From ALLCOT we offer our clients a wide range of possibilities to strengthen their strategy and message on sustainability.
Written by Natalia Rodrigo Vega, Head Group Business Development ALLCOT.
Established in 2009, ALLCOT is a veteran project developer offering knowledge, expertise, and management to initiatives that reduce greenhouse gas (GHG) emissions to actively combat the climate crisis under Article 6 of the Paris Agreement is aligned with the 2030 Agenda and its 17 Sustainable Development Goals (SDGs).
ALLCOT develops emission reduction projects under various carbon quantification standards (CDM, VCS, GS) and for various sectors (forestry, waste, renewable energy) covering the entire carbon credit value chain its later management in the markets created under the Paris Agreement.
ALLCOT supports projects, companies and public bodies to improve their sustainability performance by offering consultancy services, including the development of strategies to calculate, reduce and offset GHG emissions, as well as the identification of best practices for reporting on Sustainable Development Goals (SDGs).
For ALLCOT, sustainability has always been a priority on our agenda and modus operandi, is part of the DNA of all of us who make up ALLCOT. At ALLCOT we are committed to sustainability towards our employees. Without a sustainable model for our TEAM, it is difficult to sell a sustainable business model to outside.
Therefore, from our organization we promote flexibility and teleworking before the pandemic. The fact that our staff are masters of their time, without leaving aside their work commitments, improves their self-esteem and efficiency in their jobs and, at the same time, allows them to reconcile with their personal life, hobbies and other
obligations. In fact, we have seen that there has been no decrease in the response capacity during the pandemic and we have all been working at maximum capacity all these months.
The COVID-19 pandemic is significant threat to the health and well-being of billions of people around the world. As the world begins to open up from the blockages and enters a state of unprecedented vulnerability, or what many have called “the new normal” it makes sense to reflect on what we have learned, review our fundamental assumptions, and begin to chart a course to continue working TOGETHER to build a sustainable world.
Without a doubt, the pandemic has had a significant impact on our work. On the one hand, in view of our projects being implemented, the pandemic has made field visits impossible and follow-up and socialization work has had to be done remotely. This has not paralyzed our work, but it has slowed it down and helped to generate more uncertainty in the study of primary and secondary sources.
For this reason, ALLCOT has invested all its strength in seeking alternatives to these new uncertainties generated in the project and to be able to successfully close all its phases.
On the other hand, in relation to the projects that we had pending to execute, we have to adapt and reinvent ourselves to this “new normality”. The coronavirus pandemic presents an excellent opportunity for us to act in solidarity so that we may be able to turn this crisis into an incentive to achieve the United Nations Sustainable Development Goals.
Initially, our objective was focused on supporting companies and institutions, both in thepublic and private sectors, focused on leisure activities, events, catering and tourism. As a result of the pandemic, these sectors are defined as the most affected, so their financial capacity is limited to being able to continue their business and it is very difficult for them to make extraordinary investments. For this reason, from ALLCOT we have strengthened our scope of prospecting and opening business towards the food, energy and transport sectors.
From the company we offer our clients a wide range of possibilities to strengthen their strategy and message in sustainability. Our work relates to non-financial reporting, sustainability reporting, environmental footprint reporting (emissions, plastic) and our flagship product: the mapping, identification, quantification and monitoring of SDG.
ALLCOT has merged its know-how in climate change project development, being our strengths the development of quantification and monitoring tools together with its experience in sustainability to develop a unique and innovative tool. This tool helps us to know at regional (country, nation) and sector level, the degree of commitment and alignment with SDG and Agenda 2030.
Article originally published in Corresponsables.
Written by Enrique Lendo, Business Development Mexico Advisor.
Adopted in 2015, the Paris agreement sets the objective to stabilize the average increase of global temperature at 1.5 °C to avoid widely documented catastrophic effects. According to the Intergovernmental Panel on Climate Change (IPCC), this target will be reached only if global emissions of greenhouse gases (GHG) peak in 2030 and become net zero by 2050.
The transformation required to decarbonize our economy is monumental. It implies reconfiguring our energy mix, electrifying our transport systems, reverting deforestation rates, boosting resource efficiency and building smart cities, among many others. The OECD estimates that the investment cost in infrastructure to achieve the global climate change and sustainable development goals will be close to 7$ trillion dollars a year, equal to the GDP of Mexico multiplied by 5.
Who is to pay for the transition cost? It is very likely that the only feasible alternative to drive the energy transition at the speed required by the Paris Agreement is the massive adoption of “carbon pricing schemes”, which are based on the “polluter pays principle”.
According to the World Bank, carbon pricing schemes throughout the world have increased exponentially going from 7 in 2000 to 61 today. Thirty of these are carbon taxes and 31 are emission trading systems (ETS). Carbon pricing schemes are applied both by national and subnational governments, cover 22% of global emissions and collected $ 45 billion dollars in 2019. Through immediate signals to economic agents, they induce innovation, resource efficiency and important changes to production and consumption patterns.
Mexico was the first country in Latin America to adopt a carbon tax in 2014, which has collected $ 1.8 billion dollars since its operation began. Mexico´s ETS pilot program was launched this year, considering companies with 100,000 + tones of CO2 emissions from the energy and industrial sectors. The ETS will become fully operational in 2023 and become the first of its kind in the region.
Besides the carbon pricing schemes adopted at the federal level, in the last days some subnational governments in Mexico have shown interest to adopt GHG emissions taxes under environmental and public finance grounds, as well as in reaction to policies adopted at the federal level which prevent the transition to renewable energy. A couple of weeks ago, Tamaulipas became the first subnational government in Mexico to adopt a carbon tax and the state government of Jalisco announced that its carbon tax will enter into force in 2021. The states of Nuevo León, Coahuila, Durango, Michoacán, Colima and Guanajuato are also considering similar taxes.
While carbon pricing schemes around the world have advanced notably, their impact are still insufficient. According to the Carbon Pricing Leadership Coalition (CPLC), the price level to achieve the goal of the Paris Agreement needs to reach $75 dollars per ton of CO2 in 2030. Half of the schemes currently operating around the world have set the price below $10 dollars and Mexico´s carbon tax is only $2 dollars per ton. In this context, it is imperative to secure a substantial increase both in the price level and in the emissions covered by carbon pricing schemes to induce the transformation required. In the same line, it will be necessary to link schemes within and between countries.
Finally, to foster social acceptance, it is essential that carbon pricing policies consider compensation and transition measures to affected sectors and consumers, which can be financed with the same revenues. The post-Covid economic recovery process provides an opportunity to adjust the relative prices of energy in order to transit towards carbon neutrality by 2050.
Article originally published in Mexico´s newspaper Reforma
Written by Felipe Jiménez, Climate Change Mitigation Consultant
Humankind is destroying natural environments at accelerating rates. Deforestation, extensive agriculture, climate change, habitat invasion, biodiversity loss, and wildlife traffic, not only destroy vital ecosystem goods and services for humans but also open the way to zoonotic diseases and contamination of urban centers exposing people to deadly pathogens like the SARS-CoV-2, the virus responsible for the current Covid-19 pandemic. It was a matter of time for this time bomb to explode and cause such a dramatic impact in the world, as a result of environmental overexploitation and biodiversity’s mismanagement.
Governments, with the help of local and international organizations, have a great opportunity and responsibility to set their countries and the world on a more sustainable path. Currently, policies and subsidies have been structured towards the protection and conservation of ecosystems and biodiversity. Governments have understood the importance of reforming subsidies that are harmful to nature and introducing the payment of taxes for those activities involved in environmental degradation and biodiversity loss. The encouragement and promotion of effective nature-based projects and the strengthening of environmental monitoring and regulation procedures are being backed up by the governments and private sector initiative of creating more nature-based jobs. This in turn boosts up the economy and supports recovery processes within the ecosystems, promoting biodiversity’s conservation and restoration.
In addition to these actions, governments all around the world have banned wildlife traffic and taken precautionary measures to ensure food security and healthy consumption. In the same way, society leaders have conducted educational campaigns to raise awareness about the importance of establishing more sustainable alternative activities and confronting the problem through green investment and reinforcement of a more environmentally friendly economy and market.
Given the current situation, ALLCOT has a clear vision of its role in enhancing practices for the promotion of a resilient and well-functioning ecosystem. As a leader in the formulation of sustainable and climate change mitigation projects, ALLCOT supports the conservation of ecosystems and thus, the protection of biodiversity. Through the projects focused on reducing emissions from deforestation and forest degradation, ALLCOT tackles deforestation and forest fragmentation restoring biological corridors and protecting flora and fauna species, especially those key species considered vulnerable, endangered, or critically endangered due to their role as environmental indicators of a healthy ecosystem. Together with the mitigation and climate action scheme, ALLCOT develops a variety of sustainable initiatives around renewable energy, energy and resource management, and waste management. Through these series of projects, the organization conducts a qualitative evaluation of the Sustainable Development Goals (SDG) that could be positively impacted by the project’s activities and is currently working on a methodology that will allow monitoring this impact.
Among the activities that support the implementation of these programs, the projects include educational campaigns towards wildlife traffic, the correct resource, and environmental management, finance administration, governance, social leadership, etc. Additionally, supporting the previous idea of the encouragement and promotion of nature-based projects, ALLCOT develops well-structured plans that involve local community participation which gives them the opportunity to establish and learn about sustainable alternative activities and businesses.
We must realize that when we destroy biodiversity, we destroy the system that supports human life. Resources overexploitation, plastic pollution, overfishing, and the contamination of water sources are some additional critical issues that humankind must confront through the alignment of sustainable initiatives and actions. The formulation of such nature-based projects must receive clear support from the government and the private sector. These investments and subsidies will create a more resilient economy and will also tackle social problems such as poverty and hunger. Allcot’s contribution to the conformation and realization of these projects highlights the strong commitment that the organization has with the Paris Agreement objectives and the 2030 Agenda goals.
Written by Andrés Melendro, Sustainability Manager
Last Wednesday, June 16th, the Center for Sustainable Development for Latin America (CODS) launched its SDG Index: a measure of the progress of Latin American and Caribbean countries towards the Sustainable Development Goals (SDGs).
The report highlights that, overall, the region is not meeting the goals set forth in the 2030 Agenda, and that the health and economic crisis linked to the COVID-19 pandemic also represents a considerable setback in most of the SDGs. If the current trend continues, the goals set in 2015 would not materialize even on a 50-year horizon.
SDG 13, Climate Action, stands out as an exception because widespread quarantines and restrictions on production have led to a considerable drop in greenhouse gas (GHG) emissions. However, the rebound effect is foreseeable since the reduction is circumstantial. In particular, it is possible that the interest of investing in sustainable projects and green technologies gets delayed by the haste to reactivate or protect sectors of greater importance for the immediate future of a company. In this sense, ALLCOT’s work to develop projects that generate financial incentives to reduce emissions is more relevant than ever.
The methodology advanced by the CODS is based on the one that the Sustainable Development Solutions Network (SDSN) has been using for several years worldwide to establish international comparisons. The CODS adjusts it to the statistical reality of the countries of the region, given the unavailability of many indicators. In this way, the comparison becomes more valid. In some cases, for some States, there is no available methodology for SDG measurement. Another issue is the lack of data: the index requires figures ex-ante and ex-post 2015 to measure progress since the creation of the 2030 Agenda.
The report also includes a visualization tool called the dashboard. This allows to highlight, through a traffic light code, how close an SDG is to being fulfilled, in order to serve as a prioritization tool in each country.
The publication of the SDG Index, as well as the creation of the municipal SDG indexes in Colombia cities by the Corona Foundation through its network tracking cities’ wellbeing, illustrate the trend towards the appropriation of the SDGs by non-governmental entities and their measurement at sub-national scales. The private sector, and in particular organizations setting standards for corporate sustainability reports, have also included the SDGs in their performance metrics. Precisely, ALLCOT is currently developing statistical tools to quantify the impact of the socioeconomic co-benefits of its climate change mitigation projects, through the 230 indicators associated with the 17 SDGs.
This exercise presents several challenges, given that the project areas tend to be smaller than local political-administrative divisions in the country where the project is developed and usually do not coincide with their geographical limits. ALLCOT, like the CODS, adapts the SDG indicators to the real data availability and to variables that make more sense depending on the specific context. In addition, to mitigate the absence of local data in many rural areas of developing countries, ALLCOT has created mechanisms for collecting primary data to establish a meaningful SDG baseline. In this way, ALLCOT takes a leadership role in measuring corporate impact on sustainable development.
Written by Enrique Lendo, Business Development Mexico Advisor
The current economic landscape is complex, a different scenario from all the sustainability projections for 2020. At the macro level, governments are now able to choose whether the incentives built into their economic recovery policies will be directed to traditional, less competitive, and more polluting industries, or towards sectors that will create economic gains and social welfare in the long term. For instance, investment in renewable energy could bring gains of $100 trillion dollars, create 42 million new jobs, and reduce greenhouse gas emissions in the energy sector by 70% by 2050.
At the micro-level, manufacturers will have to adapt to the new trends in the value chains of a less interconnected world and find input providers closer to their production centers. In the service sector, digitization and virtualization have expanded like never before, fostering innovation and the development of new products and processes. Only these companies and sectors able to adapt with creativity and speed will survive in the post-Covid world.
In the coming months, trillions of dollars will be mobilized to address both the sanitary and economic crisis triggered by Covid-19. However, only a small fraction of national governments, regional groups, and subnational jurisdictions have signaled their intent to consider sustainability principles and policy tools in their economic recovery plans. The European Union has ratified its net-zero emissions commitment for 2050 by placing its “Green Deal” at the center of its economic recovery strategy, while the new government of South Korea will base its economic recovery plan on incentives for green recovery to reach carbon neutrality by 2050.
In the Americas, this issue has been part of the debate in the recent US legislative and the upcoming national elections, with lawmakers proposing a “Green Deal” as one of the pillars for the economic recovery strategy. In addition, a number of subnational governments such as New York and California have incorporated climate green objectives in their economic recovery plans. On the other hand, Canada’s federal government has stated that the crisis will not obstruct its climate change commitment and it is supporting investment projects to help industries meet their methane emissions goals. Notably, however, climate change and sustainability agendas have been absent in the language of politicians, CEOs, and other decision-makers in the Latin America and Caribbean (LAC) region.
While LAC contributes only 11% to global greenhouse gases (GHG), the region is highly vulnerable to the impacts of climate change. At the same time, many countries in the regions have stood out for their mitigation and adaptation strategies, with emerging carbon pricing schemes in Mexico, Colombia, Chile, and Argentina.
Due to its rich forest, ocean, coastal and biodiversity resources, as well as highly proficient technical expertise in carbon accounting, the region is also a priority geography for Nature-Based Climate Solutions (NCS) Along with globalization, economic integration and the building of environmental laws and institutions in the last years, the private sector in many LAC countries has embraced environmental responsibility principles and practices.
Covid-19´s economic crisis presents major challenges for the LAC region. In this context, governments and companies already engaged in the path towards low emissions and sustainable development might be tempted to deviate from longer-term sustainability goals to address more immediate short-term needs. Opportunities to boost long term and financially sustainable economic growth and create millions of jobs should be secured in cleaner industries. A recent report by UN -Climate found that 35 million green jobs can be created in LAC if the region invests in a 100% renewable energy matrix and electrifies its transport sector. At the same line, tens of millions of jobs could be created in the forest, rural and coastal sectors through forest conservation and restoration, as well as sustainable agriculture and blue carbon projects, financed with carbon compensation credits, green bonds and other financing innovative tools using SDGs and NDCs as benchmarks.
It is in this context that countries in the LAC region will need to design their recovery strategies according to their needs and circumstances, preferably based on low emission and sustainable development criteria. In the design of such strategies, it will be necessary to consider both the scale of resources and incentives needed, as well as the different sources of funding, policy tools, and industries/sectors to trigger the adjustment.
Currently, countries in the region finance their recovery strategies from international sources such as rescue packages from the International Monetary Fund (IMF), and from national public and private sources. In addition, governments may adjust their regulatory frameworks to ease the compliance cost with different standards for the benefit of vulnerable citizens or industries. They can also strengthen regulations, standards, and supervision in those sectors or industries presenting a higher risk to the economy or public health.
The stimulus measures commonly used to incentivize economic recovery in times of crisis include direct government transfers and subsidized interest loans, fiscal loans, debt restructuring or forgiveness, stabilization funds, and investment in infrastructure and public works projects, among others. The destiny of resources can vary from companies and organizations to communities and citizens, according to priority geographies, sectors, and industries in each country. Some areas of opportunities for “Green/Sustainable Recovery Strategies” in LAC countries include:
- Trade and investment incentives for clean and sustainable products and services
- Price incentives for energy intensive industries, including carbon pricing and subsidies phase-out in key environmentally harmful sectors.
- Public/private investment in natural capital, resilience, adaptation, and sustainable agroforestry, fisheries, and food systems, including Nature-Based Climate Solutions.
- Automation of processes, digitization, and virtualization of transactions and services.
- Investment in industries and sectors with high potential for green/sustainable job creation.
- Reconfiguration of infrastructure investment in the transport-mobility, housing, education, services, entertainment, and leisure.
- Investment in R&D to boost innovation and improve products and processes towards sustainable patterns of production and consumption.
- Regulatory and fiscal incentives for sustainable businesses.
Building on CPLC´s model for enhancing dialogue, creating knowledge, and boosting advocacy amongst public and private leaders, a public-private dialogue process is proposed to identify concrete opportunities and projects in the area of carbon pricing, sustainable finance, and economic recovery from the Covid-19 crisis.The initiative could start in countries active in the carbon pricing arena such as Mexico, Colombia, Chile and Argentina, but also others considering carbon pricing instruments at the subnational level or among private actors like Brazil, and with high potential for investment in NCS sectors such as Guatemala, Costa Rica, and Peru.
IETA has already launched a process to develop Natural Climate Solution strategies in the region starting with Colombia, Mexico, and Brazil. In the north of the hemisphere, Canada’s federal government, some Canadian provinces, as well as some states in the US, might be interested in participating. The process could consider representatives from the following areas:
- National and subnational governments
- Central Banks
- Business groups and private companies with green/sustainable profile
- Banking and finance associations
- NGOs and think tanks
- Youth organizations and leaders
- International Organizations and Development Banks: World Bank, IFC, CPLC, IDB, CAF, UN-ECLAC, UN-Climate, UN-Environment, UNDP, CDB, OECD, GGGI.
Written by Enrique Lendo, Business Development Mexico Advisor.
The World Environment Day sets a landmark for the international community. On June 5 of 1972, the Stockholm Conference on the Human Environment triggered a process that has produced over 500 international environmental cooperation instruments to date. Mexico has subscribed about a 100 of these agreements, strengthening our environmental management capacity and positioning our country as a player committed with global challenges.
Currently, most of the countries around the world have enacted environmental laws and established institutions for their implementation. However, they have not been capable to halt global environmental degradation. Greenhouse gas emissions have doubled since the adoption of the United Nations Framework Convention on Climate Change in 1992. We have also lost 80% of wildlife species biomass and half of the natural ecosystem’s original areas due to massive deforestation, urbanization and pollution. Over one million species around the world are in danger of extinction.
But in the last years, the methodologies to monetize climate change impacts and the contribution of natural capital to the economy have also been improved. For instance, we know that services provided by biodiversity to productive systems are worth at least 1.5 times the value of global GDP. We also know that natural disasters cost over $100 billion dollars a year in damages and that the cost of climate change inaction could reach over 15% of global GDP by 2050.
Therefore, capital markets around the world are currently tuning their risk models to account for environmental and climate change impact of investment projects. On one the hand, physical infrastructure is more vulnerable to hydrometeorological impacts, on the other, the new generations of consumers and investors demand responsibly produced goods and services. Mexico´s Central Bank (Banco de México) and the UN have recently released the “Climate and Environmental Risks and Opportunities in Mexico’s Financial System”, setting this sector in a path that will reward sustainability and punish pollution through risk assessment.
The post-covid19 crisis provides a point of inflection in which governments and companies are able to choose between updating their strategies towards sustainability patterns or perpetuate inefficient and shortsighted growth models. In the last weeks, countries, regional blocks, and subnational governments around the world have announced green recovery strategies. The European Union just released its € 750 billion economic recovery package to finance low carbon infrastructure. In the US, Democrats are positioning a “Green Deal” in the face of the upcoming national elections, while South Korea and Indonesia already implement green recovery plans.
In contrast, sustainability has been absent in the language of decision-makers in the Latin American region despite its potential to scaleup investment, create jobs, and foster welfare in the long term. A recent UN report concluded that the transition towards renewable energy and transport electrification in the region could create 35 million jobs by 2050. In Mexico, millions of people living in rural areas could benefit from investment packages to foster sustainable practices in the agriculture and forest sectors. But in order to harness these opportunities, governments need to start designing their economic recovery strategies with a comprehensive and long term perspective. Never in history had we been presented with such an attractive and feasible chance to redefine our development model.
** Article originally published in Reforma news paper:
Written by Enrique Lendo, Business Development Mexico Advisor.
Back in January, 2020 promised to be the “Super Year” of sustainable development. A growing number of companies, with assets close to $40 trillion dollars, committed to transit towards low emission and sustainable production and financing systems. For the first time, the World Economic Forum’s Global Risk Report ranked environmental and climate risk at the top of its tables, over economic and geopolitical risk. In the framework of the United Nations, fundamental decisions for the climate change, biodiversity and oceans agendas have been postponed due to the pandemic.
COVID 19 has exposed our vulnerability, as human species, before biological and natural phenomena as well as how fragile our economic and political systems are to global emergencies. The irrational management of biodiversity and ecosystems has triggered the evolution of viruses as climate change boosts its geographical reach and hastens its spread with massive consequences to human lives.
On the other hand, social distancing and isolation measures recommended to contain the pandemic fosters significant changes in the scale and the structure of the global economy. 2020 will face one of the largest recessions in modern history with contractions of 13% in trade and 1% of global GDP and impact to 1.6 billion jobs throughout the world. The GDP contraction in México will be the range of 6 to 10% by the end of 2020.
However, the current crisis also provides an unprecedented opportunity to restructure our economic system towards more sustainable consumption and production patterns in the framework of the environmental, financial and social agendas. At macro level, governments are able to decide whether incentives considered in their economic recovery policies will be directed to traditional, less competitive and more polluting industries or towards sectors that will create economic gains and social welfare in the long term.
For instance, investment in renewable energy would bring gains of $100 trillion dollars by 2050, or returns of $3 to $8 dollars per unit invested. Such investment could also create 42 million new jobs and reduce green house gas emissions in the energy sector by 70%. In contrast, fossil fuels are responsible for 70% of global CO2 emissions, receive subsidies up to $5 trillion dollars a year and, in the case of oil, have experienced negative returns in the last days. Today, Mexico’s Pemex costs 24 billion dollars in losses to taxpayers and the auctions to allocate clean energy certificates have been postponed.
At the micro level, manufacturers will have to adapt to the new trends in the value chains of a less interconnected world and find input providers closer to their production centers. In the service sector, digitalization and virtualization has expanded like never before, fostering innovation and the development of new products and processes. Only these companies and sectors able to adapt with creativity and speed will survive in the post-Covid world. However, sustainable consumption and production patterns will only be attained if policies and incentives are crafted properly. In the framework of economic recovery plans, environmental standards should not be downgraded, and support tools must not be directed towards polluting industries over more sustainable ones, otherwise inefficiencies will prevail and opportunities to boost green and sustainable growth will be lost.
Written by Alexis Leroy, CEO ALLCOT
The coronavirus pandemic has been a huge wake-up call for the world. In one short month, large swathes of the economy have either closed or been forced to scale back significantly. Air travel is virtually non-existent, private transport has shrunk to a shadow of its former self, and retail has almost entirely closed its doors.
And while we have been self-isolating at home, it’s given us all a chance to consider what we’re giving up, what choices we can’t make, and even whether we’d choose the same things again whenever restrictions are lifted. The lockdown has also turned into a fountain of ideas; ideas on how we can take this opportunity to rebuild our economies in a more sustainable way.
To be fair, some blueprints for a sustainable future are already on the table. In the US, the Green New Deal harkened back to President Roosevelt’s plan to bring the country back from the Great Depression of the 1920s. The 21st century version focused on climate change, the biggest challenge of our times, as well as social and economic inequality.
In Europe, the newly-elected Commission brought forward its own Green Deal last year, which is even more ambitious than its US counterpart. The EU plan seeks to turn the bloc’s entire economy upside down, refocusing on sustainability, climate, transitional measures to diversify and modernize the economy and offer opportunities for all. The proposals on both sides of the Atlantic are fortunate in their timing, as we grapple with “the fastest, deepest economic shock in history”. A lot of thinking has already been done.
For Asia, too, the pandemic represents an opportunity to embark upon the same shift, away from mimicking the West and towards a more sustainable, self-reliant economic model. Indeed, it may be the east’s only hope, if the kind of proposals that we read today are put into action elsewhere.
The liberal market-based economic model has been around for around 300 years. Globalization was the last great leap forward for the neoliberal interpretation, and coronavirus’ rapid expansion around the world is the warning that we cannot continue as we have done. The economy that evolved in the 18th century took the world as it saw it. It did not experience, as we do today, the immense impact of industry and business on our earth and our climate.
Pollution and resource scarcity were not considered problems 300 years ago, and all our efforts since then have been too modest, too piecemeal, and have been largely shrugged aside by the interests of old-world business models.
Yet today, we understand how our economic model impacts our health, our well-being. We can quantify the harmful effects of air pollution, just as we can quantify the cost of natural disasters.
With all this knowledge and understanding, gained through the immense technological advances of just the last 50 years, we have an opportunity to set a new course for the coming decades.
What must be done?
At a macroeconomic level, the world needs to commit, again and with greater force, to the purpose of the Paris Agreement and the Sustainable Development Goals. We need governments to line up behind these aims, to make pledges that are ambitious, believable and achievable, and develop the pathway towards achieving the ultimate prize.
The Sustainable Development Goals (SDGs) have a simple target: “a shared blueprint for peace and prosperity for people and the planet, now and into the future. They consist of 17 ambitions including reducing inequality, clean water and sanitation, climate action, responsible consumption and production, and zero hunger. All of these goals can be achieved with a thoughtful approach to re-building our shared economy.
And thanks to technology and understanding, progress towards the SDGs can now be quantified. Health, education, economic opportunity, stable societies, and even gender equality can be measured and assessed. And this quantification of achievement can now be rewarded. For the first time in our economic history, intangible impacts are now becoming tangible items on balance sheets. Efforts such as the Task Force on Climate-Related Financial Disclosure are slowly moving the needle on bringing externalities like greenhouse gases into the realm of real costs. And in the same way, improving our collective health, safety and prosperity can also be rewarded, in lower external costs (like carbon emissions and businesses losses) as well as in lower human costs.
The Paris Agreement has one, just one, simple goal: to ensure that by the middle of the century all our emissions of greenhouse gases are balanced by sinks that absorb those same gases. Again, this is a target that we can achieve if we plan carefully and put in the work, the investment, and the research to make it happen.
What will we gain? We will begin to return our climate to a state where catastrophic weather events are not “normal”, where deforestation does not rob peoples and species of their home, where water stress does not force mass migrations.
At a national or even multinational level, how can we make the changes that the future requires of us?
A Green Rebuilding
As we eventually emerge from the shadow of Covid-19, economies will need government help to re-start. Already we have seen billions of dollars, or euros, of pounds, spent to assist businesses and people to get through the lockdown. And we will see billions more spent to assist businesses to rebuild and restart their operations. We should make sure that we do not focus on short-term survival but on long term sustainability.
While we defend the independence of the private sector, when it comes to receiving publicly-financed assistance, the private sector should be required to follow public policy. Instead of spending 90% of the assistance on propping up existing business models, shouldn’t our leaders be looking at making our economy more resilient?
Financial assistance should come with conditions. Industrial companies should be required to make improvements and changes to their processes that match the SDGs. Where a factory now buys power from a gas-fired plant, any government assistance should require that it buys renewable power – a simple and achievable solution that comes at no additional cost.
Manufacturers should be required to use recyclable packaging, ensure the products are recyclable or reusable, and that their processes are as clean as possible. Regulations could be stiffened to require those producers to take legal responsibility for all lifetime waste associated with their products.
Commercial businesses should re-examine their practices and see what flexibility they can build into their operations. During the pandemic, we have seen an explosion in the use of video conferencing to maintain social links. Millions of people have been working effectively from home, rather than commuting to offices. Do we all, as employers *and* employees, need to commute to offices that use even more resources?
Instead of global supply chains, the business should be encouraged to look locally for materials and supplies, thereby reducing transportation emissions and pollution, and supporting the local community and its economy. And do we need to travel quite so much for business or for pleasure? There already is a growing awareness of the impact our travel habits have on the environment and climate, but the recovery from this global shutdown offers a real opportunity to wean ourselves off needless travel.
Lastly, how can you and I as individuals translate these goals into action on the ground?
As consumers, we can make more responsible choices and look after our outputs. When we buy, we should buy responsibly: are products reusable, recyclable and re-purposeable? Do our products even need packaging?
When we do consume, are we consuming more than we need? Are the electricity, gas, and resources that we use going from renewable sources or are we drawing on finite resources like oil or coal? Do we need to drive all the kilometers that we do? Is our flight necessary? Are we lighting and heating our houses responsibly?
Alternative products already exist for many of us, as we all know. But, critically, alternative choices exist too. It’s time we began to exercise more robustly our power of choice and, as individuals and consumers, ramp up pressure on business, on policy-makers, and on each other to think about the impact we have on our home.
The free-market economic model that was born in the heart of the Industrial Revolution, and which has lasted 300 years, is not fit for the 21st Century and the challenges it presents. We must not insist on a return to business-as-usual.
We, therefore, call on business around the world to acknowledge that the rebuilding of our economies in the wake of this pandemic cannot merely return us to the way things were before. The private sector must accept its historic role in bringing us to this point, and take on both the responsibility as well as the opportunity to fix our problems, even where the government is slow to act.