecta¬tions of Europe, the question arises as to how the EU can perform its role as a global actor better and more effectively. The dramatic escalation of events in Europe’s Neighbourhood and the subsequent refugee crisis in numerous member states (MS) clearly illustrate that a rethink of EU foreign and development policy is re¬quired. The EU was one of the most heavily engaged parties during the negotiations leading to the 2030 Agenda for Sustainable Development and in 2016 will need to address the challenge of implementing this agen¬da both within and outside Europe.
In June 2015 EU High Representative for Foreign Affairs Mogherini launched a process of consultation aimed at establishing an EU Global Strategy by early summer 2016 that all member states can agree on. A value-based and sustainable development policy that also takes account of the Sustainable Development Goals (SDGs) should occu¬py a key position in such a strategy. The European Con¬sensus on Development Policy can no longer exist as an isolated document, but should instead be linked to other strategies of EU foreign policy. Building upon the premise that European development cooperation will assume an appropriate role in the Global Strategy and in a reformed 'Europe 2030 Strategy', the Commission and European External Action Service (EEAS) have begun thinking about a possible reform of the European Consensus on Develop¬ment. On 28 January 2016 Development Commissioner Neven Mimica informed the European Parliament (EP) that preparations for this have been underway since the informal Council of Ministers meeting of December 2015.
The above context calls for a comprehensive review and reform of the European Consensus on Development (hereafter: the Consensus). This briefing paper looks into the past role and contributions of the Consensus in European development cooperation policy and operations and assesses the central challenges and opportunities for revising the Consensus and ensuring its continuing relevance. The improvement of coordination and coopera¬tion between humanitarian, development and neig¬hbour¬hood policy could indicate new paths and approaches in this regard. Four recommendations for reforming the consensus are derived from this analysis:

1. Utilising the reform momentum for a rethink of the Consensus and the forthcoming negotiation on the future cooperation between the EU and the African, Caribbean and Pacific Group.
2. Adoption of a holistic and sustainable security concept acknowledging the central importance of sustainable development in both Consensus and Global Strategy.
3. Synergies through the closer integration of policy areas within as well as between MS and EU in the coordi¬nation of humanitarian aid and development policy.
4. Definition of priorities for future cooperation with middle-income countries (MICs) and emerging powers.

Many governments worldwide make use of unofficial armed groups. This practice substantially increases the risks for civilians, as the activities of such pro-government militias (PGMs) are usually accompanied by a higher level of human rights violations, including killings, torture and disappearances. Examples are the Shia militias in Iraq, the Shabiha militia in Syria and the Imbonerakure in Burundi.
Better knowledge about these groups is essential, given the extreme suffering, violence and instability they are linked to. This briefing paper shows that PGMs exist not only in failed states, poor countries or those engulfed in civil war and armed conflict. They can also be found in more or less democratic governments and are most common in semi-democracies.
Governments outsource security tasks to irregular forces because they provide efficiency gains when leaders perceive themselves to be under threat in an uncertain environment. PGMs are attractive to governments because they are cheaper, more flexible and often better informed than regular forces. They complicate lines of accountability for the violence committed, and therefore lower the political costs for governments when there is a controversial use of violence. These aspects make PGMs particularly attractive to governments that intend to use violence against a domestic opponent but fear national and international repercussions for excessive human rights violations. Although these groups make conflict more feasible financially and are perceived to lower political costs, they may bring – sometimes unintended – consequences, such as increased suffering and violence for civilians, as well as greater instability and crime in the medium- and long term.
The risks that PGMs bring for peace, security and stability can only be reduced if the international community knows how governments delegate security tasks and holds governments responsible for the violence that their various state and non-state agents commit.

• The international community needs to pay attention to unintended consequences when promoting democracy. When incentivised to limit repression, governments in target countries might distance themselves from the violence rather than seek to reduce it.

• Aid decisions should be informed by a thorough assessment of the security sector, which should include regular as well as irregular forces.

• Governments are responsible for protecting the lives of their citizens. If civilians are targeted by militias, a government has failed in this task and should therefore be held accountable for such violence.

Non-economic loss and damage (NELD) has emerged as a new concept in the negotiations under the United Nations Framework Convention on Climate Change (UNFCCC). It refers to the negative impacts of climate change that are difficult to measure or quantify. The value of NELD cannot easily be expressed in monetary terms, which has left them mostly neglected in climate-risk and cost estimates. As a result, although NELD are vital to those affected, they often go unnoticed by the outside world.
A focus on NELD invites engagement with the normative dimensions of the loss-and-damage debate: Whose losses and damages count and how are they counted? What losses are the global community willing to accept as a result of unmitigated climate change? At the same time, the practical aspects of NELD need to be considered: What tools and instruments are available to avoid NELD? What are appropriate ways to react to NELD that prove to be unavoidable or that have already occurred?
Instances of NELD are highly diverse. Relevant insights can be gained from a range of academic disciplines, including economics, human geography and environmental psychology. Still, few studies explicitly address NELD. Currently, 10 meta-categories of NELD can be identified: Human Life, Meaningful Places, Cultural Artefacts, Biodiversity, Ecosystem Services, Communal Sites, Production Sites, Intrinsic Values, Identity and Agency.
The diversity of NELD can be better understood through a focus on their main characteristics: context-dependence and incommensurability of value. Both attributes pose challenges to policy-making. Context-dependence is particularly problematic in an international setting in which actors will likely need to rely on universal standards for the recognition of losses.
Incommensurability means that values cannot be ex-pressed through the use of a common unit. This renders monetary assessments as a means of valuation problematic. Monetisation may provide useful information for cost-benefit analyses of mitigation or adaptation scenarios, but it is less insightful in terms of how to avoid NELD or respond to them once they have occurred. Such conceptual clarity is key for the integration of available knowledge and the identification of effective approaches to NELD.
In order to avoid NELD at the national level, they need to be included in risk- and vulnerability assessments. Assessments need to include negative side-effects of mitigation and adaptation and be conducted in a decentralised and participatory manner. Efforts should be made to share findings with the wider public, nationally and inter-nationally.
Addressing NELD at the international level should rely on agreed assessment rules for the recognition of NELD rather than a static set of items. The universality of standards needed for an international framework would thus shift from indicators to a process-based scheme of assessment rules under the UNFCCC. These should inform measures that avoid as well as those that react to NELD.
The emergence of NELD in the context of the UNFCCC provides an excellent opportunity to raise awareness of an oft-ignored dimension of climate impacts. An orchestrated integration of research findings from a broad range of disciplines is needed to provide a solid evidence-base for designing just and effective approaches to address NELD.

Europe has been discussing how to deal with the arrival of hundreds of thousands of refugees from the Middle East, Africa and other parts of the world for months now. However, one frequently overlooked aspect is the fact that just a small percentage of the world's approximately 60 million forcibly displaced people actually come to Europe – the number of asylum applications across the entire European Union between 2008 and September 2015 totalled around 3.5 million. Turkey, Pakistan, Lebanon and Iran are each accommodating over one million refugees, thus probably more than the European Union to date.
All in all, the number of people forced to leave their homes has never been as high as it was in 2015. Flight is a reaction to threats to people's physical or psychological integrity. The causes of flight include wars, political repression, terrorism, food shortages and natural disasters. What can development policy, including humanitarian aid, do in order to combat these root causes?
In the short term, attempts should be made to create or maintain so-called 'stability cores' – locations in which those who are fleeing receive physical stability and essential material resources (water, food, education, health care services). These spaces may be created in the countries of origin themselves or in host countries in the region. In the process, it is crucial to involve administrative structures within the host countries from the outset, and also to ensure that the host population benefits from the aid provided.
In the medium term, the refugees should be prepared effectively, either for their return to their countries of origin, or for their integration within the host country. Whatever happens, economic, social and legal prospects must be created for them, in order to avoid apathy and despair – a breeding ground for frustration and violence. At present, larger amounts, increased reliability and longer-term perspectives in terms of funding for humanitarian and transitional aid are urgently required.
Above all, development policy can attenuate the causes of flight preventively, with long-term effects. It is vital to ensure that no other countries, such as Egypt, Pakistan or Nigeria, are plunged into crises (civil war, political repression, etc.), with the result that the number of refugees increases considerably once more. Prerequisites for this are efforts relating not only to the short-term, but also to the long-term stabilisation of these countries. This pre-supposes not only politically, socio-economically and ecologically sustainable development, but also requires the involvement of large sections of the population in political decision-making processes. Only then can a social and political equilibrium between competing interests within society be achieved. In future, the primacy of short-term political stability via the support of authoritarian governments at the expense of political legitimacy and participation should no longer be accepted. Development policy is equipped with tools designed to promote inclusive social change and the balance of political forces without significantly expanding the financial scope of authoritarian regimes. As a result, crisis prevention and peace promotion must become important focuses of development policy once more. Experiences with 'multidimensional peace-keeping' in post-conflict countries show that concerted international commitment with multilateral leadership is the way forward, even in very challenging circumstances.

The 2030 Agenda, with its 17 Sustainable Development Goals, adds new urgency to the reform of the UN Development System (UNDS). If we wish the UNDS to play a decisive role in sustainable development, it must be made fit for purpose. UN member states have recognized the need for action. In December 2014, they launched a state dialogue in the Economic and Social Council (ECOSOC) in order to discuss the longer-term positioning of the UNDS and present concrete reform proposals by mid-2016. To date, no breakthrough has been achieved. Participating states are opting for incremental reforms within existing mandates and structures, which are unlikely to bring the necessary changes.
The general restraint on tackling ambitious reforms stands in contrast to the current comparatively favourable context for repositioning the UNDS. The 2030 Agenda, adopted successfully last September at the greatest ever UN summit so far, requires a revamp of the UNDS so that it can effectively and efficiently assist member states in implementing both their own and collective development interests. The increased awareness of global problems associated with globalisation and climate change has led to calls to give the UNDS better global problem-solving capacities. Additionally, it is by no means only OECD states that are deploring the fragmentation and incoherence of the UNDS.
The second phase of the ECOSOC Dialogue now provides an opportunity to take the necessary steps towards an ambitious UNDS reform. Emphasis should be placed on a more comprehensive reform package. The present paper proposes a federal structure for the UNDS, based on two elements: (1) a strengthening of the central, system-wide governance capacity, while (2) largely maintaining the subsidiary independence of the UN agencies.
Significant elements of a federally structured UNDS are as follows:

• Reinforcement of the ECOSOC as a forum for the intergovernmental, system-wide governance of the UNDS, and creation of a corresponding administrative entity of equal weight ("Development Commission");

• Expansion of existing system-wide funding mechanisms based on voluntary contributions, and the introduction of a new component of assessed contributions;

• Retention of the far-reaching subsidiary independence of the funds, programmes and specialised agencies, but on the basis of a review of their mandates;

• Reform of governance structures, including a geographically fair distribution of seats and the representation of various stakeholder groups.

Although these reforms are ambitious, they may well meet with political acceptance from a large majority of states. It is now time to overcome the formation of rival North and South camps, and to focus on common interests via an open, inclusive and constructive dialogue.

On 25 September 2015 the 2030 agenda for sustainable development was passed at the summit of the United Nations in New York. This agenda sees the Sustainable Development Goals (SDGs) replace the Millennium Development Goals (MDGs), which draw to a close in 2015. The new agenda follows a universal approach and will apply to developing, emerging and developed countries alike. It should also form the basis for a changed global partnership. The 17 Sustainable Development Goals link the principle of sustainability with economic, environmental and social development.
Financing plays a key role in the realisation of the objectives. In addition to trade, technology, the strengthening of local capacities and coherent international co-operation, financing is of paramount importance. Shortly before the passing of the 2030 agenda the financing of sustainable development was also discussed intensively within the scope of the 3rd UN Conference on Financing for Development. One of the goals of the Addis Ababa conference was to safeguard and improve the financing of sustainable development, particularly in developing countries. The necessary basis for this is a stable financial system, as a regional or global financial crisis could endanger the new development agenda. The final document places its priorities on the intensification of domestic resource mobilisation, the reliable disbursement of the funds for development co-operation and on tapping new resources of financing for developing countries. However, it does not address the role of financial stability in sufficient depth.
The choice of financing sources and instruments has a decisive influence on the stability of the financial system. During the global economic and financial crisis there was also a close interrelation between the financing structure and the effects of the crisis on the real sector. With the implementation of the 2030 agenda for sustainable development the question is raised as to whether the use of supplementary and new sources of financing fundamentally alters the financial structure in emerging and developing countries and what effects on financial stability are to be anticipated. This depends primarily on the financing conditions of a country. Secondly, the structure of the financial system plays a role because the size and breadth of the financial system and the role of cross-border financing determine the ability of the financial system to withstand systemic shocks. Thirdly, financing in order to achieve specific sustainable development goals can lead to new systemic risks. Its specific risk and financing profile makes the energy sector an example of this.
The risks to financial stability always need to be taken into account in the financing of investments in order to achieve the new sustainable development goals. On the one hand, the emerging and developing countries need to improve on managing financial complexity. On the other hand, more stringent international financial market regulation and more intensive co-ordination are required. This would enable the risks to financial stability to be contained and not used as an excuse for postponing investment in sustainable development.

The impacts of global warming threaten to undermine the core objectives of sustainable development: Large-scale invest¬ments that aim to reduce greenhouse gases (GHG) are indispensable. A just low-carbon transformation requires that mitigation investments seek to generate sustainable develop¬ment (SD) benefits while also minimizing their adverse effects.
A central goal of the United Nations Framework Convention on Climate Change (UNFCCC) is alignment of the climate and the sustainable development agendas. Govern¬ance and operational structures of policy instruments and funds should attempt to prevent local communities being confronted with the impacts of both climate change and climate protection measures.
Ongoing negotiations of the rules governing post-2020 climate protection measures offer the opportunity to address these issues. This briefing paper begins by analysing how activities under the Clean Develop¬ment Mechanism (CDM) both positively and negatively impact sustainable develop¬ment.
It then compares these experiences with emerging climate governance approaches by examining the Warsaw Frame¬work for Reducing Emissions from Deforestation and Forest Degradation (REDD+) and the Green Climate Fund (GCF).
Key conclusions:

• Activities under the CDM have both positively and nega¬tively affected sustainable development, depending on the type and local circumstances: Community-based activities regarding energy access reap high benefits for sustainable development and large-scale hydropower and reforesta¬tion projects can create negative impacts.

• The CDM requires stakeholders to be consulted at the beginning of the project design but does not include international safeguards to prevent ongoing activities harming local communities.

• More recent financing instruments and investment frame¬works such as the GCF and REDD+ have begun to formu¬late additional regulatory frameworks to promote sustain¬able development and avoid harmful side effects. While these frameworks still must be tested in practice, the GCF stipulates verification of sustainable develop¬ment impact and mechanisms for independent redress.

• The future of a reformed CDM for financing climate protection and sustainable development depends on political decisions. However, the CDM offers critical in¬sights for designing a new generation of multilateral cli¬mate finance mechanisms. Post-2020 mechanisms should create strong and harmonized standards to help align the sustainable development agenda with climate protection.

While sustainable development and climate goals can be mutually reinforcing, there may be trade-offs between these agendas. Future climate finance mechan¬isms should minimize trade-offs and allow for appeals by vulnerable communities affected by investments in climate protection.

The United Nations (UN) climate summit (COP 21) in Paris is the most important opportunity for years to come to organise effective collective action at the international level to stabilise global warming at 1.5 degrees Celsius (°C), or at least limit it to a maximum of 2°C; facilitate the transition towards a zero-carbon economy; and mobilise significant financial resources to adapt to climate change, particularly in the most vulnerable countries. The European Union (EU) is in a unique position to contribute decisively to these ends.
With its climate pledge from March 2015, the EU has made explicit what it considers to be a fair offer, in terms of reducing greenhouse gas emissions. However, to further an ambitious and fair deal, the EU should be prepared to offer even more in the key negotiating fora, especially regarding adaptation and finance.
With the negotiations towards COP 21 in full swing and the EU’s negotiation mandate fixed, however, the real work will begin after Paris. Five building blocks will be of particular importance to demonstrate European leader-ship: (1) mitigation, (2) adaptation, including the issue of loss and damage (L&D), (3) climate finance, (4) a framework for non-state climate actions and (5) the building of ambitious alliances.
1. Mitigation: The Intended Nationally Determined Contribution (INDC) of the EU and its member states represents an important step in the right direction, but it is not ambitious enough to really make the EU a climate leader. The INDC target of 40 per cent emission reductions by 2030 is based on a scenario of 80 per cent decarbonisation by 2050. This puts the EU at the lower end of its long-term goal of 80–95 per cent by mid-century. Attaining the 40 per cent target by 2030 does not necessarily enable the EU to reach a goal of 80 per cent by 2050, even if it were on track to reach its 40 per cent target in 2030 – which it is not.
2. Adaptation and L&D: The international community has waited too long and acted too weakly to fully avoid dangerous climate change, meaning more vulnerable countries and populations will be increasingly affected by severe impacts of climate change. Action on adaptation as well as L&D is therefore crucial for COP 21 and beyond, and the EU should be seen as treating these issues with the same priority and urgency as mitigation.
3. Climate finance: Climate finance is the most straight-forward way to demonstrate an international commitment to fight climate change and its impacts. To demonstrate resolve and credibility, the EU’s contributions for mitigation and adaptation will need to be made in addition to its conventional development finance.
4. A framework for non-state climate actions: The EU has been a frontrunner in promoting greater engagement of non-state and subnational actors in global climate policy. It should thus support a long-term action agenda and policy framework to facilitate and galvanise bottom-up climate actions.
5. Ambitious alliances: Since 2011, the EU has made considerable efforts to revitalise its external climate action and related diplomacy. Paris will be a vantage point to capitalise on new opportunities.

The Briefing Paper series “Financing Global Development” analyses key financial and non-financial means of implementation for the new Sustainable Development Goals (SDGs) and discusses the building blocks of a new framework for development finance.

Financing social service delivery is becoming more and more challenging. At the same time, private assets are increasingly seeking out investment opportunities. Some high-net-worth individuals and foundations are accepting lower returns as long as pressing societal objectives can be achieved. This presents an opportunity to mobilise more private capital for social investments. The so-called impact investors can play a promising role in financing social and environmental service delivery in G7 countries as well as in the developing world. Impact investing is intended to finance projects, organisations and social enterprises to intentionally create a measurable social or environmental impact alongside financial returns. One innovative instrument is the so-called social impact bond (SIB) – or, in the case of development cooperation, development impact bond (DIB) – through which private investors pre-finance the intervention, and governments or donors provide funding solely when the intended outcome goes beyond what would have occurred otherwise.
Advocates of impact investing see SIBs and DIBs as useful instruments for the financing of the 2030 agenda. However, they are still largely unproven; even though some promising interim evaluations exist, this innovative  
financing approach faces a number of challenges. Besides questionable or outstanding evaluations, the most important challenges are: limited transferability, the nascent development of the market, high transaction costs and the hurdles for investors. Nevertheless, given the urgency to mobilise finance for sustainable development in developed and developing countries, it is worth considering and prudently developing impact bonds further, and more generally impact investing. Supporting them would entail:

• Data- and information-sharing have to be furthered by the impact investing community in order to critically evaluate first experiences of pilot SIBs and DIBs, provide recommendations and enable basic education for entrepreneurs and investors.
• Further research should be encouraged to get a better understanding of how to create additional impact and to deploy different instruments in the development context as well as to offer exit opportunities for private investors.
• Policy-makers should support the development of clearer definitions and a common impact-measurement system as well as standardised and mandatory reporting requirements to ensure effectiveness and quality.
• Development finance institutions should become more active in the market by providing resources to encourage the implementation of SIBs and DIBs. Governments and/or donors need experienced partners who provide catalytic capital for first initiatives and serve as intermediaries.

Mitigating climate change and limiting global warming to no more than 2°C require a fast and radical transformation of politics, the economy and society. Worldwide emissions of greenhouse gases need to fall to zero by 2100. Action needs to be even faster in the case of carbon dioxide (CO2), which is primarily released in the burning of fossil fuels. According to the Intergovernmental Panel on Climate Change (IPCC), global CO2 emissions need to reach zero by 2070 at the latest. In other words, the global economy needs to be completely "decarbonised" by then. The sustainable development goals (SDGs) of Agenda 2030 underscore the significance of this task.
The decarbonisation of our economic activity is dependent not only on the international climate regime, but also the regulatory framework for the world economy, i.e. global economic governance.
In addition to progress made in the context of the UN Framework Convention on Climate Change (UNFCCC) and the fundamental acknowledgment of all states of the need to tackle climate change in the scope of Agenda 2030 there are currently numerous initiatives that give cause for optimism – not least the commitment of the G7 states to the decarbonisation of the global economy and manifold climate actions of actors such as cities, churches and companies.
However, further reaching reforms of global economic framework conditions are necessary if a fundamental transformation is to be achieved. We therefore propose 3x3 starting points: 3 areas of action, each with 3 key aspects.    Of particular importance for the decarbonisation of the global economy are (A) adequate pricing, (B) a suitable body of regulations for international trade and investment and (C) the appropriate configuration of the financial markets. (A)    To achieve correct pricing it is necessary to (i) introduce a global carbon price, (ii) continue to remove subsidies for fossil fuels, and (iii) extend the system of payments for ecosystem services. (B)    A suitable regulatory framework for international trade and investment includes (i) climate-friendly multilateral trade rules under the aegis of the World Trade Organization (WTO), (ii) the promotion of plurilateral agreements for the liberalisation of environmental goods and services and (iii) increased focus on the right to regulate in terms of environmental aspects in bilateral and regional trade and investment agreements. (C)    In addition to the establishment of global funds such as the Green Climate Fund (GCF), the area of global financial governance has three starting points in particular: (i) regulation of financial markets, (ii) green guidelines for investment decisions and (iii) guarantee instruments for green investments. For all reform measures there is a need to identify potential win-win constellations that offer co-benefits to as many participants as possible. In addition, attention should also be paid to trade-offs and political economy. This includes the question of which actors are in favour of the necessary measures, which resist them and why and how coalitions of change can be formed and reinforced.

The trend for military putsches continued in 2015, with no end yet in sight. After the unsuccessful attempt in Burundi, the military in Burkina Faso once more seized power, albeit for a short duration. Putsches remain a widespread means of precipitating a change in government. Although the absolute global figure has decreased, Coups d'Etat remain particularly common in West Africa. Of 69 changes in government in the region between 1990 and 2014, 33 were elicited via elections and 18 via military putsches.
International actors usually react to military putsches with two standard responses. Firstly, they demand that the putschists cede power to a civilian government. The African Union (AU) and the Economic Community of West African States (ECOWAS) are just two organisations which have formally declared, in legally binding documents, that a junta regime may not remain in power and that the next government must be appointed via elections. Secondly, several states and organisations including the USA and the AU have decided to impose sanctions automatically.
This double response, consisting in the goal formulation of the swiftest possible transition to a civilian government and sanctions, creates a good basis for international actors to promote sustainable democratic structures. If democracy promotion is to be effective, however, three questions must be answered prior to any attempts in this area:

• What is the military's attitude towards democratic order? In the event that the putsch is an attempt to destabilise democratic order (as was recently the case in Burkina Faso), a hard-line policy against the putschists is appropriate. However, if the military is overthrowing an autocratic leadership, it may well prove a useful partner.
• What are the most pressing problems within the country's political system? International actors may be well advised to focus on military withdrawal in the event that a civilian government constitutes a sine qua non for democracy. However, this alone is not sufficient. Coups d'Etat are frequently an expression of deep-set structural problems. As a result, international actors should broaden their focus and address the root causes of the putsch. It may be expedient to combine steps towards reconciliation between political parties and security sector or judicial reforms with the demand for a civilian government.
• Which actions are appropriate in order to achieve these more broadly defined objectives? The suspension of cooperation may be a suitable means to penalise junta regimes. However, these measures should be complemented by other strategies. Restricting action to sanctions constricts scope for action unnecessarily. Military force, positive and negative, material and immaterial incentives as well as long-term persuasion efforts can, under specific conditions, complement traditional sanctions. The ultimate degree of success enjoyed by such measures depends heavily on the level of consensus reached by international actors and their legitimacy in the eyes of the addressees.

One strand of current conflict research claims that military victories are beneficial for peace. It is argued that these outcomes produce more unified post-conflict societies, thereby facilitating reconstruction and economic development. The implication of this view is that, instead of encouraging negotiated settlements, international actors should either support one side to victory or allow a conflict to run its course. This briefing paper argues that the case for “peace by victory” is weaker than supporters claim. The most successful conflict resolutions address their root causes and involve a broad range of stakeholders. A quick glance at all civil war terminations since 1946 seems to suggest that military victories are slightly more stabilizing than other outcomes. Rough comparisons, however, are insufficient for drawing conclusions or offering policy advice. A full review of the context and content of peacebuilding reveals a very different picture.

• Focusing only on military victories and peace agreements ignores the most common outcome of civil strife: an ongoing contest between belligerents, albeit with a limited use of force.
• On average, the civil wars that ended with peace agreements lasted eight times longer than those that were terminated through a military victory. Indeed, a one-sided victory almost only occurs when fighting is counted in days or months rather than years. This indicates that protracted conflicts are unlikely to end if allowed to run their course and that negotiations are the only way to end a long-running war.
• Differences in conflict duration mean that the challenges for reconstruction are substantially greater after negotiated settlements than after military victories. International actors seeking to contribute to the rebuilding that follows peace agreements are faced with societies with more victims and divisions, and greater physical destruction.
• Regardless of how a conflict ended, the most important factor for post-conflict stability is the orderly demobilization of former fighters. After a war, it is also imperative for the underlying grievances to be addressed through non-violent policies such as offering the vanquished side the opportunity to form a political party and/or share power in the government.

Long-term success in conflict management calls for dismantling troop mobilization structures as well as those used for repression. This includes ensuring that both the army and militias return to the barracks and come under official civilian control. External actors can best contribute by helping to create outlets where grievances can be aired and addressed peaceably. Although it is very important to reduce violence quickly, armed belligerents must not be seen as the sole representatives of conflicting views. The following recommendations can be drawn from this paper: – Talks about the issues are the only realistic outcome of a protracted conflict.
– Conflict negotiations should not only involve the violent parties but also other non-violent, legitimate stakeholders. 
– While peace negotiations must be held in a central location, local efforts to promote intra-societal trust also need to be initiated and supported. Many potential peace-process spoilers are less concerned with the terms of a national agreement than with their immediate local security.

One strand of current conflict research claims that military victories are beneficial for peace. It is argued that these outcomes produce more unified post-conflict societies, thereby facilitating reconstruction and economic development. The implication of this view is that, instead of encouraging negotiated settlements, international actors should either support one side to victory or allow a conflict to run its course. This briefing paper argues that the case for “peace by victory” is weaker than supporters claim. The most successful conflict resolutions address their root causes and involve a broad range of stakeholders. A quick glance at all civil war terminations since 1946 seems to suggest that military victories are slightly more stabilizing than other outcomes. Rough comparisons, however, are insufficient for drawing conclusions or offering policy advice. A full review of the context and content of peacebuilding reveals a very different picture.

• Focusing only on military victories and peace agreements ignores the most common outcome of civil strife: an ongoing contest between belligerents, albeit with a limited use of force.
• On average, the civil wars that ended with peace agreements lasted eight times longer than those that were terminated through a military victory. Indeed, a one-sided victory almost only occurs when fighting is counted in days or months rather than years. This indicates that protracted conflicts are unlikely to end if allowed to run their course and that negotiations are the only way to end a long-running war.
• Differences in conflict duration mean that the challenges for reconstruction are substantially greater after negotiated settlements than after military victories. International actors seeking to contribute to the rebuilding that follows peace agreements are faced with societies with more victims and divisions, and greater physical destruction.
• Regardless of how a conflict ended, the most important factor for post-conflict stability is the orderly demobilization of former fighters. After a war, it is also imperative for the underlying grievances to be addressed through non-violent policies such as offering the vanquished side the opportunity to form a political party and/or share power in the government.

Long-term success in conflict management calls for dismantling troop mobilization structures as well as those used for repression. This includes ensuring that both the army and militias return to the barracks and come under official civilian control. External actors can best contribute by helping to create outlets where grievances can be aired and addressed peaceably. Although it is very important to reduce violence quickly, armed belligerents must not be seen as the sole representatives of conflicting views. The following recommendations can be drawn from this paper: – Talks about the issues are the only realistic outcome of a protracted conflict.
– Conflict negotiations should not only involve the violent parties but also other non-violent, legitimate stakeholders. 
– While peace negotiations must be held in a central location, local efforts to promote intra-societal trust also need to be initiated and supported. Many potential peace-process spoilers are less concerned with the terms of a national agreement than with their immediate local security.

Global challenges such as climate change or the dismantling of protectionism can only be countered through enhanced forms of global co-operation. Traditional multilateral co-operation has come up against limits in recent years. For example, efforts to achieve an international climate treaty have taken many years, with this now set to be signed at the end of 2015 in the scope of the United Nations Framework Convention on Climate Change (UNFCCC). At the World Trade Organization (WTO) the negotiation of the Doha Development Agenda has been extremely slow for many years. To lend new impetus to international trade and climate politics it is necessary to discuss innovative forms of co-operation, such as in the form of minilateral or plurilateral initiatives, in other words "sub-groups of multilateral actors".

In the global trading system many countries have reacted to the stuttering progress of the multilateral process by concluding bilateral and regional treaties outside of the WTO. In particular, the negotiation of ever-larger mega-regional treaties such as the Transatlantic Trade and Investment Partnership (TTIP) and the Transpacific Partnership (TPP) mark a turning point in the global trade system. The content of these treaties frequently extends beyond agreements in the multilateral context. Minilateral alliances in international trade politics are frequently viewed critically. They are regarded as second-best options – or no good solution at all – compared to multilateral agreements, as they may lead to detrimental effects on countries that are not part of the negotiations, as well as tying-up capacity and reducing incentives for the conclusion of the Doha Round. To the extent that demand exists for minilateral negotiations, these should therefore take place in the scope of the WTO. This requires the reaching of a compromise in the WTO that enables more efficient negotiations whilst at the same time supporting an inclusive, multilateral trading system. Consequently, it should be discussed whether and under which conditions plurilateral treaties should be accorded more scope within the WTO.

Pioneer alliances offer great potential for international climate policy, particularly where they also include sub-national and non-governmental actors. However, the same applies for climate politics as with trade politics: minilateral pioneer alliances should augment the multilateral process, not replace it, even supporting it in the ideal scenario. Although numerous international climate initiatives have already been formed, they tend to generate merely marginal rather than transformative changes. The basis for a transformative pioneer alliance could be, for example, the "Renewables Club" formed by Germany in 2013 along with nine other countries. In order for this club to become a transformative pioneer alliance it needs to first fulfil a number of key conditions: the members need to agree on a joint, ambitious vision and corresponding objectives; they need to concur on how to create additional benefits for all members; and they should support transformative strategies for climate protection and climate resilience in other parts of the world. In addition, it should also be ensured that minilateral alliances do not undermine multilateral forums, but instead complement them. After the COP21 it is necessary to discuss how pioneer alliances can be utilised to support ambitious climate policies and also the effective implementation of the agreements reached in Paris, e.g. by strengthening the ratchet-up mechanism.

In September 2015, the United Nations (UN) adopted a new global development framework, the “2030 Agenda for Sustainable Development”, which includes the Sustainable Development Goals (SDGs). The SDGs thereby replace the Millennium Development Goals (MDGs), which were supposed to be realized by the end of 2015.
What is the role of global economic governance in the 2030 Agenda, and specifically in the SDGs?
The MDGs failed to adequately address issues of global economic governance. MDG 8, which was intended to develop a global partnership for development by 2015, did not create a more effective and fairer framework to enable countries to promote human development within the global economy. What is more, since the MDGs were adopted, broader economic globalization, with more interdependence between countries and shifting economic dynamisms, has changed the world economy.
The past two decades have witnessed the quadrupling of global trade and a tenfold increase in South-South trade. In the same period, emerging economies’ share in global foreign direct investment (FDI) increased from just 5 per cent to over 30 per cent. Similarly, financial flows have not just swollen during the past two decades, they have also switched direction, with financial surpluses from emerging economies flowing ‘uphill’ in order to cover current account deficits in advanced countries. In a decade’s time, inter-national cooperation has been transformed from the dichotomy of the ‘rich North’/‘poor South’ to new forms of international economic cooperation created by new actors.
In light of these new circumstances, the SDGs should place more emphasis on global economic governance issues – some of which are not at all or only inadequately addressed.
Whilst the 2030 Agenda for Sustainable Development does more to address global economic governance issues, it exhibits significant lacks.
Key global economic challenges remain inadequately addressed:

• Greater adjustments to the international trading system are needed to ensure that trade and foreign investment support sustainable development. More must be done to increase developing countries’ access to global value chains, reduce their trade costs and reform the multilateral trading system, especially against the background of ‘mega-regional’ trade agreements.
• The rules and institutions of global finance must be reformed to guarantee greater financial stability and improve global cooperation with respect to the fight against illicit financial flows and transfers. The global financial safety net and the global debt governance system remain incomplete.