Global governance

According to the Global Challenges Foundation, action to reform global institutions has reached a stalemate. This is draining the legitimacy of agenda setters like the UN, WTO, IMF, UNFCCC, G-20, and their power to influence world events is declining. Decentralisation of power to cities, regions, businesses and social media communities has further weakened the standing of the world’s foremost global institutions. Yet many organisations and individuals still expect them to solve the world’s most pressing issues, including international conflicts, climate change and resource scarcity.

 

This expectation is beginning to fade though. While many businesses, governments and civil society actors still rely on the IMF and UN to effect change on pressing global issues, their confidence that these institutions will actually be able to meet their targets is low. They have seen how attempts to cooperate to address global risks have been impeded by weak or inadequate global institutions, agreements or networks, or undermined by competing national and political interests.

 

As a result, many organisations no longer rely on global governance mechanisms to deliver solutions to global problems or administer military and emergency humanitarian aid. Instead they are forming strategic coalitions, and seeking opportunities for solving global problems themselves.1

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Current trajectory

  • 86% of respondents to the Survey on the Global Agenda agree that we have a leadership crisis in governance in the world today. [i] Overall trust in government has experienced a decline from 52% in 2011 to 44% respectively in 2014. 1
  • Many experts believe the G8 Forum has failed to properly reflect the views of emerging economies like India, Brazil, China, South Korea, and Mexico, some of which have now surpassed G8 members in terms of GDP. 2
  • The failure of the Doha round (the latest round of trade negotiations among the WTO membership) has triggered an expansion of regional and bilateral trade agreements over the past decade. 3
  • Although the outcomes from the UNFCCC process have disappointed many observers, unilateral and bilateral action has made significant progress on issues such as soot. President Obama has ordered the US Environmental Protection Agency (EPA) to regulate GHGs from power plants. While China is slowly adopting a leadership position at COP21 (the United Nations Climate Change Conference that will be held in Paris in 2015), and its 13th five-year plan may include an absolute emissions cap, a cap on coal use and tighter regulation of air pollution. 4
 

Implications

  • Global institutions have insufficient resources to address catastrophic environmental and humanitarian issues, and no single institution can solve complex global problems. As such there is now a risk that individual countries and/or regions will respond to issues like the global financial crisis in an uncoordinated and therefore ineffective manner, introducing capital controls, trade barriers and relying solely on neighbouring countries for support – actions that global institutions were set up to prevent. Uncoordinated responses could also escalate global and regional conflicts, reviving old animosities and potentially worsening the economic fallout from the global financial crisis. 1
  • Weak and incoherent global policy can also hinder long-term planning – particularly in terms of sustainability goals. The onus to take action is therefore shifting to businesses themselves, leading to increased collaboration and business leadership. 2

 

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