Over the last few months, something extraordinary has been happening in the UK and around the world. Hundreds of thousands of people, from all walks of life, have taken to the streets to demand that the government declare a Climate Emergency. But this call isn’t just coming from your typical eco-warriors. The same level of urgency is coming from the heartland of our financial system - from central banks, sovereign rating agencies, and insurers. The CEO of AXA insurance made a statement last year that should send shivers down the back of every decision maker in the world: "a 2 degree world might be insurable. A 4 degree world certainly would not be."
The truth is that even if every single government met their Paris climate change commitments – which is, let’s just say, quite unlikely – that would still bring us close to a 3 degree increase in global temperatures. So yes, we are indeed facing an emergency not just for the planet, but for our economic and social systems. So what would a commensurate response be? If we were putting nature into the Emergency Room, what treatment must follow?
Nature would jump the priority queue.
The UK government currently allocates less than 1% of the national budgets to conserving the environment. By declaring an emergency, climate change and environmental loss would be recognised as an issue of national security. Party politics would be suspended on issues relating to climate change and biodiversity loss, and it would be made a regular Cabinet meeting agenda item.
“ Given the threat posed by climate change and ecological collapse, can we credibly deny that we are already in the midst of an undeclared emergency?”
The UK's ‘Emergency Powers Act’, signed in 1964, states that the government may declare an emergency "…if at any time there have occurred, or are about to occur, events of such a nature… [that] by interfering with the supply and distribution of food, water, fuel, or light, or with the means of locomotion, to deprive the community, or any substantial portion of the community, of the essentials of life.”
Given the threat posed by climate change and ecological collapse, can we credibly deny that we are already in the midst of an undeclared emergency?
Clean the wound.
Just 100 fossil fuel producers around the world are responsible for 71% of industrial GHG emissions since 1988. Public investment should not be going towards these companies, or to oil and gas exploration. Yet the UK currently spends an astonishing £10 billion a year on subsidising fossil fuels, more than any other EU country - more in fact than we currently spend on renewable energy (£7.5 billion). We need a UK ‘green new deal’.
It’s worth recalling that when the 2008 financial crisis hit, within a matter of weeks the then Chancellor of the Exchequer galvanised £500 billion to bail out the banks that were ‘too big to fail’. And a billion Euros were pledged virtually overnight to the restoration of the fire-damaged Notre Dame Cathedral.
Nature is the very definition of “too big to fail”: if our environment goes down, then we go down with it, and unlike cathedrals, old growth rainforests can’t be simply rebuilt when they’re destroyed. Nature needs a ‘bail out’ plan commensurate with the scale of the problem. Failing to address climate change and biodiversity loss is already leading us towards a planet-wide crisis that will make the 2008 recession look like a mere bump in the road.
Stem the bleeding.
The UK has made some impressive progress at reducing carbon emissions from energy and industry, but some stubborn sectors are proving resistant to the low-carbon treatment: transport and housing. Decarbonising these won’t be easy, but that’s precisely why they need to be an urgent priority.
Luckily, there’s tonnes of policies that can start making a difference right away. Just for starters, we’d recommend bringing back Feed in Tariffs for smaller renewable energy providers, and replicating successful social enterprise models that were starting to spring up in the UK (such as the Low Carbon hub in Oxfordshire where communities have taken back control of their energy systems); increasing the carbon floor price and taxing embedded carbon through targeted consumption tax; cutting company car tax for electric vehicles; a scrappage scheme for diesel vehicles; repealing the ban on onshore wind power; and re-booting the Zero Carbon Homes policy, abandoned in 2015, that would have been saving new-build homeowners £200/year by now). Oh, and nixing the Heathrow expansion.
Move beyond the symptoms to the cause.
Without tackling the capital markets, our efforts to green the economy are akin to treating a heart attack with a sticking plaster. Central bankers like Mark Carney at the Bank of England are already sounding the climate alarm, but financial markets are still woefully inadequate at quantifying environmental risk or even identifying ‘green’ investment over ‘brown’.
Firstly, we need government intervention to tighten, strengthen and ultimately regulate around social and environmental disclosure. Secondly, the government can support the Bank of England to drive through a clear taxonomy on what ‘green’ investment is (the process is already underway in the EU but is taking too long) in order to start penalising brown investments. We should also follow the Bank of France to make ‘climate stress testing’ legally binding.
Thirdly, we need to diversify the landscape of financial institutions away from ‘too-big-to-fail’ banks and institutional investors because large, shareholder value-drive institutions will always be unlikely to finance common goods. A diverse and socially-responsible banking ecosystem – as exemplified by Triodos and the Global Alliance for Banking on Values – would be more resilient, more sustainable, and better able to fund green innovation and investment.
We need to prioritise ‘green infrastructure’ over ‘brown infrastructure’: using natural processes and solutions to manage water, waste, and resources instead of pouring more concrete. Once environmental and social benefits are factored into the cost/benefit analysis, the choice is simple. The New York authority famously saved themselves 8 billion dollars on a new water filtering system for the city by instead investing in restoring and protecting the Catskill mountain watershed, and many more US cities are investing in wetlands restoration for flood prevention as a cost-effective alternative to digging more drains.
And new evidence is emerging that rewilding schemes can have remarkable climate and environmental benefits. Restoring coastal ecosystems like mangroves and seagrasses can suck carbon out of the atmosphere far faster than any current man-made carbon capture technology. Maybe every company on the stock market could match their share price to launch a global campaign to plant 1 trillion trees?
Long term rehabilitation and recovery.
All of the above might stabilise our natural world, but it would still be in a critical condition. To ensure long-term recovery, we also need to fix the institutions, ideologies and frameworks that govern the global economy. We need to supplement GDP with a measure of wealth that more accurately measures human progress, welfare and wellbeing rather than production alone. New Zealand’s Living Standards Framework does exactly this. We need to scrap quarterly reporting altogether, a change that Unilever’s ex-CEO Paul Polman and others have long supported. We would make integrated, triple bottom-line reporting mandatory.
Once recovery is progressing, we also need to make sure that the patient is never able to fall into such a sorry condition again. This requires bigger and longer-term societal change: imagine an economic system in which farmers might be paid to be stewards of our biodiversity rather than producing food that goes to waste? One in which the discipline of economics and business schools abandon the linear models have defined the last two hundred years, and instead recognise that our economies sit within planetary boundaries? One in which social enterprises that are motivated by social and environmental purpose have taken the lion share of the market? This is the transformation we can start on together.
As any psychologist will tell you, the first step of any recovery starts by admitting to ourselves that there is a problem. This is a problem we’ve known about for 30 years. Greta Thunberg, Alexandria Orcasio-Cortez, Mark Carney, the Extinction Rebellion, David Attenborough, the insurance industry are all saying the same thing. Let’s call this what it is: an emergency – and nothing short of deep-rooted economic reform will do.
- Emily Benson, GEC
GEC selected for the Global Gateway Dialogue Platform
In a world riddled with complex challenges, international cooperation with all stakeholders is essential to drive transformation.
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