It's about people

Climate Inequality Report 2023

“The climate crisis has begun to disrupt human societies by severely affecting the very foundations of human livelihood and social organisation.”

The World Inequality Lab hosts the World Inequality Database, the most extensive public database on global inequality dynamics. Last January it published the Climate Inequality Report 2023 with the aim of exposing the very unequal effects of climate change on populations and suggesting pathways to solutions such as development cooperation and transformative tax and social policies. This is a must-read report and an excellent resource for anyone wishing to better understand the interconnection of two systems-level risks: climate change and wealth/social inequality. The report reminds us that the top 10% of emitters generate 48% of emissions, with the top 1% being responsible for more emissions than the entire bottom 50% of the world’s population. Let that sink in for a moment. However, while the poorest populations are the least responsible for climate change, they are both the most exposed to climate-related risks and the least able to shield themselves from these risks. In other words, left unaddressed, climate inequalities will only worsen. Another revealing insight from this report is that this inequality is not only between countries, but today mainly within countries – in other words, there are very vulnerable populations in all the countries of the global North. This is not someone else’s problem, it’s everyone’s problem. The report also exposes the funding gap that remains between climate finance needs and the amounts actually deployed or committed – despite all the noise about climate finance these days, and despite these funds representing a tiny portion of GDP. This is nothing we haven’t heard before. We know the problem. We know what to do. The difficulty is that we can only solve this problem through a holistic approach that moves all the pieces of the system at the same time.

Introduction to Racial Inequity as a System Risk

On a closely related note, The Investment Integration Project (TIIP) has published a report called “Introduction to Racial Inequity as a Systemic Risk: Why Investors Should Care and How They Can Take Action”. Calling racial inequity “morally and ethically abhorrent” and a systemic risk that investors cannot ‘diversify away’, it outlines how the financial industry can manage this risk and “promote the equitable distribution of resources, power, and economic opportunity across all races and ethnicities in the U.S. – to advance racial justice and to protect their bottom lines.” Readers beware, it offers a relatively narrow lens of racial inequity in the US from the perspective of investors and how they can leverage capital allocation decisions to help address this issue, which arguably overemphasizes the ‘what’s in it for me’ optimization of bottom lines and investment returns. Nevertheless, it provides valuable insights, using a perspective and vocabulary that may resonate with a broader segment of the US institutional investment community awakening to responsible investment practices and systems-level investing. And while the report doesn’t mention it, the connection between racial inequity and climate inequality (referred to in the previous item) is fairly obvious. Whether racial inequity, or just plain inequity, the arguments are the same, as is the pressing need to reduce inequity and injustice and promote a fair, safe, just, and equitable society. Everywhere.

We’re taking a break for Canada Day and will be back for the week ending 7 July.