By Ashlyn Bagocius
A Call to Action
Climate change is the fight of my generation, and there’s no time like the present to stop it from getting any worse. The up and coming Generation Z is standing up and demanding change to protect our planet and people.
But the economy! We can’t uproot our entire society to stop the sea level from rising, right?
Well, we don’t have to. There’s a misconception out there that we have to choose between the economy and slowing climate change. But who said we can’t have both?
Much of the discussion around this topic leads back to the government. The government should do this, the government should do that. And maybe they should.
But let’s be honest here: how long have people been saying that and how much has gotten done? The point is, we can’t wait around for Congress to pass a bill that they agree on and the president to sign it. We don’t have that kind of time anymore. But that’s all right, because there is a way to make significant change, right here and right now.
Putting the government aside for a second, who controls all the capital in the United States?
The free market does. Businesses and individuals do.
Who better than to make major financial shifts than the people and entities that already control the money? That’s right, I’m putting the responsibility on each and every American business with capital that’s ready to invest.
The strategy is simple, with two major facets. First, major corporations invest in making internal, environmentally-friendly improvements to their own company. Second, any business that’s ready for their dollar bills to go out and make friends can invest in other businesses whose goods and services are actively making a difference in the fight against climate change.
Strategy 1: Internal Investments
Internal investments are all about improving your business model to include eco-friendly practices, products, and/or services. Now that’s all well and good, but how does this benefit individual businesses? The first strategy seems like a great way to save the planet, but where is the return on that investment?
I’ll explain. Think of it as an investment to protect the future of your business. After all, if humanity gets wiped off the planet, your business will too, right?
For years, climate change has been something far away, melting the ice caps thousands of miles from where we live. Easy to ignore.
But not anymore. The effects are right here and they are already wreaking havoc on us. Climate change is about more than ice caps and the polar bears. It’s about acidity levels in the ocean, droughts, wildfires, hurricanes, and blizzards. It’s about mass migrations and a disproportionate impact on the lower socioeconomic class. Climate change is real and very much upon us.
Let’s analyze the short-term. Each year, hundreds of billions of dollars are spent on cleaning up the aftermath of natural disasters. And that number climbs higher every year. In 2016, $175 billion were spent on natural disaster relief world-wide, and that number nearly doubled to $340 billion in the next year, 2017.
Yikes. If your business is in the path of one of these devastating disasters, this could seriously affect your bottom line. Maybe your commercial property is destroyed by the latest hurricane or burned by a raging wildfire.
And it runs deeper than that. The private sector is dependent on the ability of their consumers to purchase their goods and services. Businesses and communities are all connected through the markets. What if your supplier for coffee for your restaurant chain, and many other suppliers as well, are greatly affected by climate change? The cost of coffee suddenly skyrockets, and your operation costs go way up.
The point here is that investing in saving the environment provides a return in the form of protecting the future of your business and the economy at large against the effects of climate change. Major economic losses can be avoided through investing in protecting the environment.
Strategy 2: External Investments
If that’s not good enough, let’s get more concrete with the numbers. If changing things within your own company isn’t a possibility, you can invest in companies and industries that are actively making a difference. Doing so is something the Global Commission on Adaptation dubs “adaptation actions.” Essentially, you are investing to change the future.
This organization, led by Ban Ki-moon, 8th Secretary-General of the United Nations, Bill Gates, Co-chair of the Bill & Melinda Gates Foundation, and Kristalina Georgieva, the CEO of World Bank, released a report that explained that “$1.8 trillion of investment in five areas could yield $7.1 trillion in total net benefits.” That’s a nice return on your investment.
Not only that, but the outcome of these adaptation actions is called “the triple dividend.” This means there are three key benefits to investing in the climate fight. The Global Commission on Adaptation explains that “the first dividend is avoided losses, that is, the ability of the investment to reduce future losses. The second is positive economic benefits through reducing risk, increasing productivity, and driving innovation through the need for adaptation; the third is social and environmental benefits.”
So if you’re not ready to change your company but you have some money ready to invest, this is the way to go. This strategy simultaneously benefits you, the economy at large, and the planet.
Of course, choosing to invest in anything is a tricky business. You need to know what’s happening with your money. So, let’s get more specific. The Global Commission on Adaptation lays out five major areas we should be looking to invest in to slow climate change and protect our economy against the effects we are unable to stop: strengthening early warning systems, making new infrastructure resilient, improving dryland agriculture crop production, protecting mangroves, and making water resources management more resilient. $1.8 trillion in investments in these five areas has the potential to generate triple-dividend benefits worth $7.1 trillion.
Adaptation of the Market in the Era of Modern Consumers
Let’s think about why internal and external investments in the climate fight work. In a nutshell, the free market will have to adapt to incorporate the demand for environmentally friendly goods and services.
Let’s use the example of oil companies. As renewable energy expands and becomes more popular, oil prices will drop, putting pressure on the big oil companies. They will be forced to compete with renewables, making it vital for them to consider cleaner energy as well, or else risk losing massive amounts of capital.
As oil companies lose their influence in the energy industry, they have no choice but to bend to the will of the customers. And this is already happening. In the last 50 years, the cost of solar energy has massively decreased, past the point of projection. In 2015, the price of solar power already dropped below rates that were speculated to not be possible until 2021. The shift is happening, and it’s being called the “third industrial revolution,” an era marked by the push toward sustainable production and consumption.
Moving forward from the COVID-19 crisis, this massive mindset shift is occurring in consumers, and sustainable goods and services are making their move against less eco-friendly options. This change in the market is being headed up by my own generation: Generation Z.
The new wave of consumers is coming of age, and our priorities look quite different than the older generations before us. After all, it’s us and our children who will live to see the most devastating effects of climate change. Therefore, we have the most urgency out of all the current generations to make a difference.
To prove my point, I’d like to mention a study that was performed in 2016 by Masdar, the Abu Dhabi Future Energy Company. They conducted a survey to gauge the priorities of Generation Z. This survey included 5,000 young people from 20 different countries across five continents. The results found the subjects listed climate change as the biggest challenge of their generation, more than any other issue.
80% of survey respondents said that it’s up to them to create a sustainable future, and 50% said that the most effective way of integrating clean energy and technology is by changing people’s behaviors and mindsets. Right here is proof that the younger generation is willing to change their consumer habits if it means protecting society from climate change.
As Patricia Espinosa, Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC), puts it: “There is huge demand among our youth for corporate and public investment in clean technology and renewable energy. The winners in the green economy will be those who can harness this youthful idealism and combine it with regulations, long-term investment, cultural change and political action.” This market adjustment is upon us already, so it is most beneficial to the American business to adopt one of the above strategies, to move with the market shift rather than against it.
Will your business be one of the winners in the third industrial revolution?
Our Current Investors, Taking the Lead
Now, the great thing about these investment strategies is that they are already being done and yielding great results. In fact, major companies have stepped up to the plate to demonstrate the importance and possibilities of a sustainable future.
Take Amazon, for example. This corporate giant is making use of both investment strategies I explained. They have goals within their own company to be running on 100% renewable energy by 2025 and have net-zero carbon emissions by the year 2040, among other things. For reference, this goal of theirs is ten years ahead of the goals laid out by the Paris Climate Agreement (which the United States is no longer a part of). Amazon has also pledged to invest $2 billion in other businesses, big and small, across many different industries, that are making a positive environmental impact. Another major company that is undertaking a similar pledge is Walmart. Like Amazon, they are striving to reach net-zero emissions by 2040. Additionally, they are aiming to protect and/or restore 50 million acres of land and one million square miles of ocean, all by 2030.
It’s possible to have a mutually beneficial situation when talking about the environment and the economy. Instead of trying to uproot everything the country has already built, we simply need to do what we do best and take advantage of the markets we created. After all, my generation of consumers is demanding change, and it’s in the best interest of American businesses to meet that demand. If the government won’t do anything to solve the climate crisis, the firms of the United States can.
Ashlyn Bagocius is a sophomore at Bard College at Simon’s Rock. She is an aspiring creative writer with a passion for creating a sustainable economy. Her aim is to present an approachable solution to climate change that appeals to people of all political backgrounds.