Economic Sustainability | 4 financial fundamentals of a greener world

Sign at the March For Science advocating for environmental and economic sustainability says "Capitalism has no climate solution"

As we move toward addressing environmental and social justice, a concern at the top of a lot of people’s minds is economic sustainability.

For a company or organization or even an individual, economic sustainability means making enough money to continue existing and growing.

The same holds true for governments and the world as a whole.

We want the systems that keep society running to make sure that they don’t spend too much money or cause us individuals to spend too much money.

And in order for this economic sustainability to be achieved at a large level, it must work hand in hand with the other components of sustainability.

Environmental sustainability will be at the forefront of this post, but keep in mind that I’ve written about the importance of social sustainability and how it is inextricably linked with environmental and economic sustainability.

“Climate change for me is not an environmental issue; it’s an economic issue.”

Dr. Marshall Burke

Intro to Economic Sustainability

In a nutshell, economic sustainability is about more than just making money, because many of the money-making systems in place currently fuel climate change, which is already causing more money to be spent on climate solutions.

We do not have a system of economic sustainability as long as the economic system is unsustainable in other ways.

Part of this is because preventing climate disasters usually costs less money than fixing them after they happen. So addressing sustainability issues now can save money in the long run (in addition to all the other positive outcomes for humans and the environment).

This is just one way to look at the economics of sustainability, though.

On top of the fact that the sustainability movement will save money for corporations, governments, communities, and individuals, there are many other ways that economics intersects with sustainability.

One thing we need to consider is the implications of today’s corporate capitalism and hyper-consumerism on overall sustainability. 

Sign at the March For Science advocating for environmental and economic sustainability says "Capitalism has no climate solution"

There are ways that we can maintain the free market while enforcing regulations to restrict unfair labor practices and introducing concepts such as a circular economy. (When I critique economic elements of our current system, please understand I am specifically advocating against corporate capitalism, not capitalism as a whole.)

A conversation about economics and sustainability should also discuss individuals, both in the impact that their economic situation has on sustainability and the impact that sustainability has on their economic situation. (That’s a bit of a mind-bender, but we’ll untangle that in section 3.)

Meanwhile, sustainability plays a part in an individual’s economics, and we need to be careful that the price of progress is not so high that it prevents individuals from thriving.

Each of these elements will be addressed in the following sections.

1. The sustainability movement will save money.

Harming our environment is expensive.

In 2017, the US spent $300 billion on natural disasters, many of which were related to climate change.

A secret report was recently released showing that the Norwegian government allowed oil drilling in the Arctic despite knowing that it would lead to a loss of money.

The amount that we will spend on dealing with the aftermath of environmental disasters will only increase as more climate change occurs.

One analysis suggests that within 10 years, the global cost of the damage caused by climate change will be anywhere from $300-700 billion per year. Which means that the cost of combating the effects of climate change in the 2030s will be $3-7 trillion.

There is plenty of evidence to suggest that spending money on prevention now (rather than paying for damage control along the way) will save much more money in the long run.

Everyone will be impacted by the costs of climate change. 

For example, anybody who is involved with the real estate market will have to contend with increased instability in the market and more property damage due to worsening climate change. 

“We cannot separate our national security from our natural security; they are inextricably tied to one another, and they are tied to the fate of all of our communities.”

Andy Karsner

Global and national security are under threat, which obviously has serious economic implications. In the US, climate change has destroyed military bases and equipment, and billions of dollars are already being spent to rebuild as well as to beef up infrastructures to withstand rising sea levels. 

(It really strikes me as wild that taxpayer money is going to the military to pre-emptively plan for the future effects of climate change rather than using that money to prevent the effects of climate change in the first place.)

Elsewhere, terrorist organizations have leveraged climate disasters as a means of recruiting. Not only is that bad news for the countries these groups reside in, but it can obviously have even wider implications if these groups seek to expand their reach to other regions of the world.

And although it often seems that businesses are merely the bad guys who cause climate catastrophes for everyone else, big corporations will also see costs of roughly a trillion dollars due to climate change.

(Dec 10, 2020 Update: A new report shows that the low-carbon revolution will be cheaper than previously thought. Great news!)

There are so many other ways that climate change will have a financial effect on almost every individual in society. But as I established in a previous post, environmental destruction has a much larger effect on certain groups of people.

Dirty alley in Hong Kong

More often, it is individuals who have less social privilege that are directly impacted by environmental disasters, though it is society as a whole that ultimately has to pay the price.

The financial consequences of environmental destruction and social inequality include expenses related to natural disasters, healthcare, increasing cleanups, social programs, overburdened infrastructures and facilities, and many more.

Moving forward, prioritizing environmental and social sustainability is economically efficient. There is no way to obtain economic sustainability without addressing all aspects of sustainability.

Involving marginalized people and groups is more economical.

The first part of this section established that addressing sustainability will save money, but I wanted to add this sub-section as a caveat that there is a way to save even more money in the fight against climate change.

While there is a huge opportunity to save money in the long run by investing in sustainability solutions now, we need to be smart about how we invest.

There are currently substantial up-front costs of adapting to a warming climate, but it doesn’t need to be that way; many of the people who can fight against climate change and save money in the process are not being allowed on the playing field.

Only 0.2% of global funding goes to organizations that focus on women and the environment. So addressing many of the social inequalities that contribute to the environmental crisis will also involve an economic shift.

Quote by Patricia E Perkins that says “When women’s situated experiences and expertise, diversity, and gendered roles in production and reproduction are taken into account, climate justice for women increases the welfare of all humans – economically, socially, and politically, both intra-generationally and inter-generationally.”

And remember, women are just one group that can help provide economically efficient solutions to environmental issues. The people who bear the brunt of climate change are often used to working around limitations.

Keep in mind that though Indigenous communities typically hold less wealth, they protect 80% of the world’s biodiversity.

Amplifying these voices and including other marginalized groups in policy-making could lead to resourceful changes that cost less money.

But these steps alone are only one vital piece of the solution. 

Symbolically, these action items amount to mopping the floors from an overflowing sink while the tap is still running at full speed. So we need to demand change of the people who are responsible for turning the tap on.

2. Sustainability is hindered by corporate capitalism and hyper-consumerism.

Putting more money into climate solutions is not the only economic change that needs to be made.

A lot of people are starting to catch on to the fact that supporting small businesses is often better for the environment and local economies. But that hasn’t had enough of an impact to slow down the takeover of big corporations.

Many everyday consumers, especially those in the global north, are still regularly purchasing products made from big businesses, which allows these businesses to continue to be some of the largest polluters in the world.

Oil slick water pollution

Furthermore, many of these environmentally unsound practices not only hurt the communities who live in the affected areas but also go hand in hand with unethical treatment of laborers.

I’ve already discussed the interaction between environmentalism and human rights in another post, so I won’t go further into it now, but it was worth mentioning that this is an element in the discussion of corporate sustainability.

Making big changes to the true economic sustainability of corporations will likely require participation from individuals as well as businesses and likely governments. 

 Climate change is not the problem. Climate change is the most horrible symptom of an economic system that has been built for a few to extract every precious value out of this planet and its people, from our natural resources to the fruits of our human labor. This system has created this crisis. 

Colette Pichon Battle

Consumers will need to address hyper-consumerist mindsets, by adopting a new set of material values (which I’ll talk about in a separate post), but more importantly, businesses need to take accountability for the damage they cause, either of their own volition or through government regulations.

For example, businesses can voluntarily offset their emissions footprint by purchasing carbon credits, or they can be forced by the government to mitigate their impact via a carbon tax.

Another way that a business can take accountability for their environmental impact is to curtail the waste from their products. Although we currently live in what you could describe as a disposable economy, we need to switch to a circular economy, where items are endlessly repaired, reused, and recycled–this system produces no trash. Companies need to build those practices into their business model.

Doing this should also include the elimination of business practices such as planned obsolescence, which encourages or even requires consumers to throw away items that still work in theory but aren’t as good as the latest version. 

Definition of sustainability on dictionary.com on phone screen against floral backdrop | contact me

(I am writing this on my second-hand laptop that is only 3 years old and in perfect physical condition, but it is already starting to be incompatible with the latest software updates. This is an example of planned obsolescence that many of us experience with tech devices.)

In adopting all of these changes, prices of consumer goods may increase to pass some of the expense on to the consumer, which may naturally encourage individuals to only buy what they need rather than overconsuming.

Again, we as consumers can certainly have some sway over companies when we band together, but there is no guarantee that will work in every case. 

Atm

A more impactful solution might be government intervention, as businesses may be reluctant to make such drastic transitions unless it is required for them in order to continue to operate. So let’s not forget that our economic systems are tied closely to the governments that regulate them.

3. Environmental destruction is linked to income.

It’s true. Economic sustainability cannot be achieved while the richest individuals harm the environment, which in turn harms the poorest individuals.

Our action plans need to acknowledge that. Otherwise, we get distracted by false arguments that the first step of addressing climate change is combatting overpopulation. Indeed, a bigger population means more emissions and resource depletion, but the reality is that one rich person has the footprint of many poorer people

Yachts at Bradenton Marina in Florida

When we look at the economics of environmentalism, we see that people with less economic power are affected more by climate change. In fact, income inequality at present has the power to shape what the future will look like in a climate-stricken world.

Since the year 2000, it is estimated that some lower-income countries have already become more than 5% poorer than they would have been without climate change. While many of these countries are likely to be hit hardest by the climate crisis, they are increasingly less equipped to handle the financial burden of this emergency, and funding is failing them at present.

On the other hand, higher-income countries may suffer fewer climate related-deaths in the future than the aforementioned countries, but they will be paying a lot of money for that privilege. In reality, they already are paying, as the US and EU have already lost $4 trillion since the year 2000 due to global warming.

Truly, the best way forward is to fund the transition to a greener world to prevent further expenses, deaths, inequality, and suffering in the future. It is the correct thing to do, morally and financially.

4. We can avoid hurting individuals by ensuring a just transition.

We’ve established that preventing further climate damage is good for the overall economy, but I know that doesn’t stop some people worrying about the effects of a greener world on individuals. 

These concerns are valid, as the UK’s abrupt dismantling of the coal industry 4 decades ago has harmed a lot of people who worked in the industry and were left to fend for themselves with no entry into alternate jobs.

But that was a lesson learned, and we can prevent this from harming individuals by ensuring a just transition. This means “moving to a more sustainable economy in a way that’s fair to everyone – including people working in polluting industries.”

In other words, climate solutions need to include a just transition to make sure that people whose livelihoods would be hurt by the transition to a greener world are given support in the form of new jobs, training, or other forms of support.

When you take away the threat of people losing their jobs, climate solutions aren’t so scary. In fact, we have long known about the health hazards to workers in environmentally harmful industries, but the unsafe practices have continued.

Ensuring that these workers will be able to have a job in the clean energy future not only provides them with economic stability, but also better health outcomes (which in turn saves more money).

I don’t claim to be an expert in economics or politics, but I have indeed researched these topics enough to know that there are experts who know how to ensure that a transition to a greener future is better for every individual.

Between their knowledge and the power of the government and corporations to enact the suggested changes, a greener world will benefit everyone.

The Takeaway

Ultimately, it will save money, lives, and the planet to act now on climate change. Waiting will only result in more costs to individuals and governments.

Acting on climate change means addressing a lot of levels of the economy, from income inequality, to consumer habits, to corporate accountability, to the way governments protect individuals from being lost in the shuffle of transitioning from environmentally harmful industries.

Rather than jumping to conclusions about how climate solutions might harm us, we should instead look to the experts who are addressing the topic to make sure that our fears are unfounded. (If you’re worried about the impact of green energy on your job, there are probably plenty of climate economists who are probably working on that issue right now.)

In many parts of the world, this transition to economic sustainability is already in progress. But it is clear that we need to be working faster to combat the climate crisis. 

Pushing for corporations and governments to implement eco-friendly policies is going to be an important part of what we as individuals can do in the push for economic sustainability. 

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    Continuing the conversation

    Are you surprised by any of these elements? Were any of those terms new to you? What are your takeaways for how economic sustainability impacts you? Let me know in the comments below!

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