The G7 at a Crossroads: Advancing multilateralism, climate, environment, and energy action in an uncertain world

Why the G7 Matters

This June, Group of Seven (G7) leaders will convene in Kananaskis, Alberta, at a pivotal moment, with geopolitical fragmentation, rising protectionism, and diverging domestic priorities challenging the body’s cohesion. Established in the 1970s to coordinate responses to global economic shocks, the G7—comprising Canada, France, Germany, Italy, Japan, the United Kingdom, the United States, and the European Union—has since evolved into an informal forum for addressing shared global challenges, including climate change, nature loss, and energy security. Collectively, G7 members represent approximately 30% of global GDP, a substantial yet declining share, and hold significant influence across international institutions.

Early signals suggest this year’s Presidency may fall short on climate ambition, reflecting deeper divisions within the G7. Political shifts, economic pressures, and diverging national priorities are making consensus harder to reach. These internal dynamics risk further weakening follow-through on past commitments. Most G7 countries are off track to meet key climate commitments made in earlier Summits, just as the urgency for coordinated action grows. According to the World Economic Forum 2025 Global Risks Report, disinformation and polarization are eroding public trust, making coordinated global action increasingly difficult. 

Canada’s Presidency: An opportunity for leadership and cooperation in troubled times

Canada’s G7 Presidency began amid considerable political upheaval, both globally and at home. Former Prime Minister Justin Trudeau resigned and was succeeded by Prime Minister Mark Carney. The U.S. administration ramped up pressure with tariffs targeting all G7 economies and sovereignty threats to Canada. These moves have further strained G7 relations at a time when global alliances are already under pressure.

Economic uncertainty is rising across the globe, marked by inflation, high debt burdens, and persistent supply chain disruptions. Climate ambition is waning in some countries, even as climate impacts such as human-caused natural disasters, droughts, and food insecurity continue hurting communities and economies. The biodiversity crisis is already disrupting agriculture, fisheries, and tourism in many countries, undermining food security and livelihoods, such as in Canada, where biodiversity loss is affecting pollinators critical to crops and threatening fish stocks vital to coastal communities.

Against this backdrop, and on its 50th anniversary, Canada’s 2025 Presidency presents a critical test of the G7’s credibility.While prospects for full consensus on climate and environmental ambition are very limited, the G7 has positioned itself as leading on critical global issues. To remain a relevant and trusted forum, it must find a way to continue to lead on climate resilience, action, biodiversity, and clean energy as drivers of economic prosperity and energy security. If unanimous consensus cannot be reached, the Canadian Presidency should pursue coordinated action through smaller groupings and/or optional issue-specific statements that uphold the G7’s long standing commitments.The imperative is clear: political stability, economic strength, and bold environmental and climate action are deeply interconnected and mutually reinforcing.

What We Know so Far

The Canadian Presidency has held two Ministerial Summits in advance of the Leaders’ Summit: The Foreign Ministers’ Summit, on March 12-14 in Charlevoix, Quebec pre-election, and the Finance Ministers and Central Bank Governors Summit held May 20-22 in Banff, Alberta, which occurred in the early days of Canada’s new government. The Finance Communique was the first since 2019 that did not include a set of climate and energy transition commitments. To demonstrate leadership, uphold its commitments during past summits, and compete in the global race to net-zero, the G7, led by the Canadian Presidency, will need to drive bolder results on climate, sustainable development, and the environment during both the June Leaders’ Summit and the not-yet-announced Environment and Energy Ministerial.

Read IISD’s reaction to the Finance Ministerial on our Inside the G7 webpage.

High-Level Timeline of G7 Environment and Sustainability Efforts

• 1975: France, Germany, Italy, France, the US, and the UK form the G6 to react to economic shocks.
• 1976: Canada joins the G7.
• 1979: First mention of environmental concerns in the Tokyo Leaders’ Declaration.
• 1985: Commitment to cooperate with developing countries on environmental concerns, including ozone layer protection, “polluter pays” principles on toxic chemicals management in the Bonn Economic Declaration towards Sustained Growth and Higher Employment.
• 1992: Mention of debt conversions for environmental protection as a debt relief effort in the Leaders’ Communique. 
• 2005: Launch of the Gleneagles Plan of Action on Climate Change, Clean Energy and Sustainable Development, with a focus on energy use, climate change, fighting illegal logging, and clean energy.  
• 2009: First commitment to reduce fossil fuel subsidies in the Responsible Leadership for a Sustainable Future Leaders’ Declaration.
• 2016: G7 set a deadline to eliminate inefficient fossil fuel subsidies by 2025 in the G7 Ise-Shima Leaders’ Declaration.
• 2018: Launch of the Charlevoix Blueprint for Healthy Oceans, Seas and Resilient Coastal Communities and the G7 Innovation Challenge to Address Marine Plastic Litter.
• 2021: Creation of the G7 2030 Nature Compact in which G7 leaders commit to “halt and reverse biodiversity loss by 2030”;  in the Carbis Bay G7 Summit Communiqué: a commitment to transition away from unabated coal; the Launch of the G7 Industrial Decarbonization Agenda aiming to decarbonize heavy industry.  
• 2022: Leaders create the Climate Club to carry out commitments made in the Paris Agreement; Support and recognition of the Just Energy Transition Partnerships in the G7 Chairs’ Summary: Joining Forces to Accelerate Clean and Just Transition towards Climate Neutrality.
• 2023: Leaders’ commitment to contribute to the first global stocktake (GST) in line with mitigation and adaptation efforts needed to keep 1.5°C alive; Establishment of the G7 Clean Energy Economy Action Plan; action steps to respond to the food security crisis in the Hiroshima Action Statement for Resilient Global Food Security.
• 2024: Establishment of the G7 Water Coalition to address the water crisis and integrate water management into global processes; launching the Apulia Food Systems Initiative to address global food insecurity.

Energy Security

Since the launch of the Rome G7 Energy Initiative for Energy Security in 2014, G7 discussions have emphasized energy security as a foundation of both economic and environmental sustainability, built on the pillars of diversification, transparency, competitiveness, efficiency, resilience, and emissions reduction.

Energy security must not be used as a justification for fossil fuel expansion, but as a reason to accelerate the clean energy transition. Investing in liquefied natural gas (LNG) is often wrongly framed as a climate and energy security solution despite its high lifecycle emissions and exposure to price volatility. Instead, public funding can support diversification into clean and price-stable renewable energy, rather than fossil fuel subsidies that can undermine energy security by encouraging wasteful consumption and locking in reliance on energy sources that are price-volatile, polluting, and depend on continuous supply from often geopolitically risky regions.

Recommendations

• Implement the global stocktake (GST): The global stocktake, or GST, is a process under the Paris Agreement that assesses collective progress toward limiting global warming to 1.5°C and identifies gaps in national efforts. G7 countries must adopt nationally specific targets to contribute to global goals: doubling the rate of energy efficiency improvement, tripling renewable energy capacity, and transitioning away from fossil fuels. By implementing the GST, as the G7 committed to in 2023, member countries can accelerate the shift to stable, affordable energy systems that attract investment, lower costs for households and businesses, and reduce reliance on volatile fossil fuel markets.
• Deliver on fossil fuel subsidy reform pledges. In 2023, G7 countries spent USD 282 billion on fossil fuel subsidies despite rising national debts. These public funds would be better spent on clean energy innovation, lowering household costs, and strengthening energy independence. Subsidies distort markets, expose budgets to oil price shocks, and mainly benefit wealthier households. Redirecting even part of this spending could close the clean energy investment gap and deliver targeted support. Despite repeated pledges to eliminate “inefficient fossil fuel subsidies” by 2025, progress is stalled. The G7 must act: develop national phaseout plans ahead of the energy and environment ministerial and drop the vague “inefficient” qualifier. Reform is essential for credible energy security and economic resilience.
• Aligning financial flows with the clean energy transition means ending direct international public financing for fossil fuels, which G7 leaders committed to doing in 2022, 2023, and 2024 Leaders’ Communiques. Canada, France, Germany, Italy, and the United Kingdom have already done so, while the United States and Japan have not. Doing so would reduce risk, attract private capital, and help prevent stranded assets.
• Retire outdated investment treaties and their investor-state dispute settlement (ISDS) clauses that let foreign firms sue governments over legitimate climate or public-interest measures. ISDS deters bold action toward low-carbon, resilient economies and fails to promote sustainable investment. Phasing it out and relying on domestic or regional courts would free governments to act and give investors clearer, more predictable rules. The G7 can lead by jointly stripping ISDS from existing treaties and replacing obsolete pacts with modern agreements that advance sustainable, fair growth without affecting cases already under way. Doing so would strengthen energy security by allowing governments to invest confidently in clean, stable energy systems without fear of legal retaliation from fossil fuel interests.

When the G7 invests in clean technology and policies, it drives down costs, accelerates innovation, and improves energy reliability and sovereignty by reducing exposure to volatile fossil fuel markets and concentrated supply chains, while supporting global partners through shared innovation and open markets.

Economic Prosperity, Trade, and Supply Chains

At a time when many countries and corporations are prioritizing domestic manufacturing, green industrial policy, and job creation, the G7 must lead by example: aligning industrial strategies with their previous commitments, enabling open and secure supply chains, deepening partnerships with developing economies, and advancing a just transition.

Recommendations

• Deepen coordination on industrial decarbonization. The long-term competitiveness of critical industrial sectors, such as steel, aluminum, chemicals and cement, demands investment in breakthrough low-carbon technologies and processes. The G7 should build on their commitment to advance decarbonization efforts through the facilitation, promotion and support of their industrial sectors’ efforts to invest in innovative clean technologies by:
  • removing restrictive trade barriers through interoperability of standards for low-carbon goods;
  • promoting scaling production of needed inputs such as low-carbon electricity and hydrogen;
  • ensuring skilled workers are available and making a strong business case through high standard public procurement;
  • exploring ways to prevent their investment from being undercut by high-emitting foreign production
• To reduce overdependence and improve resilience, the G7 should strengthen cooperation with trusted partners across the value chain, including leveraging the Minerals Security Partnership to support co-investment, infrastructure, and technical collaboration, especially with mineral rich developing economies. Canada and others can lead by advancing transparent, equitable frameworks that promote local value, strengthen governance, and uphold strong ESG and labour standards, including respect for Indigenous rights, building on the G7 Leaders’ Commitment pertaining to ESG in 2023. This approach should support open and rules-based trade,  strengthen supply chains, support shared economic opportunity and advance a stable net zero transition.
• Scale just transition initiatives that deliver real community benefits. Governments need to recognize that responses to energy and economic transitions must be people-centric, embedding just transition plans in industrial policy with clear support for retraining, job matching, and social protection in partnership with unions, workers and communities. Internationally, the G7 should increase financial and political backing for Just Energy Transition Partnerships (JETPs) and other initiatives that prioritize community participation and local employment, as they committed to doing in 2022.

By working together on these fronts, G7 countries can reduce friction in global trade and help businesses scale across markets. But it’s also important that these efforts are not just inward-looking. Policies and subsidies should be designed to include and benefit emerging and developing economies too so the clean economy grows in a fair and globally inclusive way.

Protect Natural Systems to Strengthen Resilience

Biodiversity loss, freshwater stress, and the degradation of critical ecosystems pose direct risks to the G7. With half of global GDP dependent on nature, economies, food and energy systems, livelihoods and supply chains are increasingly vulnerable to climate change, pollution, land use change, invasive species and unsustainable resource use. These disruptions carry geopolitical, economic and fiscal consequences that are growing in scale and frequency.

This agenda is not new. The G7 has repeatedly recognized the need to reverse biodiversity loss and scale up adaptation, including through the 2024 Environment Ministers’ Communique, the 2023 Hiroshima Summit, and the development of the G7 Water Coalition. What is needed now is delivery.

As Canada hosts this year’s Summit in a region recently affected by extreme wildfires, its leadership on nature, water, and resilience will be closely watched.

Recommendations

• In line with 2024 G7 commitments, strengthen global and domestic efforts to address extreme wildfires in both G7 countries and the Global South through improved land use planning, resilient building codes, and public education. Wildfires are already threatening lives, ecosystems, and economies, and require coordinated, sustained action that recognizes that climate change will increase this threat.
• G7 countries party to the Kunming Montreal Global Biodiversity Framework (KMGBF) reaffirm their commitment to adopt and begin implementing ambitious National Biodiversity Strategies and Action Plans (NBSAPs). These plans should include clear targets for habitat protection, sustainable land use, and species recovery, while prioritizing Indigenous-led conservation, including through the establishment of Indigenous Protected and Conserved Areas.
• Aligned with their 2021 commitment, advance nature-based solutions to build resilience, including water smart approaches such as restoring wetlands, forests, coastal, marine ecosystems, and promoting efficient water use aligned with natural water flows.
• Strengthen National Adaptation Plans (NAP) and implementation finance, reaffirming G7 commitments of regular NAP updates and support developing countries in translating plans into action.
• Integrate water security into climate resilience strategies, by embedding water management into national climate plans, investing in sustainable infrastructure especially for critical water services, and scaling ecosystem-based watershed management. The G7 should expand the Water Coalition with clear and measurable targets linking water availability to food systems and climate adaptation.
• Restore freshwater ecosystems and tackle pollution, including by phasing out harmful substances such as PFAS, “forever chemicals” found in drinking water, soil, and food due to their prevalence in household products and manufacturing facilities. The G7 should, as they’ve committed to doing in the past, address emerging contaminants and harmonize water quality monitoring processes.
• Use climate adaptation as a peacebuilding tool, recognizing the role of climate and environmental stressors in driving fragility, and support the alignment of adaptation plans with peacebuilding agendas, thus supporting partner governments, titleholders, and local actors in addressing nature-related drivers of conflict, including through increased adaptation finance and capacity support.

These actions not only reduce disaster risks and long-term fiscal liabilities, but also build the foundation for sustainable economic growth and stability. Additionally, they offer a visible path for G7 countries to demonstrate principled, practical leadership in the face of rising global risk.

Reinforcing a Commitment to Multilateralism

The G7 must strengthen effective multilateralism through inclusive cooperation that reflects the diverse needs of all countries. It has a key role in rebuilding trust in global institutions, promoting fair burden sharing, and ensuring decision-making includes low- and middle-income countries. This means advancing institutional reform, upholding global rules, deepening partnerships, and setting norms on the climate and biodiversity crises. The G7 can either retreat into short-term interests or lead with ambition and solidarity by delivering on past commitments. A credible response to global challenges requires aligning climate and economic goals, mobilizing finance at scale, and reinforcing the multilateral system.

Canada can help the G7 lead. Prime Minister Mark Carney has pledged to revitalize Canada’s global leadership on multilateralism. Canada must ensure the G7, either unanimously or in subsets, drives progress on climate, nature, clean energy, inclusive trade, and institutional reform to deliver global stability and a people-centered energy transition.