25 October 2021
Glasgow must be a turning point in our efforts - not because of what happens there, but because of what we do differently the day after everyone goes home, argues Simon Zadek
As we head for Glasgow – either literally or in our efforts, hearts and minds – the ideas and words of three superb intellectuals come to mind.
First up is Barbara Tuchman, whose wonderful book, 'The March of Folly', entertains us with case after case of great leaders throughout history making unnecessary errors with catastrophic consequences.
Second is Jared Diamond, who in 'Collapse' provides us with glorious historical illustrations of why societies fall apart, not least because their elite can externalise the pain onto the shoulders of others, or else find out too late that they too have to pay the price.
Third, digging back further in time is the philosopher Erich Fromm, who in his 'Sane Society' argues convincingly that the more technologically and intellectually advanced a society becomes, the more it risks falling into collective insanity, marked by the automation of our lives – and with it war.
These three voices illuminate the most obvious observation of our time. That everyone knows what needs to be done and the implications of not doing it, and yet the odds of those who lead us, who have most power, doing the right thing, is vanishingly small.
In case you missed the memo, look no further than the Bangladesh Prime Minister's recent op-ed in the Financial Times. Paraphrasing ruthlessly, Sheikha Hasina makes the shocking but self-evident point that if we do not advance far more ambitious climate action, part of Bangladesh's 165 million population will be without water, and the other part under it.
And if, for many, Bangladesh seems 'too far away to count', look no further for a taster of what is to come for the world's wealthiest communities than recent storms, floods, and energy & food price hikes.
Such outcomes are, said simply, our collective choice, including the financial community. As a recent UNEP report highlights, we continue to increase our investment in the bad stuff, with $300 billion in new funds channelled towards fossil fuel activities since the beginning of the Covid-19 pandemic — more than the global investment in clean energy.
Achieving meaningful collective action is a matter of broad-based solidarity between the parties, notably those who have, and those who have less. As Elizabeth Mrema, the Executive Director of the Conference on Biological Diversity, pointed out on the eve of the Kunming COP15 Summit on nature, such big deals are unlikely if wealthier people cannot even provide poorer people with the Covid vaccines they so desperately need.
"If we do not advance far more ambitious climate action, part of Bangladesh's 165 million population will be without water, and the other part under it"
My observations are not a counsel of despair, and frankly I am fed up with those who accuse folks who point out the obvious as being 'too negative'.
No one, least of all me, would dismiss the efforts of so many extraordinary people trying to make a climate difference, including many friends, colleagues and partners. But that notwithstanding, what we are doing is too little, too late, and as such might even be an unintended distraction from much-needed disruption.
We must hope and push for the best, but plan for the more likely worst. What we hope for from Glasgow is ramped up government commitments to reduce emissions, more spend on mitigation, and to ensure a just, if painful, transition.
The surround sound needed is an extraordinary upsurge in ambitious commitments by the business community and the wider public.
I have no doubt we will get some of this, thanks to the heroic efforts of many. But most probable is that we emerge from Glasgow with some laudable but underwhelming commitments, and a few more climate dollars that will be more than absorbed by developing countries' ballooning Covid-linked debt repayments to, well yes, richer countries and the financial community.
Business, including finance, will be very visible, vocal and supportive, but actual asset allocation tells a different, darker story.
So what might be the 'so what' of this self-evident critique of the state of play. I want to offer five possible building blocks for a more aggressive post-Glasgow world.
First, whilst continuing to act ambitiously in reducing emissions, we need a new political narrative that places far more emphasis on practical planning for a very different world, rejecting the fake 'win-win' narrative that 'we can make the transition without pain and loss'.
Second, we need to face the fact that climate and nature-related risk pricing and disclosure will deliver way too little in reallocating private capital to invest in a liveable world for all. We need to embrace the uncomfortable truth long spoken by Global Witness and now many others that we need to make it impossible as well as immoral to invest in ways that are sustaining our journey into an unliveable world.
Third, we need to ensure that the 500-plus public development banks owned by us through our governments, with their cumulative balance sheet of $11.5 trillion and accounting for 10% of global investment, are directed by their government shareholders on our behalf to deliver net zero and nature positive by 2030, or else close their doors, as recommended in a recent F4B report.
Fourth, we need the world of public finance, amounting to $25 trillion-plus a year, to be rapidly and transparently aligned with net zero and nature positive outcomes, to have larger and more visible allocations to invest in radical adaptation, and to demonstrate compliance through transaction-level transparency.
Fifth, we have to bite the political bullet and shift relative retail prices to disincentivise climate and nature-destructive consumption behavior, building compensatory payments to ease the pain for poorer citizens, and using behavioural 'nudging' techniques, such as those being taken forward by the Green Digital Finance Alliance-hosted alliance of mobile payment platforms, Each Action Counts.
Glasgow must be a turning point in our efforts, but not because of what happens there, but because of what we do differently the day after everyone goes home.
We need to celebrate what we achieve in the city that is 'miles better'. But equally, we need to be willing to let go of those efforts that are not commensurate with what needs to be achieved, and embrace a more radical agenda that aligns global finance with its core purpose of investing in the future we want and need.
Dr Simon Zadek is the Chair of Finance for Biodiversity (F4B).