Our key takeaway: We are living in a new planetary reality, one in which the climate system is destabilized and the biosphere is increasingly fragile and depleted. The only way towards enabling just futures on a thriving planet is to take actions which will transform the financial sector and our economies. All eyes are on ‘keystone actors’ (corporations, financial giants, central banks, and index providers) who will be central to ensuring the future we want. Another key player is policy-makers. These policy-makers play a central role in creating the behavioural change we need: policies that alter the behaviour of key actors, in turn change expectations and then shift norms. The time for these actions on the part of policy-makers and financial institutions is now, as evidenced by public opinion surveys, the youth movements and the rise in sustainability initiatives. Climate stability and biosphere stewardship cannot wait.
Report for Stockholm+50, Beijer Institute of Eco- logical Economics (Royal Swedish Academy of Sciences) and the Stockholm Resilience Centre have released ‘Economy and Finance for a Just Future on a Thriving Planet’ (May 2022):
- Actions required for our new reality: The authors underscore the rapidly changing planetary reality we find ourselves in. “Changes in the climate and Earth system, which were assumed to unfold in a distant future and only affect future generations, are happening now, with increasing speed and force.” The paper highlights that “[w]e now live in a fundamentally new planetary reality where we are more connected, where the climate system is destabilized, and where the biosphere that supports humanity is becoming more fragile and depleted. This new reality has repercussions for life on Earth, and needs to be the basis for actions aiming to transform the financial sector and our economies towards just futures on a thriving planet.” “Yet, a shift towards a just future for all on a thriving planet is possible, and will require actions from the financial sector, macroeconomic institutions and policy-makers that support transformative capacities. Such capacities entail the ability to define a new direction; create enabling conditions; actively contribute to a phaseout of harmful investments and economic activities in a just way; and to help scale up investments for resilience. Financial and economic incentives can, and should, align with system opportunities and acknowledge the need to sustain critical Earth-system processes in support of the biosphere and human well- being for all.”
- Role of investments: The paper highlights the central role of financial institutions that “play a central part to our ability to shift economies in a direction that promotes a thriving planet for all.” In addition, “[t]he responsibility for the new planetary reality lies heavy on high-income countries who represent only 16 % of the world population but whose consumption today is responsible for 74 % of global excess use of natural materials, including biomass, metals, non- metallic minerals and fossil fuels.” This is compounded by the fact that “[l]ow-income countries with limited historic responsibility are among those suffering the most from the impacts of growing Anthropocene risks.” The paper emphasizes the critical role of ‘keystone actors’, namely corporations, financial giants, central banks, and index providers, and calls on these players to “play a larger role in helping accelerate action for sustainability, and especially in parts of the economy of importance for the stability of the climate system and the resilience of the biosphere. To enable this change to happen, we need new indicators for human wellbeing. “The new planetary reality requires us to rethink the indicators for human well-being, macroeconomic performance and financial risks. Indicators for human development must acknowledge human pressures causing the transgression of planetary boundaries and their effects on well-being.” Financial institutions “must recognize a wider set of planetary changes, and develop impact accounting as a core part of capital allocation decisions, and support the open disclosure of Environment, Sustainability and Governance (ESG) data and criteria.”
- Behavioral change and the role of policy: The paper also underscores the role of “[l]arge-scale behavioral change” which “has a crucial role to play in a shift towards just futures on a thriving planet. Changes in social norms can instigate such wider changes in society, economies and in the financial sector.” In particular, the paper emphasizes the role of policies that “can be leveraged to shift norms by altering the behaviors of key actors and by changing expectations. This can result in the activation of large-scale behavioral tipping as actions trigger additional actions. Recent international public opinion surveys, the rise of global youth movements, and current sustainability initiatives by influential actors in the economic and financial sector, indicate that the time might be ripe for such policies that help bridge the gap between sustainability rhetoric and action.”