Blog by Steven Stone - Chief, Economics and Trade Branch, Green Economy Initiative, UN Environment
Geneva, 06 March 2016 - A lot has been said about the surprise results coming in from recent elections and referendums across the globe, and many point to the same thing: growing dissatisfaction and disenchantment with the status quo. Despite rapid progress – or at least the appearance of progress – since the close of World War II, the basic tenets of our prosperity including free trade, free markets and globalization writ large are being called into question.
And perhaps justly so. In spite of the large uplift of population from absolute poverty levels – principally in China but across the emerging economies – social inequality between and within countries has rarely been as high, with the top 8 income earners in the world now grossing the equivalent of the bottom 3.6 billion of the world population.
On top of this, the gains achieved by growing our economies fourfold in the past decades – to USD 75 trillion in 2016 – appear by many measures to have come at the expense of our overall wealth. Out of 202 countries in the world, 77% of them are found to be drawing down their natural capital and wealth. Ecosystem health is eroded, vegetation is disappearing, and collectively we are crossing planetary boundaries with regard to species loss and nutrient overload. Put short, our economies are delivering short term gains, unequally, and at the expense of our broader wealth.
Yet there is a growing recognition that this need not be so.
The global community has developed a plan for people, prosperity and the planet – the sustainable development goals, universally adopted by all countries in 2015, and which open a window for meeting the historic challenge of putting our societies, our economies and our lifestyles on course for reaching the 2030 Agenda for Sustainable Development.
At its base, this will, like all things, depend not only on leadership and commitment from policy champions, but now more than ever, on the recognition that it is our lives, our decisions and our choices that will shape the contours of the future.
The decisions we make about our lifestyles, our jobs, our families will determine how sustainable, secure and peaceful our lives will be in the future. In a world of 7 billion people, we no longer make our decisions in a vacuum. A growing awareness of how our health is intrinsically related to the environment – clean air, clean water, and clean food - can change the way we think about sustainability, taking it from an abstraction to something that affects us directly each and every day. It can drive the demand to detoxify, decarbonize and decouple our economies from unsustainable patterns of consumption and production.
So how to create inclusive and green growth?
The policy mixes are there and have been on the table for some time – which include aligning prices with true costs, because until we do neither producers, consumers or investors are getting the right signals. It also includes examining subsidies and how public funds are spent, particularly when they perpetuate our dependence on fossil fuels or heavy resource extraction.
But beyond this, inclusive growth comes down to something more simple: jobs.
Are our economies producing the kinds of jobs needed for the future? Are our schools and universities providing the training and skills needs for the jobs of tomorrow’s economies?
The short answer is probably not – yet.
Which is where the focus on trade and investment comes in. In a globalized world, a world of low friction and deceptively cheap transportation, it was natural enough that production shifted to those parts of the world where costs were lowest. And up to a point, it generated massive benefits, particularly for consumers. It’s just that the benefits were not equally spread, and eventually, the lack of producer surplus – jobs – resulted in the backlash we see today.
How to remedy?
An inclusive, and green economy, needs to invest in its people. It needs to put people in the center of the economy, and invest in their skills, their training, their future. Innovation, creativity, informed intuition – these will be the hallmarks of 21st century economies.
Of course, competition and technological innovation will continue to exert pressure and create disruption, as it has over the centuries. Trade in itself is not intrinsically disruptive, but like financial markets and other key parts of the economy depend on how it is governed. Imagine what free trade – and job markets – would look like today, if the full costs of maritime, aviation and ground shipping were reflected in market prices.
Behind all this, financing is needed, and unlocking and redirecting capital flows is probably the single most important challenge facing us. Currently, the vast pools of assets – estimated at USD 300-400 trillion – are invested in any number of ways, but most it is fair to assume are not directly underwriting the sustainable economy of tomorrow.
Here, however, as elsewhere, there are reasons for optimism. The UN Environment Finance Initiative works with financial industry leaders who see value and future growth in sustainability markets, and are driving concepts such as “total impact” investing. The Inquiry into the Design of Sustainable Financial Systems has putting financial markets governance under a microscope, and fed their findings and insights into the G20 working group on green finance.
Ultimately, though, many of the reforms needed will again come down to the base: individual choices made by people like you and me. How are we investing our time, our money, and our efforts?
Hard questions with no easy answers, but a growing field of opportunities for like-minded solution seekers to press further with their own inquiries.
For example, an entire movement of “towns in transition” is underway, reclaiming communities and even the means of barter and exchange used within them.
There is a zero-waste movement, extreme in form, that shows how consumption can be redirected to reduce and reuse packaging.
There are elements of the sharing economy that are starting to surface around the globe, many of which date back centuries as well established patterns of building and maintaining social bonds and fabric of the community.
Recognizing the need to explore alternatives, a group of like-minded individuals will gather in Berlin later this month from March 27-28 to pursue these questions and tease out their inter-relations. How can informed consumers shape sustainable lifestyles, and how can the entrepreneurs of today and tomorrow’s economy cater to them? And what policy and price signals are needed to create a distortion-free market that is capable of signalling and pricing in ecological scarcities and risks? And finally, what channels exist to attract and secure investors in the economy of tomorrow?
Mahatma Ghandi had an expression that seems apt – be the change you want to see in the world.
His message: it starts at home.
Same message we received from recent elections and referendums – it starts at home. And so kitchen table issues – like jobs, food and health – will dominate.
All the more pressing, then, to make the connections between these issues and the 2030 Agenda.
Until our lifestyles, our homes, our policies and yes, our finances are geared toward sustainability, we will struggle to make the connections to our deepest source of inspiration, wealth, and well-being: our shared environment, the earth, our home.
Sustainable lifestyles, green investment, inclusive growth: the ingredients for a greener and more prosperous future. And one well within our reach. Because it is our choice.
This blog was also published by Thomson Reuters: http://sustainability.thomsonreuters.com/2017/03/10/executive-perspectiv...
