Environmental and economic insanity
While we are forever optimistic and believe in the positiveness and innovativeness of humankind, we are also old enough to realise that doing the same thing over and over and expecting (praying for) a different outcome will not work!
According to Albert Einstein, the definition of insanity is "doing the same thing over and over again and expecting different results"
We should be more than a little concerned over the pace of change to environmental policies effecting the environment, climate change and levels of economic inequality that show little or no positive movement for all.
What we absolutely need is transparency of this issues and the data on which as global citizen’s we can cast our vote in our election cycles to make change, if change is not happening quick enough.
Here is what we know:
1. Huge amounts of funding still go to unsustainable businesses throughout the world. Governments and Financial Institutions could play a much greater part in addressing unsustainable business practices if the finance community used funding as the prize which rewarded only environmentally friendly sustainable business models.
2. The Wind and solar photovoltaic (“PV”) systems are now the cheapest options for new power across more than two-thirds of the world. Yet, investments in fossil fuels continue to dwarf clean energy investments globally (Bloomberg New Energy Finance). A photovoltaic system is a power system designed to supply usable solar or wind power by means of photovoltaics. Nowadays, most PV systems are connected to a country’s Energy Grid.
3. At the end of 2018, an estimated 42% of the global coal operating fleet was unprofitable, and emerging economies are already encumbered by bad debts caused by investments gone bad. Declining renewable energy costs, cheap gas, air pollution regulation and climate action will continue to undermine the economics of these carbon-intensive plants in the decade ahead: Carbon Tracker estimates that 72% of coal plants will be “cash flow negative” by 2030 (World energy Outlook – 2019)
4. Today, with everything we know, there is about 550GigaWatt of the most carbon-intensive power plants planned, permitted, or under construction across Asia and Africa. If built, these would contribute enormously to the climate crisis and chronic air pollution over the coming decades. (Global Energy Monitor)
5. Greenhouse gas pollution reached a new high in 2019, which was also the second warmest year on record.
6. Climate impacts will continue to worsen existing poverty, exacerbate inequalities, trigger new vulnerabilities, and could draw an estimated 720 million people back into extreme poverty by 2050. How do these people escape their circumstances? Mass migration?
7. It is the most vulnerable who have emitted the least that will be the hardest hit.
8. Increases in extreme weather events, impact low-income earners, small-business owners and part-time workers more in terms of loss of income as compared to those with higher incomes.
9. Recovery and relief funding of natural disasters (aka extreme weather events), places greater weight on assisting bigger businesses than on income support for individuals, widening the income /equality gap even further.
Reasons for optimism:
1. “Businesses will vote with their pocketbooks”. With the old carbon economy so unprofitable vis-à-vis the green economy, the Banks and professional investors will choose not to support polluting Corporates and Industries, particularly if green alternatives exist.
2. Regulators have made strong inroads in recent years addressing market failures such as environmental externalities and information asymmetry. Capital flows have responded in kind bought about new regulations. Just as capitalism got us into this mess, Capital markets can also be one of the pillars to help get us out. Measures being taken include:
• Pricing carbon: China is the world’s largest emitter of carbon dioxide. China’s nationwide Emissions Trading Scheme (ETS) aims to cover 8 billion tonnes of carbon dioxide emissions annually from around 100,000 industrial plants. The ETS will start with the coal-fired power industry. The first trade will take place in 2020.
• Other countries around the world will pilot carbon trading in 2020 as part of efforts to meet their goals committed to under the Paris treaty.
• Reporting of bad environmental behaviour: Investors around the world have been voicing their need for quality data on environmental, social and governance (ESG) issues. ESG is a reporting initiative that refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business. These criteria help to better determine the future financial performance of companies in risk and return terms. In many Countries, it will become mandatory disclosure. In some Countries (for example in the UK), it is still voluntary.
• Countries are offering debt green debt funding aimed at supporting the green agenda and social development: There are currently 3 Sovereign Bond Issuers in the world (Indonesia, Korea and Hong Kong). But there are 51 countries or regions, encompassing 60 per cent of the global population, which have yet to tap green financing to fund their climate transition. As we move closer to 2030, more Countries should raise funding this way to accelerate transition measures.
• More available funding for green sustainable projects: Many countries across the global are building large investment funds to help transition the globe from one focused on burning fossil fuels to one using green energy solutions.
Governments need to continue to take the leadership role in paving the way as green bond issuers and ESG investors to spur greater private sector participation in the global transition to a low-carbon, climate-resilient and environmentally sustainable economy. The ultimate goal of all these measures is to influence capital flows towards activities that will support this transition.
We see access to funding would be a huge step in the right direction if a lot more funding was made available to those participants that wanted to lift the bottom quartile out of poverty and food insecurity and encourage the transformation to a greener cooler planet. We are encouraged as we see a lot more countries across the globe make it mandatory that Corporates report on their Corporate Social Responsibility. India is the first country in the world to make corporate social responsibility (CSR) mandatory. We solute them!
The environment4change movement would love to think that world leaders could come together to address inequality and climate change on multiple fronts. But, we cannot leave it to someone else to do! As you know, we are huge believers in the power of community spirit. With the arrival of the Corona Virus and specifically Covid-19, we have seen tremendous local community spirit first hand of neighbour looking out for neighbour. In environmentalism, having a real local community you can count on will allow us to (i) run successful clean up projects, (ii) localise our food production (iii) collect local environmental data. Via our Platform as-a-Service, we will not only address all environmental issues, we will regenerate our own humanity. We will become much more aware of our own impact. We will be much more aware of our interrelationship with others.
So, as Bob Dylan once famously said, …”The times they are a changing”
We all hope it is quick enough!