Breaking the climate wave

This will be the year. An awesome, defining year. The year we emerge from Covid, surely! But beyond that, it’s the year for ‘global Britain’ to show great climate leadership as we host CoP26 in my home town, Glasgow. The United Nations Climate Change Conference. 

The Paris Climate agreement was born of CoP21. So, what will be our CoP26 climate legacy?

To see the waves of change that could help ….. let’s briefly broaden out. The next decade will see various transformational tsunamis. In broad areas like digital, demographics, diversity, human behaviours, the economic paradigm…. and crucially, our natural world, including climate change.

It’s in the convergence of all these big waves that I am restlessly optimistic about the future. There’s massive change coming, which means lots of scope to set the future stage. If we’re thoughtful about how we ride the waves and where we guide them, the future will be bright and sustainable.

Why do I feel this way? A couple of things.

Firstly, at a micro level, we (me too!) have to close the gaps between intention and action. As a wee lock down Christmas read, Mauro Guillen’s book ‘2030’ reminded me of the “mundanity of excellence”. The fact that a lot of small consistent changes can add up to a massive difference. And the fact that we are just increasingly caring more ….. for example, the expectation that the percentage of global wealth owned by women will rise over to over 50% by 2030, and statistically, studies show women care more and do more about sustainability (source: Mintel), and that’s before we look at the millennial stats, which paint a similarly progressive picture! Actions include, switching to renewable energy and allocating some of our lifetime savings to green investments, smart devices to conserve energy – three obvious ones.

At the macro level, the optimism comes from a government that wants to (needs to even!) lead on the world stage. A post-Brexit government seeking to be ‘global Britain’. And a Government hosting CoP26 this year, and seeking ideas to lead on climate matters. There is so much commercial and fiscal policy can do to nudge consumers to effortlessly make sustainable decisions. Decisions that leave the world no worse off than they found it.

As the environmental economist Alexandra Pinzón Torres put it “we have to include natural capital in our economic systems in order to create a sustainable future”. Here here. And so, some examples of ideas that speak to that. Just imagine if we had...

1          Carbon costed fiscal policy. What if goods and services had a red, amber, green carbon rating; based on their cradle to grave carbon cost. Much the same as we do for salty, fatty and sugary foods. It would require companies to measure these costs (and what gets measured, typically gets improved). Modern technology like blockchain could be embraced to enable this. It would also nudge and enable consumers to make informed decisions and make a virtue of free capitalism. This could be a precursor for variable sales taxes, which refocus the burden of tax onto goods which are most costly for society.

2          Sustainable economic targets. Refocus GDP growth to be net of the cost of offsetting of the total intergenerational costs (i.e. the carbon cost of delivering that growth). This would position the UK to target sustainable GPD growth, which would stimulate the innovation needed to deliver it.

3          Inclusive procurement. Starting with Government requiring its suppliers to quantify the carbon offsetting costs of the goods and services they provide. It would enable a complete view of the cost to society of a service, penalising unsustainable behaviour by capturing externalities in price. This creates an incentive to innovate and reduces today’s invisible inter-generational, inter-departmental cross subsidies.

Where the UK leads, I’m optimistic that other countries will follow. But this won’t happen by chance. For example, the OECD estimates that government subsidies for activities that exploit nature amount to around $5tn per year globally (that’s a 5 with 12 zeros after it…. or around two years of the UK’s economic output).

And so, to pensions and investments, Jeff Bezos comes to mind: “If you fight [external trends], you’re probably fighting the future. Embrace them and you have a tail wind”. When will even the most cynical investor ‘do the right thing for the wrong reasons’ go ‘all in’ to sustainable investments I wonder! In the meantime, there is so much more our collective ￡4.5tn of lifetime savings in the UK could do to forge a better, more sustainable future for us individually, collectively and through the generations.

Which brings us back to this year. And CoP 2026. What a huge opportunity for Governments to make it easy for their citizens to leave the world better than we found it. And meantime, here's to all the small but mighty changes we can make to secure a sustainable future….