The more nature is destroyed, the less carbon dioxide is sequestered, which has a major impact on climate change. As business, we need to understand the true value of nature and our essential ecosystem services.
Unless CO² emissions related to human activity are curbed, climate change will bring high costs for human development, economics and the environment. Business has a powerful role to play in ensuring we have global frameworks that integrate nature and climate, two sides of the same coin. The green economy should not be viewed simply as part of the global economy. It is ALL of it.
When one studies the atmospheric levels of CO² over 800,000 years, the sharp rise since the Industrial Revolution makes human culpability for climate change very clear. From 1960, we have seen what is known as “the great acceleration”. There have been massive increases in world population and related consumption, for example in marine fishing, forest loss and freshwater use.
Human activities have thrown the Earth’s natural carbon cycle out of balance. The concentration of CO² in Earth’s atmosphere is currently at nearly 412 parts per million (ppm) and rising, and already far above the absolute maximum ever recorded over 8,000 centuries.
We’re taking a huge loan, and the Earth is not able to pay that back. We see this play out in food shortages, fires and extreme rainfall as natural disasters take hold. Insurance payouts for natural events have gone off the charts over the last few years.
As Sir Nicholas Stern points out in the Report on the Economics of Climate Change, when it comes to the green economy, the costs of mitigation are modest relative to the cost of inaction.
Preservation and strengthening of ecosystems
Part of that mitigation is protecting our essential ecosystem services that nature provides. Consider the ecosystem service of honeybees. More than 75% of what is on our plates is dependent on a pollinator having played its role. We rely on many of these ecosystem services, including provisioning, supporting, cultural and regulating services.
If we undermine and degrade these systems, then we’re going to have to find other ways to replace them, but it would be at great cost.
In financial terms, the value of these ecosystem services is more than $150-trillion annually, representing twice the size of global GDP. However, nature’s worth to society is simply not reflected in current market pricing. Management and mitigation of nature-related financial risks can lead to increased resilience of balance sheets for financial institutions.
Furthermore, these ecosystem services support between 50% and 90% of the “GDP of the poor”. If a business is eroding any of these services, it is transferring a burden onto society, and particularly onto the poor.
With all of the pressures of that great acceleration, it’s becoming increasingly clear that we can’t continue doing business as usual and living as if there were no tomorrow.
This is where we turn towards the green economy. The green economy is about economic activity that improves human well-being over the long term, while not exposing future generations to significant environmental risks from a climate perspective or ecological scarcities from a nature perspective.
The green economy essentially refers to two interlinked developmental outcomes for the South African economy: the first is growing economic activity in the green industry sector which leads to investment, jobs and competitiveness. The second is a shift in the economy as a whole towards cleaner industries and sectors.
In the South African context, there are nine major areas of opportunity in the green economy:
- Green buildings and the built environment: this includes incorporating green technologies and sustainability in private and public buildings;
- Sustainable transport and infrastructure: opportunities include developing electric vehicles and sustainable aviation fuel, as well as green public transport systems;
- Clean energy and energy efficiency: this includes upscaling the solar water geyser rollout and creating off-grid power solutions from renewable sources. There are also opportunities for creating energy access for rural communities;
- Resource conservation and management: this includes a focus on creating resilience in our ecological infrastructure, an example being clearing alien vegetation in water source areas;
- Sustainable waste management practices: there are major opportunities in waste beneficiation such as the Zero Waste community programme for 500,000 households;
- Agriculture, food production and forestry: this includes regenerative agriculture and the reduction of food waste;
- Water management: there are opportunities in water harvesting, municipal water metering and reducing water losses in agriculture, mining and in municipal reticulation systems;
- Sustainable consumption and production: an example is connecting small-scale producers to consumers with a focus on industry-specific production methods and industrial production technology changes; and
- Environmental sustainability: an example is greening large events.
When it comes to green financing, the Green Outcomes Fund is a leading impact investing solution targeting outcomes in the green economy in South Africa.
Economic activities are only sustainable if they have the long-term interests of society at heart. Economic growth must be decoupled from natural resource use, and negative externalities to both people and nature must be considered in any business venture.
The pressure and expectation is rapidly growing as to what society expects from business. As business and as society, we must integrate our responses to nature and climate as we build opportunities in the green economy. DM