A commentary by Alejandra Garza, Sarah Wahby, Flavia Roehrs, Deepak Ashwani (YGCs, 2019)
Sustainable development involves a paradigm change in individuals’ behavior, enterprises’ purposes, and governments systems. This requires the alignment of societal interests and business models to incentivize environmentally-friendly practices and collective action.
Several countries and regions have put in place carbon pricing policies, such as the pollution pricing system in British Columbia (Canada) or the ecological incentive taxation model in Switzerland. Naoyuki Yoshino, Chair of T20 Japan, suggested taxing corporations according to the amount of CO2 emissions they produce, leveraging on the technology that is now able to determine this. Paying a fair price for pollution considers the Sustainable Development Goals of the United Nations since it does not solely focus on maximizing profit, the current main priority for businesses and its shareholders.
However, for such policy to work effectively, climate friendly technologies need to become cheaper and more attractive to both businesses and consumers. Heavy investment is needed in sustainable infrastructure for cities, for energy and for digital infrastructure. In addition, it is important to avoid carbon leakage by introducing the carbon tax at a global level so that companies do not switch countries to avoid a carbon tax. Angela Merkel, Chancellor of Germany mentioned that even though Germany has an energy tax in place “…we also have exceptions for energy intensive industries, to remain competitive globally.” This shows that governments do move in the right direction, but these built-in exceptions show their reluctance to compromise on economic profits.
Subsidies are a central tool to governments’ incentives scheme. If we are to encourage green and environmentally friendly economic activities and discourage fossil fuel industries this must be reflected in the subsidy systems implemented by governments. Virgine Marchal, Senior Policy Analyst of the OECD Environment Directorate explained that the OECD’s priority is to eliminate subsidies that are favoring fossil fuel intensive industries, mainly the energy sector. Around 300 to 600 billion dollars are spent yearly on energy subsidies and this needs to be stopped. Moreover, agricultural production is heavily subsidized in the European Union. Still, we can make sure that these are green subsidies that help shift the behavior of farmers to sustainable practices, like using less fertilizers and moving to more responsible types of agriculture. Moreover, animal agriculture is the single biggest contributor to climate change with 18% of Greenhouse Gases being emitted from this sector compared to 14 percent from the transport sector, according to the EPA. Accordingly, policies such as ending the subsidization of meat industry and taxing meat products should be put in place.
If climate change is at the center of our agenda, it should be at the center of the way we measure success as well. Economic progress of countries is still measured by GDP, which does not account for environmental degradation, e.g. the cleaning up of the oil spill in the gulf of Mexico led to an increase in GDP for the US. Similarly, companies measure their success by financial profits, but if the costs to health and to environment due to emissions were incorporated in companies’ balance sheets, companies would not be as profitable as they appear. We must, in the face of the urgency of climate change, redesign our measurement system. If we encompass in our measures of success sustainability indicators along with economic and financial indicators, we will create incentives to businesses and countries to act more sustainably. This, therefore, calls for a real paradigm change to think of climate change as a measurement of success of a country away from the sole dependence on monetary and financial measures.
For climate action to have a leveraging effect, it is imperative for it to be collective. As Svenja Schulze, Federal Minister for the Environment of Germany, stated in her speech, we need to show respect to those who depend on carbon emissions intensive industries, whether employees or business models, and find alternatives for them, otherwise we risk jeopardizing social cohesion. This was echoed by Alexander Bonde, Secretary General of the German Federal Environmental Foundation, who explained that the most underprivileged are typically the ones who are most affected by climate action. Therefore, we must obtain their acceptance of the process and design policies that ensure that they come out as winners. However, Kirsten Dunlop, Chief Executive Officer of Climate-KIC, had a different view as she suggested that many alternatives to fossil fuels have a wider set of opportunities for better distribution of resources, assets, wealth and participation in decision making than the big industrial models based on fossil fuels which are mainly about concentration of means of production. These are rather models about the distribution of means of production and the distribution of soft management.
The Global Solutions Summit panels on climate gave insights in academia, policy-making and civic engagement, but these ideas need to be linked and transformed into real actions. The solutions and ideas are voiced throughout the world, now it is on us to create systems that allow our societies to thrive within the planetary boundaries.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of the Global Solutions Initiative.