When Neil Armstrong first stepped on the moon he may have not imagined that after half a century humankind would need another substantial leap, this time with more magnitude than the extra-planetary achievement he was a part of. Correcting the unbalances in today’s society and the planet need to sit at the forefront of human concerns and efforts and should represent the essence of working for a more sustainable world.
All of us as individuals and as part of collective stakeholders have a role to play. We have to work with others at various levels in a collaborative, open and transparent way, with an honest and decisive commitment, seeking consensus and balance, informed by science and by the values and opinions of all stakeholders. And we have to move fast.
But we are still a long way from those efforts being pulled together in the right way and at a global scale. With a planet crying for help and a society with chronic and still growing inequalities, not enough is being done.
If we look at the current role of governments, in a way illustrated by the below par results of the recent COP 26, we notice the gap in the global consensus that need to be achieved to limit the impact of climate change to within the Paris Agreement boundaries. One of the explanations for that relates to solving one of the biggest conundrums in modern day economics and politics: how to consume less natural resources and non-clean energy against the background of a continuing high growth rate of the world population and while the developing world is still (legitimately) seeking better living conditions and economic wealth. Other explanations relate to the power of current economic vested interests, the short-term nature of political cycles in democracies influencing required decisions that may not be popular, other types of excessive focus on short-termism, or simply just inertia when faced with the need for real change.
Those reasons explain why some big developing countries are still not in a position to set net zero targets in line with the Paris Agreement and to accelerate the phasing out of fossil fuel use (starting with coal and methane) or why some car producing countries resist accelerating the phasing out of sales of internal combustion engines. While some progress has been made in several fronts, the gap to what is required and the speed of action is still highly insufficient.
A true collaborative engagement between countries and an honest search for balance and consensus is required. It is important and rightly responsible for wealthier countries to help developing ones to the full extent needed. At the same time, some consumption habits need to change, but this does not mean people have to abdicate their quality of life, hardly built over many decades, it rather signifies that lifestyle choices need to be smarter for the good of everyone. Science and technology evolution should also help steer in the right direction, as will businesses transformation to offer more sustainable products and services.
The challenges facing us can easily be monetised and financing is also strongly needed. While wealthy countries could not bridge the gap to the US$100bn a year required in public support to developing countries up to 2025, that amount is just small change compared with the $100tn estimated to finance the sustainable energy drive over the next three decades. It is evident that public monies will not be enough and partnerships between governments, multilateral banks, private investors and financial institutions will be required. For that purpose the constitution of GFANZ, or the Glasgow Financial Alliance for Net Zero, representing several large asset managers and banks committing to help the transition to a low carbon environment, is good news as its potential contribution could be highly significant. It rests to be seen if and how that potential commitment translates into reality. And the world also needs a set of universally accepted common standards to ensure initiatives are really genuine and mitigate the risks of greenwashing. Efforts have been made in that direction (e.g. the EU Green Taxonomy) but there still is work to be done.
Efforts to conclude adequate international governmental agreements in the climate and societal areas need to be aligned with the right set of targets and plans at national level. From regularly revising Nationally Determined Contributions (NDCs) for carbon emissions to ensure that they are both ambitious and feasible to establishing the right national and sector legislation and regulations, governments will have a critical directing role to play. Among these, pricing carbon and adequately setting the respective global market framework remains paramount. Another highly important aspect is that since the journey to a low carbon world involves structural transformation, adaptation and a degree of economic and social sacrifice, it is important to ensure a just transition, along the same lines as for the post-Covid economic and social recovery. The right balanced philosophy and action can smooth out the journey.
Alongside the efforts that governments and finance should develop, business in general has a crucial role to play in the transition to a more sustainable world. Operating responsibly and adapting and creating products and services that take better care of the environment and benefit all stakeholders in its ecosystem, from staff to customers, shareholders and investors, suppliers, other business relations and communities should drive the efforts.
Achieving great outcomes such as becoming carbon neutral (or even carbon negative) in a wider sense (i.e. directly and indirectly), not harming the environment and contributing to the well being of all stakeholders and society at large should guide all businesses.
The most effective way to achieve those final outcomes on a consistent and sustainable basis is to ensure a business has the right culture, one that puts sustainability at its core. This will ensure that the right strategy and practices are consistently present to produce the desired results for all stakeholders and the planet.
Although current efforts produced by all stakeholders in the planet are very shy of what is required and the challenges ahead are daunting, there should be hope. If humankind was able to advance science and technology and to create so much economic wealth and efficiency, it is certainly capable of solving the critical issues now facing us, there being goodwill and a more humanitarian approach.
We should hope that world leaders will find and use the goodwill to collaborate, agree and set adequate international and national policies, laws and regulations. We should also hope that the financial world will genuinely and effectively support the huge scale of the adaptation and transition processes. And all those involved in businesses need to work decisively and rapidly in transforming them for better, putting sustainability at its core.
The test will be passed if in five generations people will look back and praise their ancestors because they did the right thing. For that humankind needs various immediate and decisive steps to achieve the gigantic leap required.
Ricardo Pires
