We are a part of this planet history, being the existence of most of us a tiny fraction in its timeline. René Magritte, the surrealist Belgian painter, illustrated so quite well in its “Human condition” paintings, one of which pictured above.
This realistic vision is also myopic to the extent that most cannot see the collective impact of individual similar actions. Those squandering behaviours continue as more of the old or similar products are available at the distance of a shop or a click & collect. Ecstatic by the new items or services purchased consumers may perceive a life in heaven when in fact are continuing the curse on the Planet. René Magritte’s La Malédiction, (The Curse) from 1963 and pictured below, illustrates it quite well.
We do have a chance to switch the surreal curse into a real paradise! Switching from the unsustainable linear production and consumption model to the circular model is a way to achieve so.
Achieving sustainable circular economy models stimulates creativity and innovation in the quest of giving goods a longer life, increasing thus its usage not only in one product but also in subsequent manufacturing processes.
Reducing the national depletion rate gap which spans from January to December is thus a must. The later in the year the better. And the soon we can change those habits, the better. The big depletion rate comes mainly from the 1% who in their culture of wealth demonstrations drive the Planet to a continuous global warming. How about following Bill Gates in donating fortunes to well managed institutions to tackle global causes instead of continuously seeking to being featured in the Year’s wealthiest person. He is donating his to the Gates foundation. Well done Mr Bill Gates.
Human capital has increased globally yet there are nations that prevent it from being used, either fully or partially. This is a waste of resources that should be reduced too as in so doing and well oriented may lead to Natural Capital improvements.
René Magritte gives us a perspective of our existence. We have a chance to act with overlasting impact, too. Would be good that by 2030 the depletion trend we have seen in the last four decades as illustrated in the graphic below is reduced and by 2050 is reverted. Yes, we can! Obama said so and made history! Collectively, Humanity can achieve what is needed. It does request a mindset shift too.
Each year on April 2022 we celebrate our Planet Earth, which as a living system, changes according not only to the intrinsic but also to the extrinsic factors. Many climate scientists have shown through their research that global warming during Anthropocene has been a consequence of Human activity, accelerated by the industrial revolutions.
As awareness raised so did the pressures to move away from exhausting the limited resources our Planet has been offering us so they can be used and consumed for longer allowing future generations to also use and consume them. To do so without reducing socio-economic welfare requires updates on processes, technologies and mindsets. Investment is thus needed. Investing in our Planet, if correctly done, implies an investment in society and consequently an increase in welfare. The latter stemming from for example reduced health problems due to cleaner air resulting from improved production technologies which pollute less too.
Increasingly more investors are aware of this need and opt for responsible alternatives allocating their money in sustainable investments, enlarging the sustainable investment pie. They also show the mindset change investors need to undergo. Yet risks of continuous greenwashing in investment still exists as the OECD recently pointed out, asking for standardisation to make sustainable investments easier to track and compare. The United Nations estimated in 2018 a range of 5 to 7 USD trillion annually needed to meet the agreed SDGs by 2030. Between 2018 and 2020 sustainable assets under management rose 15% according to the World Economic Forum to about USD 35.3 trillion. Yet, this level is behind UN’s expectations by 17% on average, as shown in the graphic below created by me with UN data. The lockdowns imposed as the Pandemic emerged resulted in a slowdown of investment projects as risks of unprecedented recession emerged, and the resulting drop on the global output might explain to a great extent this deviation.
Also due to the Pandemic the issuance of sustainability bonds, green bonds and social bonds, financing instruments for socio-economic and environmental purposes, accelerated to unprecedented levels too. By the end of this year, sustainability bonds issuance is expected to exceed USD 1.5 trillion. Will the pace be maintained and the sun rise through forests expanding our life and our planet’s?
Being sustainable means that existing resources will be used in a way that current as well as future generations can access and use them to the same extent permitting similar or better living conditions. So, it’s not only for the future but also for the present! Hence, I’m sharing with you the 3 fundamental reasons why you’ll fall in love with sustainability as soon as you realise the good of it.
Thanks to technological and knowledge improvements the air has gotten cleaner. According to the World Health Organisation (WHO), 395 million people suffer from chronic respiratory diseases (CRD), over 10 million die annually and 4 million of them do so prematurely. Other sources identify over 500 million of CRD and a 39,5% increase on CRD between 1990 and 2017. The WHO has identified “tobacco smoke, indoor and outdoor air pollution, and air containing microbes, toxic particles, fumes or allergens” as the top sources of unhealthy air. It is known that GHG emissions have soared since the beginning of the Anthropocene as the world was making economic progress, which paved the way to further research and the current knowledge. It has been a trade-off society has incurred. Given that technological developments and policies have enabled an increased renewable energy generation in the energy mix, powering further progress, society has a duty to transit to a cleaner energy mix, doing so reliably and robustly. Aligning stakeholders to do so has been challenging but as more benefits from deploying such technologies are understood less resistance is faced. An illustration of such improvements is the air quality in Beijing, more in the spotlight in the last two weeks due to the 2022 Winter Olympic games. It has been reported that Beijing has improved its air quality implementing very tough measures such as a winter without heating to force replacement of old coal boilers for cleaner versions and halt of the production from polluting sources. In the graphic below, which I elaborate using Air Quality index data, it’s observable that Chinese air improved during 2008 Olympics but retreated 3 years later, to improve again. Recently, the FT published two pictures of the same location of Beijing in 2008 and 2022. The first showing thick levels of pollution and the second a clear sky. Cutting pollution implies fewer toxic particles in the air and an expected improved air quality, which reduces the number of people with chronic respiratory diseases and hence a healthier population, in what concerns CRD, hence a better life quality. Doesn’t that make you happier?
2. Getting wealthier
Sustainable goods and practices are characterised by being durable, which means they last longer than non-sustainable ones being manufactured for multiple uses. They also should be conceived for reparation and re-integration in the manufacturing cycle extending the product and its components life expectancy. This means that instead of spending for example, 30 euros for a sweatshirt every year, you spend for example 60 euros on a sweatshirt which can be used in great conditions for 7 years. In doing so, the materials you’re saving by reusing multiples times the same product are being saved for future generations, so they can also be accessed and used while simultaneously you’re financially saving.
Multiple studies such as the IPCC reports show that climate change will affect geographies with extreme weather events. Knowing the risks to be faced and how to mitigate them, may allow for future savings, which ultimately increase wealth.
It has been shown that being sustainable has benefits for the Planet, the People and the Organisations. Leading organisations such as Unilever have embraced in sustainable practices and improved their revenues as shown in the graphic below, I created based on macro trends data, along with its profits, share value and distributed dividend and yield. Paul Polman, its CEO between 2009 and 2019 has been the face of sustainable leadership pushing for a systemic transformation in businesses and in society.
3. Building better
As a responsible citizen or organization, you embrace in sustainable practices, which include consuming and producing responsibly. Doing so, allows the finite resources to be maintained for a longer period allowing future generations to use them and enjoy high living standards. Aren’t we grateful for the land which has been feeding the world? Or to get to beaches and mountains that have been kept accessible and clean throughout the years by our ancestors? Haven’t we benefited from Leonardo da Vinci, Thomas Edison, Marie Curie, and millions of inventors, studies, good practices that have been contributing to society’s increased welfare and life standards? So why are we preventing future generations from enjoying the good in our Planet and improve future life standards? Do you want to Build Better? Reach out to me, perhaps I can help you!
The Emissions Gap Report, published this week by UNEP, supports IPCC AR6 and the UNFCCC’s NDC Synthesis Report with regard to the urgency needed to mitigate and adapt to Climate Change.
The efforts some countries expect to make, recently communicated through the updated NDCs are welcome. The World has become #onestepgreener. Yet, much more is needed as map 1 created by EGR team illustrates. Its efforts combined with corporate pledges only reduce greenhouse gases emissions by 7.5% (EGR, 2021).
To limit Global warming to 1.5ºC, with a 66% probability, a reduction of 55% from pre-industrial levels needs to be met by 2100, so atmospheric carbon concentration is at the 430 ppm maximum level. Different scientific sources inform the current carbon budget is over 410 ppm. Its increase rate has changed between 2.6% and 1% annually, according to World Meteorological Organisation (WMO) data. If we keep releasing at these rates, the carbon budget will be reached soon. In 2024 and 2025 respectively, as my calculations show in the graphic below, using WMO data. Given the current NDCs and pledges, a 66% probability of limiting global warming to 1.5ºC, by 2100 seems a too optimistic scenario. The EGR informs that with current emissions rate trend, the Planet will have warmed 2.7 ºC by the end of the century.
Emissions trading schemes, a big topic to agree on during COP26, have been contributing to limit atmospheric emissions in some sectors. As companies operating in those sectors are penalised for the GHG emissions they directly generate above the set threshold, they had to decide on its optimisation. Choosing the right scenario implies a thorough process, where sustainability needs to be at the centre of the decision making. Let me remind you that sustainability is a broad concept based on three pillars; environment, social and governance. A concept not always properly used, as greenwashing cases have shown.
We all inhabit this Planet. We all profit for the care we take of it. Like the community who takes care of its common property, the more stakeholders look after it, following the set standards, the better the outcome. When it’s a voluntary work, there will be free riders who will not contribute but will benefit from others’ collaboration. When collaboration is mandatory, the collaboration’s output will reach a higher level. Very likely welfare gains will also be higher. If this behaviour is scaled to a global level, with each neighbour being each country, mandatory global emissions trading scheme could be the most beneficial for the sustainability of our Planet.
Given that not all the parties have updated their NDCs and only 60% of G20 countries have set Net-Zero targets, how can COP26 succeed in managing the global GHG emissions effectively? Isn’t the world risking for the own backyard mindset to prevail over the protected forest one? Would setting national emissions trading schemes delay the Net-Zero goal as countries spend their resources on deploying so instead of allocating to deploy a global scheme? Getting countries to update their NDCs in a Pandemic scenario has been limited by the short-term political perspective. The EGR mentions that only 2,6% of public budget spent during the Pandemic were on activities that potentially reduce GHG emissions. This shows sustainability’s environmental pillar hasn’t been a core investment criterion. The world wasn’t prepared for the black swan and diplomacy failed to influence properly and seize the opportunity to change for good and speed up decarbonisation.
I agree with the EGR – The heat is On. Acting globally instead of individually, leads to efficiencies on capital allocation. When managing emissions with a global system, most likely corporate admin costs would be reduced. Capital savings could then be used to further decarbonise organisations’ activities. It also shows we are #togetherforourplanet.