Changing Policy and Practice to Address Climate Change

In recent years, a fundamental divide has instituted itself between the climate and the economy. Choices made in markets across the world are considered separately from the environment, despite the fact that the two are inextricably linked. The short term gains that arise from unsustainable industrial activity come at the expense of sacrificing economic productivity in the long run, both for companies who are looking to expand and for vulnerable populations who will bear the brunt of climatic disasters.

Between 2016 and 2019, $415 billion was lost as a result of climate change in North American alone, much of which can be attributed to increased wildfires and hurricanes (1). Burning fossil fuels, which can quickly provide energy for transportation, heating, and production of useful materials like plastics, is a reliable method that businesses have been using since the Industrial Revolution (2). Companies nowadays are facing the challenge of having to give up some rapid economic profit to promote global stability. By experimenting with renewable alternatives and integrating environmental goals as a part of their mission, businesses will experience growth as time goes on.

CEO of BlackRock Larry Fink has already modeled how the latter target is entirely possible, and urgent, in the modern world. In a letter titled “A Fundamental Reshaping of Finance” sent out to his chief executives, he explains how BlackRock’s $7 trillion dollars of investment will slowly shift to companies that have “environmental sustainability as a core goal” (3). Clients invested in global markets will need to pay special attention to which companies are prioritizing similar objectives since certain countries are already starting to face the preliminary threats of climate change. Customers who do not own shares in companies are equally susceptible to climatic risks and can adopt a number of methods to encourage sustainable practices in the business world, most notably through consumer activism. According to a study done by the International Journal of Communication, “people [who] seek to influence companies both directly, through their own consumption, and indirectly, through interpersonal communication and opinion leadership, to the extent that they are concerned about climate change, recognize it is solvable, and believe corporations will respond to consumer activism” (4). At the local level, if such a mentality is adopted, then businesses will be pushed to respond to calls for increased sustainability, which will help them integrate environmental goals into their mission.

In order for society to advance as a whole regarding this issue, however, government policies like the carbon tax will need to be introduced in order to place clear, quantitative restrictions over the amount of emissions that can be produced. Carbon tax revenue is directly correlated to a reduction in emissions based on the percent tax level which is placed on the targeted corporations (5). To avoid devastating energy-intensive industries, carbon taxes could be gradually introduced in order to promote a transition to more renewable methods.

Since certain industries have become so dependent on carbon burning processes, the transition will be abrupt and harmful to their traditional models. Starting with the sectors that have the highest risk, such as agriculture and forestry, technologies should be introduced to encourage environmentally beneficial practices. For example, a technique called carbon capture, which grows and positions crops in such a way that they pull more carbon dioxide out of the air and store it underground (6), is being developed and should be implemented into developing countries that are heavily reliant on agriculture. Changes in other industries like manufacturing and shipping should follow soon after, also adopting an approach that minimizes a harsh transition.

To decrease the divide between the economy and the world’s climate, baseline global policies will need to be introduced by industrialized countries while businesses redefine the way that they approach their outcomes with regards to the environment. Beginning with simple measures like a gradual carbon tax and developing technologies for industries that need them the most is the first step in promoting long-term economic growth, despite the temporary setbacks that will take place in the transition to more sustainable methods.

Sources:

1. https://blogs.ei.columbia.edu/2019/06/20/climate-change-economy-impacts/
2. https://www.nationalgeographic.com/environment/energy/reference/fossil-fuels/#close
3. https://www.blackrock.com/us/individual/larry-fink-ceo-letter?mod=article_inline
4.https://www.climatechangecommunication.org/wp-content/uploads/2016/10/4702-22464-1-PB. pdf
5. https://www.worldscientific.com/doi/pdf/10.1142/S2010007818400158
6.https://e360.yale.edu/features/deep-decarbonization-a-realistic-way-forward-on-climate-change