Could the world’s asset holders be the answer to the climate crisis?
Creating solutions to climate change will require nations to cooperate in meaningful ways. Fortunately, some firms are now offering individuals and companies ways to close the gap while governments catch up
When President Trump was elected to office in 2016, the US tore up its commitment to the Paris Agreement, striking a blow to global efforts in the fight against climate change.
However, there were those that felt Paris was an inadequate proposal from the very beginning. The signatory countries are not legally bound by the targeted emission reductions and, worse, the targets are to be self-policed and met through each country’s own means.
When viewing this limitation in light of the falsified emissions reports by Volkswagen in 2015, there is the possibility that some countries could take a similar course of action in the absence of international accountability or unified approach. In addition, subsequent studies have highlighted the shortcomings of the agreement in light of the knock-on-effects of increasing global temperatures.
Off one’s own back
If the Paris Agreement is a half-measure, what can ordinary people do while they wait and hope for their governments to make impactful reforms?
One of the biggest hurdles facing meaningful reform is the climate funding gap – the estimated total sum needed to effectively tackle climate change – which is currently estimated to stand at $16.8trn over the next 15 years.
One foundation, called Parents Pledge, has suggested a way to bridge the gap: by using a small fraction of the world’s total assets under management, which The Wall Street Journal estimates to be worth around $140trn. The organisation’s website claims if every asset holder paid an annual 0.25 percent from their savings, the fund would produce $350bn annually.
Parents Pledge takes these donations and gives them to groups around the world that are trying to reverse climate change, such as those planting new forests, developing clean energy solutions or lobbying governments to pass new environmental laws and uphold existing ones.
One of the biggest hurdles facing meaningful reform is the climate funding gap – the estimated total sum needed to effectively tackle climate change
Among notable figures to have made the pledge are Rowan Williams, the former Archbishop of Canterbury. “I made the Parents Pledge because it is essential not just to protest but to contribute positively in protecting our environment for our children and all the world’s children,” he said, according to the Parents Pledge website.
By 2030, two thirds of the world’s wealth is predicted to have been amassed by the world’s wealthiest one percent, with inequality continuing to rise to unfathomable levels. This raises questions about a potential ‘funding ceiling’ if members of the world’s richest one percent do not contribute some of their wealth to combatting the climate crisis. Ultra-high-net-worth individuals may be difficult to convince, owing to the link between the success of capitalism and climate change: wealth is generated through the acquisition and application of natural resources. Our economies have been founded around this collective agreement, which is why some have been able to make their fortunes from damaging industries, such as herding cattle, chopping down trees and drilling for oil and gas locked safely away underground.
Another company, Poseidon, makes use of ‘carbon tokens’ through its Reduce programme. Through this, firms can offset their carbon footprint by paying a levy for the environmental impact of running their business – for example, a company could offset the carbon footprint it creates when manufacturing and delivering its products by funding reforestation projects to ‘lock up carbon’.
In Poseidon’s model, responsibility is shifted away from individuals and towards corporations – an approach that makes sense, given the huge impact that some industries have on the environment.
“Our groundbreaking Reduce platform allows everyone to participate in addressing social as well as environmental challenges,” Laszlo Giricz, Founder and CEO of Poseidon, told The New Economy.“We use… tokens – for example, our forest carbon credit… tokens on the Stellar blockchain – in order to create small fractions of carbon credits that can be allocated to emissions fast and in an affordable manner.”
Vivobarefoot is one such company that has committed to offsetting its carbon footprint. “Every single shoe sold at its stores in Zurich and Lucerne, as well as every shoe sold through its online store, has been turned into climate action,” said Giricz. Both of these initiatives, it could be argued, are a form of voluntary ‘climate change tax’ in the wake of ineffective government policies.
Bring it back home
If radical action on the climate crisis is not taken soon, the consequences could be disastrous. “Nobody knows how bad it will really be, as this has never happened before,” Giricz told The New Economy. “We have no reference. There will be food shortages, as well as extreme weather events. The future will be challenging for all life on Earth.”
In 2012, Australia became the first country to introduce a carbon tax, which was levied against industries as a means to encourage the development of sustainable energy sources. However, subsequent political and public pressure over fears of rising energy prices also made Australia the first country to repeal a carbon tax in 2014. When more political consensus is found for how best to tackle climate change, it is possible that the world’s governments will be able to take inspiration from initiatives such as these to ensure the planet is preserved for future generations.