6.3.9 Global strategies: Redesigning global rules

When Cyclone Pam struck Vanuatu in March 2015, winds of more than 250 kilometres an hour tore through the islands, destroying homes, schools, and roads. Tens of thousands were left without shelter or clean water. The damage equaled more than 60 percent of the country’s gross domestic product (GDP).

Even before the storm, Vanuatu had debts that limited public spending. Afterward, aid arrived slowly and often as new loans, so the country still had to repay debts while trying to rebuild.

Vanuatu’s leaders told the world this was unjust. They called for debt cancellation and faster climate finance payments, arguing that those least responsible for global warming are paying the highest price. Their message was clear: the rules of global finance must change to support justice and resilience.

Rules shape who controls the direction, purpose and relationships of global finance. These rules are made through international treaties, trade deals, tax agreements, and the policies of international institutions such as the International Monetary Fund (IMF), World Bank and the World Trade Organization (WTO). These institutions were created to promote stability and economic growth. But wealthy countries and investors have always had disproportionate power to shape the rules the institutions create, or block rules they don’t like. These institutions and their histories are explored further in Topic 7: International Exchanges.

This power imbalance means that poorer countries often face restrictions on how they can spend or invest in healthcare, education, or clean energy. The global rules of finance also make countries more vulnerable to global shocks. Reforms are needed to share risks more fairly and direct finance toward long-term wellbeing. 

Every year, huge amounts of money leave countries through illegal or hidden financial flows such as tax avoidance through loopholes, hidden accounts in tax havens, and multinational companies shifting profits to low-tax countries. According to the Tax Justice Network, around one-third of multinational company profits are shifted to tax havens each year, costing states hundreds of billions of dollars in lost tax revenue and reducing funds for public goods like schools, hospitals, and transport.  The global tax rules (or lack of them) that make this possible have been shaped by and for high-income countries, often through international institutions where lower-income countries have limited influence.  Figure 2 shows the countries most responsible for this injustice. This is particularly harmful for low-income countries that need the money the most.

To fix this, reformers are calling for global rules that make taxation fairer and more transparent:

• a global minimum tax on corporate profits to prevent a race to the bottom on tax rates (Section S.9),

• automatic sharing of tax data between countries to uncover hidden wealth,

• ending profit-shifting by taxing multinational corporations where they actually produce and do business, 

• public registers showing who owns companies and properties, and

• equal participation for all countries in global tax decision-making, which has long been dominated by high-income nations through the Organization for Economic Cooperation and Development (OECD).

Progress is slow because some of the countries that benefit most from the current system,  including the United States, the United Kingdom, the Netherlands, Luxembourg, Switzerland, and Singapore, have resisted or weakened global reforms such as the proposed minimum corporate tax. Real change will depend on public pressure and international cooperation to make global tax justice a foundation for regenerative economies.

Countries like Vanuatu, Pakistan, and Mozambique have lost lives and livelihoods to floods, cyclones, and droughts. Yet most greenhouse gas emissions come from wealthy countries and large companies. Many states and campaigners therefore call for climate justice.

One part of climate justice is loss-and-damage finance, money to help countries recover from disasters they did not cause. The Fund for Responding to Loss and Damage, created in 2022 under the United Nations, was meant to provide this support. But progress has been slow. By 2025, countries had pledged less than US $1 billion in total (Figure 3), far below the hundreds of billions that developing nations estimate they need each year to cope with climate impacts. The fund still relies on voluntary contributions, so poorer countries cannot depend on it when disasters strike. Many are calling for predictable, automatic finance linked to historical responsibility for emissions.

Another, broader idea is ecological debt. This means that countries that grew wealthy through centuries of extraction, colonisation, and heavy use of fossil fuels owe a debt to those whose lands, peoples, and ecosystems were exploited or polluted in the process. It includes unpaid costs from mining, deforestation, resource trade, and slavery that shaped today’s global inequalities.

Some campaigners call for reparations to address this deeper historical injustice. Reparations could take many forms: cancelling unfair debts, restoring damaged ecosystems, or transferring resources and technologies to support sustainable development. While a few states have begun to discuss these ideas, most current pledges, such as contributions to the Loss and Damage Fund, are far too low to repay ecological debt. Movements such as the Loss and Damage Collaboration, Climate Action Network, and Global Campaign to Demand Climate Justice continue to press for more just global rules that recognise the full ecological debt owed to vulnerable nations and communities.

Trade and investment treaties set the rules for how goods, services, and money move across borders. These agreements can promote cooperation and help countries access what they need, but many have been written in ways that give greater power to large companies than to states.

Trade rules usually aim to reduce trade barriers so that trade between countries moves more freely. But laws that protect workers, communities, or nature can sometimes be treated as trade barriers, and challenged by other countries. The World Trade Organization (WTO) allows some exceptions for blocking trade for health or environmental protection, but these are narrow and often disputed. For example, in 1989 the European Union banned beef treated with growth hormones to protect consumer health, but the United States and Canada challenged the ban through the World Trade Organization (WTO). Almost ten years later, after a lengthy and expensive battle, the WTO ruled that the EU’s ban counted as a barrier to trade because it was not based on international food-safety standards. Europe chose to keep the ban, which was supported by its population, it had to accept trade penalties in return. 

The case shows how rules designed to promote ‘free trade’ can be used to question or punish state policies meant to protect people and nature, especially harming countries with less global power. In general, free trade agreements can make it harder for states to:

• support local industries or farmers,

• give public contracts to local businesses

• ban harmful products like plastic waste or toxic chemicals, 

• regulate artificial intelligence and digital platforms; or

• protect public services such as water, energy, or healthcare.

Meanwhile, many experts point out that the World Trade Organization (WTO) already allows countries to defend health and environmental measures, but the exceptions are narrow and difficult to use. Because of this, many states and campaigners want to rewrite WTO trade rules to make sure climate protection and human rights always take priority.

A regenerative approach to trade and investment would place people and planet before profit. It would protect each country’s right to strengthen its communities, restore ecosystems, and meet climate goals while still cooperating globally.

To conclude, climate-vulnerable countries and international organisations are pressing for new global rules that distribute power more evenly, share risk, and allow all nations to invest in regeneration. Many economists argue that global finance must shift from managing crises after they happen to building systems with rules and relationships that prevent crises and serve collective wellbeing.

Concept: Systems,  regeneration

Skills: Thinking skills (transfer)

Time: 30 minutes

Type: Individual, pairs, and/or group

Note: Here is a link to a worksheet for this activity

Every global rule for tax, trade, debt, or climate finance affects how money, power, and care flow between countries. In this activity, you will look closely at one or more examples of new global rules or reforms from this section and determine why they might be considered regenerative.

• The Global Financial System - a ca. 3 minute video by Financial Justice Ireland explaining the role of global institutions and rules in financial injustice. Difficulty level: easy

• Keynote at UN HL debate on debt sustainability and economic equality for all -  In this 12min speech PM Motley of Barbados makes a powerful case for ending the inequitable impacts of the current international finance and debt regime. Difficulty level: medium

• What is tax justice? - the website of Financial Justice Ireland that explains what tax justice is and the strategies we need to make our tax systems more equitable. Difficulty level: easy

• Tax Justice Network Country Profiles - an interactive map from the Tax Justice Network where you can find out how each country ranks in terms of amount of tax revenue lost from tax havens and/or how much in tax losses each country inflicts on other countries (for example by being a tax haven, or helping people and firms to avoid taxes). Difficulty level: easy

• What is loss & damage? - explainers on loss and damage from The Loss & Damage Collaboration. Difficulty level: medium

• ISDS 101: Investor-state dispute settlement explained: A short animated video about ISDS from a Canadian perspective. Difficulty level: easy

• ISDS: Fear of Billion-Dollar Lawsuits Stops Countries Phasing Out Fossil Fuels – A news article from The Guardian on how ISDS lawsuits are discouraging governments from enforcing environmental policies, with real-world examples of fossil fuel companies suing states over climate action. Difficulty level: easy.

• Investor-State Dispute Settlement (ISDS) - A Primer – A short guide from Columbia University’s Center on Sustainable Investment explaining how ISDS allows multinational corporations to sue governments when regulations impact their profits. Includes case examples and key concerns about state sovereignty. Difficulty level: medium.

• Debt Justice - Debt Data Portal -  An interactive map revealing which countries are in debt crisis or at risk, and the type of debt (public or private). A great resource for spotting global patterns and sparking systems thinking. Difficulty level: medium

• Fund for Loss and Damage finance pledges - the website for the loss and damage financing for low-income countries’ mitigation and adaptation to climate change. The link takes you to the funding pledges, where you can see how much countries have contributed. Difficulty level: easy

Columbia Center on Sustainable Investment. (2022). A primer on international investment treaties and investor-state dispute settlement (ISDS). Columbia University. https://ccsi.columbia.edu/content/primer-international-investment-treaties-and-investor-state-dispute-settlement

Centre for Climate Engagement (n.d.). Trade law and climate change. Hughes Hall University of Cambridge. https://climatehughes.org/law-and-climate-atlas/trade-law-and-climate-change

Darnal, A. (2024). Moving from unequal to win-win partnerships. Stimson Center.https://www.stimson.org/2024/moving-from-unequal-to-win-win-partnerships

European Commission. (n.d.). Multilateral Investment Court project. Retrieved from https://policy.trade.ec.europa.eu/enforcement-and-protection/multilateral-investment-court-project_en

Fund for Responding to Loss and Damage (n.d.). https://www.frld.org/

Loss and Damage Collaboration. (n.d.). What is loss and damage? https://www.lossanddamagecollaboration.org/whatislossanddamage

NatureFinance. (2025, April). Innovative financing structures as game changers for nature and climate [Report]. https://www.naturefinance.net/wp-content/uploads/2025/04/InnovativeFinancingStructuresasGameChangersforNatureandClimate-1.pdf

Reuters. (2022, November 8). COP27: Which countries have offered “loss and damage” funds? Reuters. https://www.reuters.com/business/cop/cop27-which-countries-have-offered-loss-damage-funds-2022-11-08/

Tax Justice Network. (2024, November). State of tax justice 2024. https://taxjustice.net/wp-content/uploads/2024/11/State-of-Tax-Justice-2024-English-Tax-Justice-Network.pdf

Trade Justice Education Fund. (2022, November 29). The case for and design of a climate peace clause. https://tradejusticeedfund.org/wp-content/uploads/ClimatePeaceClausePaper.pdf

Weston, P. & Greenfield, P. (2025, March 6). ISDS: Fear of billion-dollar lawsuits stops countries phasing out fossil fuels. The Guardian. https://www.theguardian.com/environment/2025/mar/06/isds-fear-of-billion-dollar-lawsuits-stops-countries-phasing-out-fossil-fuels-aoe?CMP=Share_iOSApp_Other

World Trade Organization. (n.d.). DS26: EC — measures concerning meat and meat-products (hormones). https://www.wto.org/English/tratop_e/dispu_e/cases_e/ds26_e.htm

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