The annual Earth Day event that took place last Thursday has always seemed an appropriate day to step back and take stock of progress on environmental issues over the previous year. This year I found my feelings more mixed on the subject than usual. The day itself was marked by two events in particular that reflect some of positive steps being made.
The first was the announcement by US President Joe Biden of his intention to double Barack Obama’s greenhouse gas emission reduction goals under the Paris climate agreement to 52% by 2035, and then achieve net-zero emissions by 2050. After four years of environmental lunacy under Donald Trump it is an enormous relief to again have an American president at the helm who is more concerned with genuine governance issues than petty politicking. There is a general sense that with the US back on board the Paris climate train, the “decade of action” on climate change can now truly commence in earnest. And at long last it appears as though the financial services sector is on board too.
Global issuance of sustainable debt in the form of green bonds and loans totalled $655bn in 2020, up from $465bn in 2019 and $261bn in 2018. Likewise, environmental, social & governance (ESG) equity funds have attracted over $340bn over the past two years alone, according to a study by the Emerging Portfolio Fund Research institute.
The second event was Nedbank's impeccably timed Earth Day release of its energy policy and updated climate change position statement. After some questionable starts on climate risk responsiveness by some of its SA banking peers, it’s inspiring to see Nedbank not only continue to set the pace on ESG issues domestically, but take to the forefront globally by raising the bar from the “net zero by 2050” target, to zero fossil fuel exposure by 2045. The bank’s energy policy also clearly has its finger on the pulse of global developments as it sets a clear timeline for decarbonisation and fossil fuel exclusions.
Yet despite these positive developments the fruits of these labours remain stubbornly elusive. The World Wide Fund for Nature’s (WWF’s) Living Planet Index continues to decline, showing an average decrease in population sizes of mammals, birds, amphibians, reptiles and fish between 1970 and 2016 of 68%. Its most recent report states that “75% of the Earth’s ice-free land surface has already been significantly altered, most of the oceans are polluted, and more than 85% of the area of wetlands has been lost”.
While Covid-19 had a net positive environmental affect for 2020, overall the broader trends remain grim. As long as economic growth remains our major societal goal the decoupling of growth from resource use and emissions is fundamental to a sustainable future where our consumption of resources does not outstrip the Earth’s ability to replace them. Humanity’s ecological footprint, which measures how much demand human consumption places on the biosphere and compares it to what ecosystems can renew, remains deeply unsustainable. Last year’s global average footprint was 2.5ha per person, compared to 1.6ha of biocapacity, meaning we overshot our sustainable annual resource use on August 22.
Clearly we are seeing some deeply positive movements towards sustainability generally, but even with the near exponential growth in sustainable finance about the world the scope of the challenge lying ahead of us remains monumental. The decarbonisation agenda is a critical starting point for financial and corporate mobilisation, but it will be nowhere near good enough to steer us through the environmental crises facing us.
At an individual industry level humanity requires that leaders step forward and develop new business models that will fundamentally change the relationship between commerce and natural resource dependency. In the timeless words of Abe Lincoln, “As our case is new, so we must say anew, and act anew. We must disenthral ourselves, and then we shall save our country.”
• Maguire holds a master’s degree in global change studies from Wits and has been developing green economy solutions for the private sector, NGOs and the state for more than a decade.
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