David Lais is the Co-Founder and Managing Director of ecolytiq, a climate engagement platform for financial institutions, empowering customers to live more sustainably.
The human brain is ill-equipped to come to terms with the vastness of climate change. The brain has its own limitations in perceiving future risk. By design, we adapted to survive the here and now. Economists have even coined the term “social discount rate” to describe a negative interest rate we give to actions that generate value in the future. We tend to prefer to consume in the present than wait for the future.
Despite feeling climate change on a personal level, we aren’t valuing the impending cataclysm as highly as our more immediate problems. The 2020s is the most decisive decade on addressing the climate crisis. With the third COP climate conference of this decade around the corner, COP 28 takes places with the background of an ever-dimming future.
And yet there’s hope. These annual COP meetings act as a shot of adrenaline into the climate economy. A global stage infuses renewed calls for action and additional pledges of good faith agreements. It's effects never linger enough to push us into gear.
If we are to ever to get a handle on the climate crisis, we would need a COP every month.
Ahead of this COP 28, here are some the indications of how we are doing so far. I’ll start with my red flags that are causes for concern and then showcase some green lights, areas that are making good progress.
On the fast track to the wrong place
In 2015, the Paris agreement enshrined a global consensus that global warming needs to be capped at 1.5 degrees Celsius. That no-go zone now looks like a foregone conclusion. Ahead of COP 28, a new UN report paints a more harrowing picture. We are on track to almost double 1.5, overshooting our limit to an estimated 2.8 degrees Celsius – a disaster scenario to put it mildly. We’ve got to get off this track.
An astounding finance gap
Financing still remains a huge hurdle. Money makes things move, and there’s still not enough capital going into funding our transition. Globally, there’s around one trillion USD flowing into the climate solutions economy. At face value, that seems like great progress. But it’s only 11% of the $9 trillion we need each year by 2050 to reach net zero. Closing that gap by making more capital from public and private sources available is a prerequisite for liveable planet.
Fossil fuels get record-breaking support
While the climate financing gap continues to impede action, fossil fuel subsidies have reached an all-time high of $7 trillion US dollars – an amount that invested into climate technologies would make considerable progress towards the net zero financing goals. Money isn’t being funnelled into future-proofing, and it’s worrying.
This is also made worse by continued fossil fuel investments from banks, who in 2022 provided $673 billion to finance the fossil fuel industry amid record profits from oil & gas companies. It’s clear that priorities are still propping up a doomed status quo. It’s time to leave it behind and embrace a cheaper, cleaner, more inclusive future – one without the burning of planet-cooking fossil fuels.
Policy is breaking new ground
Governments are adopting more ambitious climate policies. From the Inflation Reduction Act in the US to the Fit-for-55 package from the European Union, a mix of carrot-and-stick initiatives has pushed climate technologies from infancy to market viability in very short windows. The recent US-China deal
Governments are finally adding some structure and regulation to rapidly changing markets, evening the playing fields for innovation. This is encouraging momentum is a start; one that needs to be back by more ambitious legislation and bold financing initiatives that bring them closer to their Paris Agreement obligations. Let the race to the top begin!
Consumers are more willing than ever
The urge to act is there. 80% of people are ready to make changes to their lives to fight climate change, according to Pew Research. When it comes to financial services, consumers are becoming more aware that they have power. What is lacking is the enablement to act. We’ve seen that through our work with banks around the world. When given the tools and education, people do in fact live more sustainability. On average, they reduce their footprints by 13%. Why? Because climate matters to people. It empowers them. It’s also never been easier to make changes to your daily life to reduce our individual impact. Just consider the options we have when it comes to EVs, dairy and meat substitutes and the like.
Empowering the next generation
I had the honor of speaking at COY18, Conference of Youth, in Dubai on the 26th of November. The panel was about “Fostering Technology for a Sustainable Future,” where I emphasized how crucial it is to channel technology for social gain, as currently we see it applied for only commercial gain all too often.
The audience included key government officials and over 100 youth delegates from all over the world, who are catalysts in leading the sustainability transition. For youth, development programs are so important in accelerating projects around sustainability. One program showcased at COY was the Arab Youth Technology Fellowship, which has been incubating projects that support clean water, soil health, and more.
COP 28 is here. We have seven more COPs to get it right or as close to right as possible. Talks and handshakes need to go further with our future hanging in the balance.