Reflections

An Inclusive Green Economy
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The shift in perspective since 2006 is extraordinary. It is critical for our future. And it is good reason for hope and optimism.

A decade ago, when I took up my appointment as Executive Director of UNEP, the economic, social and environmental landscape looked very different. The world was wedded to a paradigm of at-all-costs economic development. Social concerns – health, equality, justice – had little integration with economic concerns. Climate change and environmental degradation were gaining traction as global issues, but were more often than not treated as discrete challenges.

Ten years later, we have a global agreement on climate change. We have a universal approach to sustainable development. Importantly, we have an awareness and acceptance that solutions to these challenges must integrate the social, economic and environmental dimensions in tandem.

What this amounts to is an international recognition of the deep and fundamental relationship between social equity, economic development and a healthy environment. The shift in perspective since 2006 is extraordinary. It is critical for our future. And it is good reason for hope and optimism.
Central to this integrated approach is the notion of an inclusive green economy: an economy that both works for everyone and supports environmental sustainability.

Early on, this idea was seen as almost quixotic. It took a violent upheaval of our financial system in 2008 to open minds to the concept of a green economy.

In response to a financial cataclysm that saw markets lose a third of their value in only three months, UNEP tabled the idea of a “Global Green New Deal”. This vision proposed a reorientation of fiscal stimulus packages toward renewable and energy-efficient infrastructure, creating job opportunities in sustainable industries in the process. Many countries drew on this recommendation as an integral part of their recovery efforts.

The idea has snowballed since then and gained purchase around the world. UNEP continues to support countries in advancing green economy policies and projects.

The Partnership for Action on Green Economy and related initiatives currently contribute to the shift of national economic structures in over 22 countries towards clean technologies, resource-efficient infrastructure, green skilled labour, good governance and well-functioning ecosystems.

The latter has been a crucial aspect of green economy work. Our ecological infrastructure provides enormous benefit to the economy beyond direct contribution through green industries. Early on, at the G8 meeting in 2007, the Economics of Ecosystems and Biodiversity (TEEB) initiative was born with the purpose of informing economic and social policy on the hidden values of ecosystems. More recently, the ProEcoServ project has demonstrated almost $1 billion worth of ecosystem services in just four localities across four countries.

This is evidence of a truth that many people instinctively know: Our economies do not function in isolation from our environment. But as this is true, so is the reality that our economies and our environment are deeply intertwined with our societies. Coupling sustainability with economic growth truly only matters to the extent that it supports an essential social quality: inclusion.

An “inclusive green economy”, then, is an opportunity to advance both sustainability and social equity as functions of a stable and prosperous financial system. It is also a chance to look at the impact of individuals and society as consumers, and how our lifestyles draw from and imprint upon the environment.

And equally significant, this insight allows us to look at investment policies that drive and shape the societies and economies that we inhabit. The underlying markets and governing conventions for financial capital are a key element of this. Promisingly, many countries have developed policies and practices that capitalize on the role finance can play in shaping the world we want.

The UNEP Inquiry into the Design of a Sustainable Financial System has set out to study those innovations and best practices. The Bank of England, The Central Bangladesh Bank and the People’s Bank of China, and other major financial institutions worldwide, have demonstrated that there is indeed a “quiet revolution” occurring in sustainable finance. The Inquiry’s findings are gaining recognition in key financial constituencies around the world, and green finance is a matter now taken up by the G20 under the Chinese presidency. Building on our work of over two decades in sustainable finance, UNEP will act as secretariat to the G20 Green Finance Study Group, with the aim to inform further national and global action.

From a little-known idea with even less traction in financial circles, to the nucleus of sustainable development on the agenda of G20 meetings, the notion of an inclusive green economy has come some way in ten years. The goal now is to build on that awareness and action to shape our pathway to achieving the Global Goals and implementing the Paris Agreement.

In the early days of the past decade, milestones for an inclusive green economy were few and far between. Now they pass almost in a blur: $600 billion worth of pledges from institutional investors to decarbonize their portfolios; $10 billion invested in the Africa Renewable Energy Initiative. Markets for green technology, transport and infrastructure are expanding as never before. Environmental doom, while still a real risk, is changing into an economic opportunity from which planet and people benefit.

The journey toward a truly inclusive green economy continues, and many challenges remain. But the interest and potential of business and finance to support a sustainable and inclusive future has never been greater. Our task as individuals and societies is to continue to put sustainability and equity at the heart of our economic decision-making.