No room for doubt

Oxfam’s Survival of the Richest

Oxfam International has published its annual inequality report, this year titled Survival of the Richest – how we must tax the super-rich now to fight inequality. Once again, the statistics are deplorable and disturbing. It’s no wonder that the World Economic Forums’s 2023 Global Risks Report listed the cost-of-living crisis as the # 1 global risk over the next two years. This is a must-read report. It illustrates not only that the wealth gap is real and significant (we knew that), but more importantly that it’s growing, with the 1% richest people gathering two-thirds of new wealth created between 2020-21. In other words, the poor are getting poorer while the rich are getting richer. The report is much more than a compilation of data measuring the scale of the problem. It also proposes a very clear and bold solution of taxing the rich to significantly reduce wealth inequalities. It also provides some insights into the evolution of taxation regimes over the last decades and the strong correlation between cutting taxes (wealth, inheritance, corporate) and increasing the wealth gap. Among other things, it suggests that returning to prior existing taxation levels would dramatically reduce this gap… A concept perhaps similar to that of returning to prior existing consumption levels to address climate change and planetary boundary overshoots.

“We are living through an unprecedented moment of multiple crises. Tens of millions more people are facing hunger. Hundreds of millions more face impossible rises in the cost of basic goods or heating their homes. Climate breakdown is crippling economies and seeing droughts, cyclones and floods force people from their homes. ?Millions are still reeling from the continuing impact of COVID-19, which has already killed over 20 million people. Poverty has increased for the first time in 25 years. At the same time, these multiple crises all have winners. The very richest have become dramatically richer and corporate profits have hit record highs, driving an explosion of inequality.”        

Circularity Gap Report 2023

Circle Economy has released its 2023 Circularity Gap Report, highlighting – yet again – that the circularity of the global economy is not only low at 7.2%, but also dropping – from 9.1% in 2018. This is a(nother) must read report. Like its predecessors, this report is chockfull of valuable information, backed by copious quantitative measures, and distilled into insights about all things related to a circular – vs linear – economic model that would enable us to live within our planet’s natural boundaries. Once again, the message is that the linear economy has exceeded the safe and healthy limits of the planet. The report offers both a comprehensive assessment of the problem and an equally comprehensive set of solutions. Chief among them: reduce our consumption.

“The economy is embedded in nature and nature has limits. We must, therefore, also place boundaries on material use and prioritise the transformation of material use into societal benefits. This means a circular economy must push for a cultural shift to prioritise immaterial ways to fulfil needs, and invest in health, wellbeing and education and decent jobs, rather than material accumulation—as does the predominant economic model in many parts of the world.”

Shift’s 2022 Canadian Pension Climate Report Card

The Shift Action for Pension Wealth and Planet Wealth has released its inaugural 2022 Canadian Pension Climate Report Card. It offers an independent benchmark for evaluating eleven (including the so-called ‘Maple 8’) Canadian pension managers’ climate policies based on the latest science and international best practice. It complements the Canadian Pensions Dashboard for Responsible Investing and Building Climate Resilience in Canada’s Pension Funds reports, which assess the climate and responsible investing approaches of these pension funds. While findings may not be surprising to readers, they are useful in taking stock of where we’re at. Most noteworthy is the finding that “the climate plans of Canada’s largest pension funds are not yet aligned with the path required to protect the retirement security of beneficiaries while ensuring a safe climate future.” There’s also a refreshingly candid observation of “a Canadian reluctance to admit that fossil fuels lack credible climate-aligned pathways.” Reports like this one are important because pension funds are large – universal – asset owners sitting at the beginning of the investment chain, representing a significant driver of change for asset managers and company boards and c-suites.

IMP System Map

The Impact Management Platform recently launched a new tool called the IMP System Map, providing a high-level visual for companies and financial institutions to manage their sustainability impacts. This is an outstanding resource that does a very solid job of mapping the principles and standards, guidance and tools, indicators, and metrics and databases, that are all available as a public good and predominantly voluntary in nature. It helpfully distinguishes between practice, disclosure, and benchmarking, between the value perspective to the organisation and to society, and between resource type. It also comes in two versions – one for companies and one for investors. It helps us understand which resources are available and how they interrelate; and like any good mapping, it identifies areas for harmonization and gaps that need filling. It may take newcomers a while to find their bearings, but it’s worth the effort. It also illustrates the very rapid evolution in thinking about, understanding, and measuring impact, which is now finding a home in the context of corporate sustainability practices and disclosures. We should expect continued convergence in the impact measurement and management space in the months to come.

UNEP and S&P Global Sustainable1 Nature Risk Profile

The United Nations Environment Programme (UNEP) and S&P Global Sustainable1 announced the launch of Nature Risk Profile - A methodology for profiling nature related dependencies and impacts. While aimed at enabling the financial sector to measure and address nature-related risks, the methodology outlines metrics and data to identify and quantify companies’ nature-related exposure. At first blush, this might seem like a good thing, given that biodiversity loss is a critical system-level risk. However, it’s a bit surprising to release such a methodology when the ink on the Kunming-Montreal Global Biodiversity Framework adopted last December at COP15 hasn’t dried yet. Also, surprising that it aligns with the approach of the Taskforce on Nature-related Financial Disclosures (TNFD) – which is great – when the latter has not been finalized yet. It is also worth noting that while the UNEP is non-profit organization, S&P Global Sustainable1 is a for-profit entity that produces ESG ratings – and advisory services – for companies. Perhaps it’s no surprise that the methodology comprises a “dependency score” and an “impact score” that can be applied overall or to a sector, an asset, or a company. While the methodology might be sound and leveraging existing credible resources, it may be putting the cart before the horse, because we are still so very far away from companies getting a grasp on the key concepts of dependencies and impacts, let alone on how to measure them to better manage them (and improve their scores?). As pressure for companies to change keeps rising, they need time to absorb new information, assess and decide on what to do (biggest blocker here being board and executive inertia), and then implement their action plans to effect change. All of which leads me to think that even though we need to move fast to address the global threats to our wellbeing and survival, there may be such a thing as too fast.