Oceanographer Dr. Sylvia Earle said of the world’s oceans, “50 years ago, we could not see limits to what we could put into the ocean, or what we could take out. 50 years into the future, it will be too late to do what is possible right now. We are in a “sweet spot” in time when the decisions we make in the next 10 years will determine the direction of the next 10,000.“. So relevant, not just to the state of the oceans today, but also to the environment at large.
Here in Singapore, when the haze from Kalimantan’s forest fires obscures the landscape for days on end around this time of year, this question looms more immediate and urgent- at least until the skies clear and it’s business as usual once again. But what is the cost of collectively doing nothing to sort out thefundamental cause of the problem– the high-consumption, high-carbon way of living that we have all come to take for granted as path to development?
As preliminary figures show, the loss in GDP to Singapore and Malaysia from reduction in tourist arrivals due to the haze runs into millions of dollars, but dwarfed by the billions of dollars of loss to Indonesia’s GDP, from the forest fires alone. And similarly for implications of other environmental disasters around the world– from mining mishaps, to pollution of groundwater from large scale industrial production, to improper disposal of e-waste and other non-biodegradable products of our high-consumption economy. Moreover, it is increasingly clear that if urgent steps are not taken to transition the world at large into a low carbon economy, extinction of the human race is indeed a possibility! In other words, despite the returns to preventing such an eventuality being essentially infinite, the take up of lasting solutions to climate change is devilishly difficult.
As environmental economists like to illustrate, this is the classic case of a prisoner’s dilemma- or the tragedy of the commons. Translated, it refers to the warped thinking wherein, “until everyone else agrees to live in ways that saves the environment, how can I make a difference, and why should I do so?”But although long term solutions seem distant right now, there are reasons for hope.
Last week, I had the opportunity to address a cross-functional mix of business and financial leaders and senior bureaucrats (incl. ministries of Environment or Finance) from over 15 different countries in a workshop focused on private climate finance. The workshop was about how business leaders and society alike can take steps individually and collectively, for countering the very real threat of climate change- to avoid the huge losses to business and human life that can occur if we just decide to do nothing.While the quantum of climate finance that is needed to stimulate change from carbon-intensive to low-carbon economy runs into trillions of dollars, even the billions of dollars being committed by governments in the developed world and multilaterals right now will not be enough to effect change in time to avoid armageddon, if private sector and business leaders don’t get into the act– and large-scale, at that.
In the workshop, we discussed ways and means for private sector business, financial institutions and investors, as well as citizens to work together with government to get sustainable financial solutions and effect transition to a low carbon economy. How can we get the price of carbon emissions to be come in as a tax, which ensures that it is a tangible cost when factoring into relative costs of various production options? Can we convince governments to have reserve banks levy higher SLR/CRR/liquidity ratios which penalize investment by banks in non-complying projects – to lead to en-masse migration into carbon friendly investments? Could an updating of accounting standards to reflect environmental and social goals, in addition to the purely financial goal of shareholder profit, lead to changed perspectives for the investors who control the flow of billions of dollars around the globe? How can we organize for large scale consumer action to effect change in production practices of large multinational firms and in turn, the supply chains consisting of MMEs and SMEs in developing countries? Most importantly, how can we catalyze changeso that business as usual, and investments that worsen the existing GHG emissions scenario, get redirected into sustainable finance?
The good news is that this question is increasingly getting the attention of world leaders – not only from the political but also the business andfinancial sector. The subsequent “sustainable business” dialogues in which I got the opportunity to contribute last weekend, was one of several being held around the world in advance of the upcoming climate change negotiations in Paris at the end of the year. This, in turn is expected to lead to actions that impact central banks, commercial banks and multinational as well as private companies. We hope that these discussions will bring “climate finance” out of the purview of specialists and niche financiers, and intoeveryday drawing rooms– and thereby lead to concrete steps that will lead to more sustainable and effective investments in the long term. Policy makers amd banking regulators, would provide the framework and incentives for compliance by large businesses as well as individual consumers – to collectively make sure that timely actions to avert climate change are taken. We all have a stake in the planet’s future! Lets make sure it is sustainable.
Voyage of Discovery 