DP: Climate change, human development and responsible investment

In my second post I have introduced the linkage between climate change and sustainable development. I would like to add now another piece of this puzzle: the role of the private sector and the need of a responsible investment.

During these months I have been reading articles and documents on climate change and development and I have been evaluating different theories and solution approaches that several professors and experts of sustainability and economics have shared.

Tariq Banuri and Hans Opschoor (2007) say that “the main failing of the climate discussions is that they have not viewed climate as a development problem” and that a “linkage of climate change to development policies will make development more sustainable”.
In addition other studies (Pacala & Socolow 2004, Stern 2006) confirm that technological knowledge could represent the solution to reduce the GHG emissions by 80% over the century, but the fragmentation of the activities and the lack of a development-oriented policy have brought disappointing results so far.

I believe that all the theories and the different proposals evaluated so far, like slowing down the economic growth, de-carbonizing the South, sharing the carbon budget, the urgency of an international policy framework and a responsible and innovative way of using technology are strongly related to the new role the private sector should have and to a responsible investment the private sector should encourage.

In the Business Action for Africa Report, Koffi Annan, Former Secretary-General of the UN and Chair of Africa Progress Panel, talks about the need of a more sustainable and more equitable economic system where developing countries should be included into the global system and part of the international institutions. In addition K. Annan points out that the current crisis could be an opportunity for the developing countries to implement new low-carbon models and be pioneer and innovator in the de-carbonization process.

In order to achieve these goals a new type of investment is needed, based on renewable energy financing and able to integrate climate change into development strategies.

Mark Bowman, Managing Director SABMiller Africa, talks about the private sector challenges to upscale the efforts in those areas that require an important financial assistance like climate change. Bowman explains that in order to overcome the upcoming challenges a new relationship between development partners, private sector and investors is needed and should be based on shared financial resources and shared risks.

It is clear the private sector has a key role in the international development and the corporate responsibility enables corporates to engage development organizations and to increase the development impact of social business practices. In addition a responsible investments could create employment and new business opportunities in underestimated markets while CSR practices would demonstrate a responsible business conduct to the different stakeholders.

Unfortunately big quantity of money are used for different purposes and the majority of the current investments are driven by the economic growth or private interests instead of human development and environment.

Just few examples of how money are spent currently worldwide:

-440$B represents the US Defence Budget while only 21$B is the budget for saving the Amazon

-more than 3000$B are spent in wars and arms while 103$B is the value of the foreign aid

Is this a responsible investment?

Source: http://www.informationisbeautiful.net

The current flows of money

Using proper investments for mitigation and  climate change adaptation would give instead a chance to reach a more sustainable development and improving the human welfare.

The Intergovernmental Panel on Climate Change, IPCC (2001) confirms that “adaptation can complement mitigation in a cost-effective strategy to reduce climate change risks; together they can contribute to sustainable development objectives”.

Adaptation strategies are necessary especially in the more affected countries: the developing ones.

Stern (2006) estimated an annual investment of tens of billions in the developing countries for adaptation but climate change funds are limited, there is no budget or frameworks in place about this important issue so how to solve the problem?

I believe one feasible solution is given by the world collaboration.

Private institutions could apply the recent “sharing economy” trend to the development area and shift from compete to collaborate and share resources and funds to reach common goals. Companies should integrate the worlds “sustainable development” while developing the financial strategy (not only when writing their CSR nice and optimistic reports) and should invest in creating new innovative and long term partnerships with development institutions, aimed to reach a sustainable and more equal world instead of being exclusively focused in economic growth and profit.

Investments are necessary and why not using them for social and development issues also? for “fixing” the human impact on the environment? for  adaptation to climate change effects?

Having in mind that climate change is an urgent sustainable development issue, I believe it is still possible to “change for good” and a responsible investment would represent indeed a possible solution.

Comments Off on DP: Climate change, human development and responsible investment / 02 Jan 2013 por Veronica Recanati
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