The World Economic Forum published its global risk report at the beginning of the year, marking the many challenges we face as a global society today in the short, mid and long term. And while most of the short term concerns seem to stress social matters (primarily due to the recent sanitary crisis), the long term ones carry vast climate worries, including the fear that little action is being taken to combat an intensifying climate crisis.
Although the lockdown caused by the COVID-19 crisis saw a decline of GHG emissions worldwide, they soon rose to levels that portray an alarming picture of our dependence on fossil fuels, a concern that was met with the increasing urgency for climate action. In fact, the latest Conference of the Parties (COP26), showed that the 1.5Cº goal set out years prior in the Paris Agreement is still far from being achieved, making decarbonization efforts more urgent than ever.
The latest scientific environmental analysis points out irreversible consequences already pushing ecosystems to its limits. But, can we achieve the necessary climate transition fast enough, or could the consequences of such rapid change be as harmful as the current climate crisis?
Double trouble
The current international scenario regarding climate change, and the targets and policies developed around it, have created a multidimensional bifurcation of potential consequences to the global efforts currently trying to encourage climate action.
On the one hand, aiming for a fast transition, could also mean encountering a rather disorderly transition, creating an environment of polarization among countries; on the other hand, too slow of a transition could create irreparable climatic consequences as well as economic and social disruption.
On a national level, the disruptiveness arising from the transition could come from a lack of connection and coordination between governments, businesses and individuals, therefore diminishing the objectives of policies and regulations due to clashes with immediate needs. Additionally, on a global scale, we could also talk about geopolitical implications stemming from differences between those who advocate for strong decarbonization efforts, and those who still play on greenwashing terms.
A fast but disorderly transition
Governments, companies, institutions and individuals are rapidly jumping onto climate friendly initiatives that try to encourage sustainable development and a quick net zero transition of the economy, namely ESG factors are a great example of such efforts. With stakeholder capitalism and shareholder activism on the rise, ESG has become the new language for sustainability and the best tool until now for reshaping the economy.
However, many fear that these claims and initiatives are surrounded by populists messages that will not endure and will actually fall short of its promises as they are done on the basis of political or financial gain. But what are the consequences of such actions?
Because of the scale of the endeavor, fast and aggressive measures will inevitably bring disruptions on many dimensions, this is, although long term environmental consequences could be alleviated, the social and economic impact in the short term could bring severe discontinuities. In this regard, we should be aware of the risk of not taking an holistic approach to the transition, as disposing of a certain system faster than new and more sustainable ones are ready to be dependent on would lead to severe consequences (e.g production shortages).
This is also true for the millions of jobs that currently exist and rely on carbon intensive industries that could suddenly disappear in favor of decarbonization. Furthermore, the emergence of new green markets, if not regulated effectively, could also lead to dangerous monopolies.
Slow but no so steady
Given the many complex interdependencies governing our societies, it is likely for many actors to try to avoid or diminish climate action in the short term, in fact, some of them are actually already plotting to slow down the transition.
National governments need to find the balance between the population’s needs, which are highly dependent on carbon intensive industries, and international platforms, commitments and regulations aiming for a greener future. Additionally, in the international scenario, there are those who strongly advocate for change, while others have little to no interest in multilateral agreements that threaten their stronger industries. In short, the incentives for businesses or individuals to invest in decarbonization are poor, and the penalties in failing to do so are weak if not non-existent.
A slow transition could be more manageable in the short term, but it would eventually lead to the need for rapid and deep changes by the year 2050, therefore creating a more notable disorder in the long term, as well as environmental degradation impacting on social well being.
In this scenario, developing countries would be most impacted and disproportionately affected, as political and financial barriers hinder efforts for decarbonization and their needs are focused on reaching higher levels of industrialization reliant on fossil fuels. These practices are damaging to the environment and would most likely lead to countries prioritizing adaptation over mitigation efforts.
Where are we now?
The sanitary crisis has been a defining factor in the slowing down of the transition, as post COVD-19 measures focused on short term stability, therefore leaving climate change concerns largely unattended. And as countries’ economies recover at different paces, the climate transition seems to follow a similarly personalized pattern.
As plenty of initiatives and regulations start to emerge in favor of transforming the economy and financial market into a booster for sustainability, the reality is that there is most certainly no easy way out of a disorderly transition, no matter the pace at which we collectively or individually begin to take action.
Too many years of climate in-action have exacerbated environmental damage and deepened complexities and systemic interdependencies, making efforts for climate change mitigation increasingly complicated. Countries will have to find their own pace to ease out short term disruption and alleviate long term damage, but the difference in transition timing from one nation to another will be felt worldwide given the inescapable interconnectivity of our global society.
Any transition of this scale will be disruptive. All stakeholders need to focus on actions that will drive an innovative, determined, and inclusive transition in order to minimize the impacts of disorder, facilitate adaptation and maximize opportunities (WEF, 2022).
You can’t manage what you don’t measure
We believe transparency is one of the key values that should drive the fight for climate action, as it is the only way to understand what we are doing wrong, what we are doing right and what it is that we are not doing yet.
Because being transparent is not only an externality to a company, or a given organization, to help build trust and reputation; it is in fact also a great learning and improvement mechanism. You cannot manage what you don’t understand. And so we advocate for transparency, integrity and precision as imperatives to the fight against climate change.
In DoGood we are convinced of the need to understand and manage efforts to achieve a sustainable transition inside an organization for the correct and efficient functioning of the business and the community it operates in. We alone cannot achieve the substantial changes necessary, but we work on the basis of collaboration, transparency and accuracy in order to bring light to sustainable actions.
In this regard, it is essential to our work to promote good corporate governance, meaning that the processes of disclosure and transparency are followed so as to provide regulators and shareholders as well as the general public with precise and accurate information about the financial, operational and other aspects of the company, including a more accurate definition of the ESG performance.
We have developed a corporate government tool that helps establish ESG impact objectives for employees in regards to the sustainability strategy of the company. Through our technology we are able to activate and track employees’ impact, creating engagement that translates into improved ESG metrics, reputational value and an overall positive impact for the environment and society.
If you want to know more about how we work to create a positive social and environmental impact, click here.
