Economic growth depends on tackling climate change, says global commission
A major report has been published, demonstrating how governments, businesses and cities can more effectively deliver on their core economic and social goals, while reducing the risk of dangerous climate change.
The report concludes that the goals of improving economic performance and reducing climate risk are not in conflict. In fact, growth cannot be achieved unless climate risk is addressed, while emissions cannot be reduced unless the economy improves.
The report was sponsored by seven governments (Colombia, Ethiopia, Indonesia, Republic of Korea, Norway, Sweden, UK). Former Mexican President Calderón guided the report by chairing a Commission of 24 former heads of state and business leaders including Deutsche Bank Vice Chairman Caio Koch-Weser. Caio Koch-Weser said “There is no such thing as business as usual: economic growth and climate risk must be tackled together in order to create a livable, equitable and prosperous future.”
New Climate Economy report presented at the UN headquarters
Fighting climate change or growing the world’s economy: a false dilemma
Former President Calderón said: "The New Climate Economy report refutes the idea that we must choose between fighting climate change or growing the world’s economy. That is a false dilemma. Today’s report details compelling evidence on how technological change is driving new opportunities to improve growth, create jobs, boost company profits and spur economic development. The report sends a clear message to government and private sector leaders: we can improve the economy and tackle climate change at the same time."
Also in advance of the UN Summit, Deutsche Bank joined more than 300 businesses and 44 countries in supporting the World Bank’s “Putting a Price on Carbon” campaign and Deutsche Asset and Wealth Management joined more than 340 institutional investors with over $24 trillion in assets in urging heads of state to take strong action on climate change. Group Sustainability Officer Sabine Miltner also discussed the Bank’s role in the growing green bond market at a recent conference.
A short window of fifteen years
There is a short window of fifteen years in which the mentioned challenges can be tackled as US-$ 90 trillion will be invested in new infrastructure in the world’s cities, energy systems and land-use sectors – significantly more if all buildings and transportation are included. For instance, urban planning should focus on compact, resource and energy efficient cities to bolster growth and create healthier and more vibrant places to live by stopping unplanned urban sprawl.
The New Climate Economy report: Better Growth. Better climate. recommends that economic growth and emission cuts can be achieved by focusing on improving resource productivity, infrastructure investment and technology innovation. Economic growth and society’s ability to avoid dangerous climate change will be determined by the nature of these investments.
Responsible investments which boost income and spread wealth
Caio Koch-Weser concluded “The financial sector has a major leadership and business opportunity to accelerate environmentally and socially responsible investments which boost income and spread wealth. Taking up this challenge will demonstrate our sector’s important role in society.”
The report recommends:
- Integrating climate change risk and business opportunities into core economic decision-making processes by governments, companies, investors and banks
- Phasing out subsidies for fossil fuels, agricultural inputs and urban sprawl (which is one of the world’s greatest market failures)
- Introducing strong, predictable and rising carbon prices as part of good fiscal reform
- Development banks increase efforts to leverage private investment
- Phasing out high-carbon project financing (such as coal), except where there is a clear development rationale without alternatives
- Tripling government energy R&D, doubling agricultural R&D and strengthening the use of standards, codes and public procurement for new technologies
- Stopping deforestation of natural forests and restoring degraded forest/agricultural land
The “Global Commission on the Economy and Climate”
Notable members of the Commission include Unilever CEO Paul Polman, Bank of America Chairman Chad Holliday, Swiss Re CEO Michel Liès, China International Capital Corporation President/CEO Zhu Levin, Infosys Executive Vice-Chairman S.Gopalakrishnan, and Vattenfall CFO/Deputy CEO Ingrid Bonde. Other members include Bank of England Deputy Governor Nemat Shafik, Asian Development Bank President Takehiko Nakao and National Committee of the Chinese People’s Political Consultative Conference Vice Chairman Chen Yuan.
“The New Climate Economy report refutes the idea that we must choose between fighting climate change or growing the world’s economy. That is a false dilemma.”
“The financial sector has a major leadership and business opportunity to accelerate environmentally and socially responsible investments which boost income and spread wealth. Taking up this challenge will demonstrate our sector’s important role in society.”