Denial of science and leadership void. Why can’t we tackle sustainability?

Currently, forests burning are hitting new records widespread for example in Australia, Brazil, and the USA. Although the environment discussion is present in every single speech, few effective measures can be seen. This is also related to the misunderstanding of climate change by the general population. In the USA for example around 30% of its citizens don’t believe that global warming is real. Thought when the denial come from a remarkable country, with educated citizens, it become hard to cope with.

This year at the World Economic Forum the 1 trillion tree project emerged supposedly as a silver bullet solution. That was misguidedly purposed in Davos, in the Swiss Alps, as if we could address decarbonisation of energy sources, storm irregularity, the rising of the sea level and all by one

Brazil has suffered a lot of international pressure due to deforestation and forest burning. Germany and Norway withdraw its conservancy funding at Fundo Amazonia due to the bad management of natural resources. The retaliation went further when the Dutch vetoed the long-waited EU-Mercosur Trade Agreement. But here are some the paradoxes:

Germany which is renowned for its auto industry have measly 1% of hybrid and Electrical Vehicles as a proportion of its total fleet. But even if they manage a complete transition to Electrical Vehicles (EVs), around half of the energy matrix of the largest European country relies in fossil-fuel sources. This fact put the efficiency of EVs subsidies under controversy and severe doubt.

Norway, which have the largest sovereign wealth fund, owns much of its wealth from the Oil and Gas industry. Despite this, nowadays its fund still investing in environmental risky companies. One of them for example is a mining company in Brazil, Hydro, which heavily polluted Amazon River and had the Nordic government holding at least 30% of its share. One more example of lack of leadership from a rich nation.

The Netherlands for instance, was recently condemned by its own court due to the failure of its actions toward sustainability. The country sets an important example if itself fails to meet its own promised goals.

For example, the largest European oil company is based in The Netherlands, Royal Dutch Shell. It dropped its research on Algae Biofuel because that was “years away from becoming marketable” at the time.

Flying back to emerging economies, when it comes to the energy matrix, Brazil has around 80% coming from renewables — a percentage level of renewable share four times higher than the world or OECD, as of 2017 data.

The Brazilian companies in the wood & pulp sector alone manages 56M km² of forest conservation and 80M km² of planted threes. That is larger than the area of Portugal and Switzerland combined.

On the other hand, 80% of illegal deforestation in Brazil is associated with cattle production.

Globally, the animal food industry accounts for 83% of global farming land. While it takes up most of the world agricultural land it only produces 18% of the world’s calories, but at the same time is responsible for 60% of agriculture’s greenhouse gas emissions, more than all the world’s transportation systems combined.

Not only that, but there are still other sanitary consequences of animal food industry such as new transmissible diseases, epidemics and super bacteria. Furthermore, the excessive animal food consumption is directly linked to increase risks of cancer, heart problems and diabetes.

By consequence, higher public health budgets are needed to counterbalance it. Finally, society is missing the point and underestimating the hidden costs of animal food. There is a large public deficit that should be addressed by socio-environmental accounting.

Obviously, Latin American countries are far away from achieving net-zero deforestation. More effective measures and regulations regarding the entire animal industry supply chain are necessary. But it has become clear the driver of this damage is the international hungry of beef and dairy.

In this matter, the UK and the Europe are the ones more advanced in the discussion. The only way to influence consumer behavior and on top of that reduce costs with healthcare is by taxing animal food properly. Such a righteous and polemic policy shouldn’t be treated as a taboo, but the industry lobby is doing a better marketing job than the scientific community indeed.

Word carbon credit marked topped $ 215bn last year, although the global warming cost is estimated around 3 times higher this year alone. As an organic system, the overall cost of climate change is quickly growing, though the investment needed to offset it with low-carbon initiatives should be sufficient to reverse this path, instead of mild mitigate a self-destruction.

By that, a price estimated of $30 per ton of carbon and a total emission of 36bn ton last year, would create a fair carbon credit market size, valuated around $ 1 trillion. That would represent only 1.15% of the world gross domestic product (GDP), but even more important, it would allow the largest income transfer program from wealthy nations to the underdeveloped world.

In Brazil for example, according to Mr. Alperowitch, a renowned Portfolio Manager specialist in the matter, a $30bn annual budget would add up 1% in to its growth and could double the average long term GDP growth per capita which is around 1%.

The first aspect of global warming is its speed, at current pace, we are increasing CO2 concentrations that in only 140 years we would replace the same amount of carbon that stayed in Earth’s atmosphere for billions of years.

It means nevertheless, even if a zero-carbon economy suddenly started today, the atmosphere would still have half of the carbon emitted by the modern civilization with a 46% higher concentration than prior this period. The other half of it was absorbed by the ocean which became more acid, endangering many species living there such as algae that are natural carbon absorbents.

The carbon budget to limit Global Warming in 1.5°C ends in just 8 years if we maintain current emissions.

But at this point of the text if you are not concerned about this basic math of global warming, remember that a biochemistry system isn’t a linear science, so more greenhouse gases lead to an acceleration of the climate crisis.

The nation most responsible for climate change is by far the US, with a quarter of all the historical carbon output. But the accountability for matching the contribution ability isn’t being seen in the private sector there. Nike and Amazon for example, very resourceful corporations timidly set their net-zero carbon targets in 2050 and 2040, respectively.

Shouldn’t they act like Salesforce which aggressively set 2025 as their net-zero goal? So far, it’s a company with more than 50 thousands employees led by Marc Benioff, who were elected as the 2nd best CEO of the World.
Wait, but now how can the stockholder capitalists sustain the narrative fallacy that sustainability is against financial success?

More spotlight to leaders like Benioff, please.

Naturally, in Asia there is a lack of reliability and transparency from China policies, which influence the whole eastern region. In North America, the denial of facts by the US government and its withdraw from the Paris Agreement leaves the next elected presidency with much more promises than track of record, so there cannot be much faith in that. Therefore, Europe rises as the major economic group capable of lead a stakeholder capitalism.

Somehow, Latin America also can be the hot spot and the fertile soil to amplify, and to consolidate the Environmental, Social & Governance (ESG) practices in the corporate world. But don’t be naive, there is no time to a smooth transition and the odds to limit the temperature increase to 2Cº are every day smaller and harder.

With the lack of authorities, who should be followed? A famous TED talk presented Central America and more specifically Costa Rica, as one of the most efficient by reconciling economic growth and sustainability. Despite this great example, we can’t put all our hopes on political protagonist, they are usually reactive, unpredictable, and often fail to achieve consensus.

Therefore, the duty to transform is in the hands of the corporate sector, which has the speed, the autonomy and creativity needed to bring solutions, to inspire, and to attract the crowds.

In Brazil, there are some great examples of socioenvironmental culture such as in Klabin, ranked globally in the top 5 for ESG practices by a British platform.

There is also in Brazil a case of study to not to be followed: JBS. Despite being ranked as the company highest exposed to deforestation, it has around $ 320 million in investment from the world largest Asset Manager, BlackRock. And here it is the caricature scene of a beautiful speech from a Wall Street firm CEO detached from reality, Lary Fink, followed by a contradictory action when it comes to prioritize quick profit instead of accountability with a long-term vision.

No one is neutral in this battle, investor can withdraw resources from irresponsible enterprises, consumers can boycott them and executives can pivot their business model. In respect of our generation legacy, hurry now.

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Andre Castelo Branco

Venture Capital @ TM3, building best practices of ESG & GRI. Engineer, entrepreneur & minimalist. Worked with SaaS Startups, Wealth Management and Agribusiness.