The discussions of today’s COP26 interested me, as it’s all about the money.
Today is the day that all of the world’s finance ministers meet to discuss their dedication to climate change. They had this before – in Paris six years ago they promised $100 billion to be given to poorer nations to focus upon climate … and failed – but it’s a nice idea.
Ambitious plans to create a huge pool of money to invest in a green future will turn the UK into “the world’s first net zero-aligned financial centre”, with companies managing $130 trillion of assets committing to the goal of holding global warming below 1.5C, Rishi Sunak has said.
I love this idea … but like the Queen I wonder if they’re just talking and not doing. Everyone can say they are dedicated to climate change and then just not bother. It’s like me saying that by 2030 I will have dieted, given up smoking and no longer drink wine. It’s a New Year’s Resolution, and how many of us keep our New Year’s Resolutions? It’s blah-blah-blah.
So, what’s the answer?
Well Kate Mackenzie touched on this in her article I discussed yesterday, but my focus is three-fold:
- We need countries that are rich to invest in countries that are poor to manage climate issues
- We need to encourage countries with rare wildlife to create eco-tourism
- We need the world to move from greed to inclusion
First, there are many countries who rely on industries that destroy the planet. People who dig for coal, cut down trees and farming with cattle. There are millions, or over a billion, of these people. You cannot just end their jobs and industries overnight. Banks can help to do that but have no incentives. The governments of the world need to change this if we are to meet net-zero emissions, but governmental economies rely on these industries. You have a viscous circle of reliance on destroying the planet through industries that don’t care. How do you change that?
Second, biodiversity is at huge risk. Over half of the world’s species have disappeared in the last century. We need to get countries to move from hunting with guns to hunting with cameras and selfies. That one seems to be working quite well. When I saw gorillas in Rwanda, we had to pay a fee for access that was quite high. I didn’t mind paying the fee as it funds the biodiversity and protection of the environment for these species.
Third, to move from greed to inclusion relates to the two points above. The incentive for inclusion is to save the world, but why would I want to save the world if there is no incentive. The incentive for seeing gorillas in Rwanda is the experience. The incentive for saving the world is the experience. If governments actively incentivised industries, business, commerce and consumers to have better experiences, they would convert.
So, what’s the answer?
The answer is not cash or investment, although that is a part of it. The answer is experience or, more pedantically, it’s about experiential marketing.
If governments could offer tax incentives, support programmes and budget reallocations for carbon offsets every time a consumer or business used renewable energy and stopped planet destroying activities, maybe things would change. And yes, they do some of this already but if I have a family dependent upon deforestation, digging for fossil fuel or moving people from A to B, what are you offering me to stop doing that? That's the question and there's the rub.
I don’t have all the answers, but I know the one big one is that I’m happy to change if there’s a reward. What are the rewards for stopping flying, driving electric and heating with sunshine?
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...