Global Inequity — a major hurdle

33 years from the time that James Hansen, ex-NASA scientist, testified in front of the US Congress that the rise in global temperatures was a consequence of human activity, policy makers and officials are only just waking up and creating change.

Are things looking up though?

We witnessed a historic win earlier this month, with courts ruling that Shell needs to slash their emissions.

Climate change is a term that’s thrown about everywhere now, but it is true. This phenomenon has been set in motion years ago, and the catastrophic events have been seen in higher frequency. This is of serious concern, especially with regards to aiming to achieve Net Zero goals.

Panelists at the Green Swan 2021 conference warned that policy makers leaving behind the social agenda in our journey to climate goals can be hugely problematic. People working in the financial sector need to be well aware of this climate change related risk.

It is imperative to understand that the adverse effects of climate change are seldom felt by the people who contribute the most to it. Unfortunately, climate changes stresses marginalised communities more, despite their minimal contribution to this. Not focusing on designing polices to combat poverty and inequality is foolish.

When we think of ‘stranded assets’ we must sensitise ourselves to the fact that people should not be stranded. Tribal communities, Island communities, women, coastal areas are all in grave danger. Rewiring the way we understand this is crucial, human rights issues and climate change feed into each other and are deeply interlocked.

The ESG framework has three components that need to be given equal focus. It’s very easy to focus on only one, in this case E (Environment) but it is necessary to remember that the components need to be given equal importance, Social and Governance responsibilities go hand in hand in taking a stand against climate change.

Investors have a large role to play in this. Taking a key point from here, it is beneficial for companies to take up ESG factors seriously.

A fundamental restructuring is required in the school of thought dictating our national, international and industrial policy making. Driving finance and investments to control our economic forces is the need of the hour, and believe me, time is ticking.

David Wood, director of the Initiative for Responsible Investment (IRI) at Harvard’s Kennedy School of Government puts forth quite a compelling situation:

“Wood warned that the shift from coal-fired power plants to wind energy in the United States — a mid-west to Northern mid-west move — has revealed that new jobs are more precarious, not unionized, and often offered on a seasonal basis.” However, workers in the fossil fuel industry have been protected with features like long-term job security and union protection.

With the shift to renewable energy, especially in countries like India which has been touted to be the fourth most attractive renewable energy market (states like Gujarat and Karnataka have very progressive solar energy policies), these factors need to be discussed.

Read more: https://www.theasset.com/article-esg/43819/theasset.com