Towards a Rights-Based Economy - how did the Summit of the Future stack up?

The Pact recognizes the need for International Financial Institutions (IFI) governance reform (Action 48) to strengthen developing countries’ voices and representation in global economic decision-making. The important role of developing countries in norm-setting and global economic governance is also emphasized (Action 48). However, the language used is notably cautious, “encouraging” the IMF board to take further steps to improve representation, or “urging” the World Bank and other MDBs to do the same (Action 48). Despite this, the action aligns with calls for more equitable global economic governance, and the commitment could be leveraged to help advocate for against long-standing institutional power imbalances.

Action 53 commits to develop measures of progress that go beyond GDP, opening the door to more comprehensive assessments of debt and development that better reflect human rights and sustainable development goals. This represents a significant shift from the narrow GDP fixation criticized by UN Special Rapporteur on Extreme Poverty and Human Rights, Olivier De Schutter. The Pact proposes a two-step process: an independent expert group to develop recommendations, followed by a UN-led intergovernmental process to consider them. This hard-won step provides a critical foundation for integrating human rights and the long-neglected issue of care into economic and financing processes. However, it emerges within a system still guided by neo-liberal principles. To leverage this opening effectively, civil society and progressive member states must promote the inclusion of human rights, care, environmental sustainability and social wellbeing metrics into these new indicators, and be vigilant to ensure these measures are not sidelined by conventional economic measures.

Action 50 acknowledges the need to reform existing IFA processes to prevent debt crises, facilitate debt restructuring and debt relief, and “when appropriate” take into account evolving trends in the global debt landscape. It invites the IMF, in collaboration with the UN Secretary-General, World Bank, the G20 and major bilateral creditors and debtors, to conduct a review on ways to strengthen and improve the existing sovereign debt architecture, “building on existing processes”. This proposal differs from earlier iterations of the Pact which originally tasked the UN Secretary-General with the job. The IMF’s leadership in this review poses risks. It may not effectively challenge structural inequities within the international financial institutions or be sufficiently ambitious in rethinking debt restructuring mechanisms. There's also a risk of prioritizing debt repayment over human rights obligations and climate responsibilities, which has been the trend in the last six decades. The review mechanism's silence on private creditors is another concern, given their growing role in sovereign lending and potential to complicate debt restructuring efforts. Notwithstanding these concerns, Action 50 opens the door to questioning the status quo. Debtors and concerned Member States have stipulated avenues through which they will be able to contribute - debtors through the review process directly, and Member States through a reporting back mechanism - creating a critical advocacy opportunity. Advocates should leverage this opportunity by continuing to articulate the clear connection between debt and human rights, and push for the integration of Action 53 (beyond GDP) with Action 50 (IMF review). This approach could help to embed a more comprehensive, rights-based understanding of debt sustainability within critical IFA reforms. In relation to credit rating agencies, the evolution of the Pact's provisions reveals a concerning trend towards less ambitious commitments. These agencies significantly influence countries' borrowing costs through their ratings. Lower ratings lead to higher interest rates on sovereign debt, forcing governments to divert resources from crucial social spending to debt servicing. The threat of downgrades can also discourage progressive fiscal policies and necessary public investments. Early drafts called for concrete actions, such as agreeing on measures to enhance developing countries' access to credit and improve credit ratings' contribution to achieving the SDGs. However, the final text merely "takes note" of existing efforts and requests updates to Member States (Action 50(c)). The shift risks maintaining the status quo - without concrete commitments, there is little incentive for these agencies to reconsider their practices. Despite this, the commitment to keeping Member States informed establishes a formal mechanism for continued dialogue and scrutiny, which should be seen as an opportunity. Advocates should also push for the IMF review (Action 50) to directly consider the issue.

The Pact calls for “concrete political steps to mobilize significant financing” (paragraph 10) to close the SDG financing gap (Action 4). In terms of immediate measures, it calls for scaling up development assistance commitments - including taking “further measures” to strengthen the effectiveness of development assistance in line with existing targets (Action 4). Action 49 also focuses on increasing the availability of funding, particularly through multilateral development banks (MDBs). While this approach can provide quick injections of capital, it fails to address underlying structural issues associated with MDBs in their current form. Structurally, the Pact links IFA reform with failing capital flows for developing countries (Action 49). While it doesn’t assign responsibility for this failure, the connection opens avenues for targeted advocacy. The Pact also connects taxation to the need to increase domestic resource mobilization as a mechanism for financing sustainable development. Action 4(i) commits to “strengthening the inclusiveness and effectiveness of tax cooperation at the United Nations”, and engaging constructively in the process towards developing a UN framework convention on international tax cooperation (UNTC). The Terms of Reference (ToRs) for the UNTC were recently adopted at the UN in August 2024, marking a crucial step toward a more equitable global tax system. The Pact’s explicit mention of this process strengthens its legitimacy and importance on the international stage. Importantly, the UNTC ToRs includes a hard-fought provision aligning efforts with states’ obligations under international human rights law. This TOR provision could be leveraged to strengthen the human rights considerations in implementing the Pact’s tax-related commitments, and vice versa. The Pact also makes a strong commitment to combating illicit financial flows (Action 4(h)), and calls for “exploring options” for international cooperation on the taxation of high net-worth individuals (or ‘super rich’) “in appropriate fora” (Action 4(j)). While the language particularly around taxing wealth may be somewhat weak, its mere inclusion signifies a victory, opening the door for more concrete actions in the future, and acknowledging the growing global concern on wealth inequality. One concern is the Pact’s emphasis on catalyzing private sector investment for sustainable development (Action 4(k)), raising concern about potential deregulation and tax exemptions that could harm economic and social rights. Advocates should push for a holistic interpretation of Action 4, linking private investment (4(k)) with commitments to international tax cooperation (4(i)) and combating tax avoidance (4(h)). The Pact's lack of focus on private actors' responsibilities and state regulation of these actors is also concerning. Without proper safeguards, this reliance on private sector financing could exacerbate inequalities.

The Pact reaffirms existing commitments to women's empowerment and the elimination of discrimination and violence against women and girls (Action 8). However, the language remains largely declaratory, and lacks specific targets or concrete mechanisms for implementation. Some progress is evident in calls for gender diversity in IFA institutions (Action 48) and UN leadership roles (Actions 45), offering potential leverage points to push for broader gender representation. Advocates should be wary of language related to implementing “family-oriented policies” (Action 34), which could pose a risk for gender equality through possibly reinforcing traditional gender and family roles, rather a more progressive language based on sexual and reproductive rights.

The Pact recognizes gender equality as essential for sustainable development (Par 15) and calls for attention to gender equality in various aspects of development. It commits to "urgently remove all legal, social and economic barriers to achieve gender equality" (Action 8b), and to give women “equal rights to economic resources, as well as access to ownership and control over land and other forms of property, financial services, inheritance, natural resources, and appropriate new technology" (Action 8e). While it does not provide detailed strategies for implementation, these commitments offer a foundation for advocates to push for more comprehensive gender-responsive economic policies. The Pact also emphasizes the need to "significantly increase investments to close the gender gap" (Action 8d), which could be leveraged to argue for targeted economic interventions.

The Pact includes recognition of the care economy (Action 34(d)), calling for the dismantling of inequalities in this sector. It also calls for an increase in investments to address the care and support economy, and the need to strengthen support for institutions relating to gender equality (Action 8(d)). While this falls short of CSO demands to explicitly recognize, reduce and redistribute unpaid care work, it provides a baseline acknowledgement of the issue, and a foundation for future advocacy through leveraging intersections with other associated Pact actions. Advocates should continue pushing for the recognition, redistribution and rewarding of care work and for care to be a key element of the beyond GDP agenda.

A significant oversight in the Pact is its failure to explicitly address intersectionality of gender with other factors to create unique situations of economic and social inequality. Advocates should consider how different provisions could be read together to infer an intersectional lens. For example, the call for gender balance in leadership roles (Action 50) could be tied to the commitment to strengthen the voice of developing countries in global economic governance (Action 48) to advocate for diverse representation that includes women from the Global South in key decision-making positions.

The Pact recognizes the urgent need to address climate change through financial measures, committing to accelerating IFA reform to improve access to climate finance for developing countries (Action 52). While the Pact’s failure to bring the loss and damage fund into the fold is a glaring omission, the commitments to promoting climate-resilient debt clauses represents an opportunity for developing countries grappling with the dual challenges of debt and climate vulnerability. For example, these clauses could allow a country hit by a severe hurricane to temporarily suspend debt payments, freeing up resources for immediate disaster response and recovery. These mechanisms could allow for more adaptive financial strategies, helping nations manage their debt burdens during climate-related crises. However, their effectiveness hinges on the willingness of lenders to adopt these clauses, and is also limited in terms of longer-term mitigation strategies. To be genuinely transformative, these provisions must be accompanied by more comprehensive robust IFA reforms that enhance the bargaining power of debtor nations in negotiations, embed such clauses in holistic debt restructuring frameworks, and provide for preventative climate action.

The Pact’s emphasis on differentiated impacts and responsibilities (par 11; Action 9) suggests a potential pathway for negotiating climate financing arrangements that honor the principle of common but differentiated responsibilities (CBDR). The principle acknowledges that those who have contributed most to climate change bear a greater responsibility to assist those who are disproportionately affected by its consequences.

While the Pact calls for "accelerating [climate] action in this critical decade," it also "calls on Parties to contribute to global efforts" (former iterations read “accelerate”) in a "nationally determined manner," potentially allowing for varied levels of commitment (Action 9). The Pact includes more specific and comprehensive climate goals than previous versions, such as tripling renewable energy capacity and accelerating efforts towards phasing down unabated coal power. However, the lack of a clear commitment to fossil fuel phase-out mirrors recent debates at COP28, where civil society organizations pushed hard for stronger "phase out" language for fossil fuels rather than the more ambiguous "phase down" terminology that ultimately prevailed. While the Pact includes some specific climate goals, history suggests caution in celebrating these commitments prematurely. The Pact's commitments, while promising, must be viewed through this lens of past shortfalls and the urgent need for timely, substantial action.