Financing a Fair Green Transition

Financial mechanisms can be used by governments to encourage more environmentally friendly behaviours. This is important as, while generating more revenue for the sustainable transition is one issue, encouraging correct behaviours to power the transition is another. Use of financial and fiscal mechanisms can reward appropriate consumer/corporate behaviour and punish unsustainable behaviours, through taxes and tax breaks, for example. A clear example of this is the use of environmental legislation in Finland. The country has high fossil fuel taxes, and offers tax deductions and subsidies for the installation of heat pumps. These have been mandatory to be installed in all new homes since 2014. These measures have not only encouraged use of heat pumps, but also grown interest in sustainable heating and energy generation, providing greater employment and skills in this area.

Presented by: Mark Spelman, non-executive director of Buro Happold

Finland Integrated Energy and Climate Plan

Carbon pricing is a solution that governments can better make use of to shift towards a greener economy. Low carbon prices incentivise behaviours which are environmentally damaging. One example is that it is cheaper to fly from Edinburgh to London than to catch a train, despite a flight having a much larger carbon footprint. A solution for governments is to work on understanding the underlying floor price for carbon and how altering this can have an impact on transition and transformation across different industries. Until the carbon pricing is fixed, there will be a continued distortion of behaviours towards unsustainable practices, because there is currently a failure to price in carbon to the costs of goods and services.

Presented by: Mark Spelman, non-executive director of Buro Happold

Carbon Pricing Leadership Coalition

The G17Eco tool created by World Wide Generation offers a range of offers to businesses which allows them to: check their current sustainability metrics; collect sustainability data and turn this into standardised reports; track the ESG attainment of investment portfolios; calculate emissions created by the business; assure sustainability reports; and compare progress against the UN SDGs and other countries. The tool uses blockchain technology to show where the collected data has come from, as well as supporting evidence for it. The tool enables data to be collected in such a way that its provenance, evidence and traceability are visible and usable to back up its viability. It also brings together government, business and civil society actors because it has the capacity to collect, aggregate and disseminate standardized data to each of these sectors, enabling them to look at one standardized data set. This is important because non-financial accounting (such as sustainability accounting) is typically unstandardized and therefore difficult to make use of, and there is a real need for reliable real-time sustainability data that is not outdated, and that can be trusted to drive business and governmental decision-making, which this solution offers.

Presented by: Manjula Lee, Founder and Chief Executive of World Wide Generation

G17 Eco tool

World Wide Generation

The Natural Capital Protocol, created by the Capitals Coalition, is a framework which allows organisations to assess their dependence on natural capital, as well as the impact that their business decisions may be having upon natural capital. It allows organisations to better understand their own impacts, and thus empowers these organisations to use the standardised protocol framework to take steps to lessen their environmental impacts. The Natural Capital Protocol attempts to fill the gap in the market of the need for "an internationally standardised framework for the identification, measurement and valuation of impacts and dependencies on natural capital in order to inform organizational decisions" (Capitals Coalition Website).

Presented by: Martin Lok, Executive Director of Capitals Coalition

Natural Capital Protocol

The use of data modelling can help to identify which sustainability solutions have the biggest impact and the largest potential to answer the challenges we are facing as a planet. For example, modelling has indicated that kelp and seagrass can from day 1 sequester carbon at a faster rate than trees. Seagrass has the potential to sequester twice as much carbon per hectare as a forest. Furthermore, bioproducts from the sequestered seaweed can be used in biofuel. Had the modelling been available some years ago to indicate that such a solution has very strong viability compared to planting trees to sequester carbon, (which take some 15-20 years to grow large enough to perform this task at a sufficient rate), then these practices could have been developed much further by now. Modelling offers an indication of which practices are the most efficient and effective, but it requires accurate and reliable data to ensure that it can provide helpful conclusions.

Presented by: Manjula Lee, Founder and Chief Executive of World Wide Generation

The Blue Carbon Initiative 

ESG data can be used to encourage businesses to shift to cleaner practices. Example of BNP Paribas asset management, which worked with Capitals Coalition to calibrate a natural capital approach with ESG factors. This was applied to companies in the food sector, particularly related to seafood. Companies were scored based on the new comprehensive ESG values, and given a percentage score based on their performance. Under-performing companies were incentivised to improve their scores, while the lowest performers were not afforded further services by BNP Paribas. Such an approach leads to a greater emphasis to be placed on ESG factors by corporations, as they see the real risk of losing their asset manager if they do not perform to the required standards.

Presented by: Martin Lok, Executive Director of Capitals Coalition

Capitals Coalition

Public procurement accounts for a large part of the world economy, and public procurement budgets are very large to provide all the necessary goods and services that are required within a country. In the UK alone, some 2 million organisations contribute to providing goods and services for the public sector. As governments are looking to create greener legislation to support ecological targets, the realm of public procurement provides enormous opportunity within which governments can act as pioneers in setting standards and norms that reflect strong sustainability practices. Green Public Procurement and Sustainable Public Procurement are solutions that are being increasingly used by the EU, with the latter focusing on sustainability across social, environmental and economic parameters within public procurement practice.

Presented by: Mark Spelman, non-executive director of Buro Happold

Green and Sustainable Public Procurement

Behavioural psychology should be used to incentivise sustainable changes. The work of Prof. Daniel Kahneman indicates that humans are irrational beings, and that 95% of our decision making is subconscious. It is also governed by cognitive biases: we tend to favour now instead of the future, to favour pleasure instead of pain, and we tend to remember loss instead of gain. These findings offer insights into how governments can craft solutions to the climate crisis to shape consumer behaviour, and alter the economy. Government incentives must align with these findings, incentivising positive (sustainable) decisions, and penalising those with a negative effect on the environment. Because of our tendency to remember loss rather than gain, penalties may be effective; however, there is a need to find a balance between 'carrot' and 'stick' approaches when it comes to economic incentives in order to identify the most suitable solutions. Furthermore, data and technology such as Virtual Reality technologies can appeal to the empathy of humans - if these technologies are used in such a way in which we are shown today what the impacts of climate change could be, this could create a greater sense of urgency and need to act.

Presented by: Manjula Lee, Founder and Chief Executive of World Wide Generation

Applying behaviour change techniques to key challenges

This solution provides a potential alternative to transitional climate finance, which holds large bureaucratic burdens around these assets. Currently, although many ESG options are available to investors, a lot of these investments end up as tech stocks which do not make a large contribution to climate issues. By contrast, using decentralized finance models, which are financial applications built on top of a blockchain based ecosystem- is a solution to this. The decentralized finance or DeFi model offers a cheaper IPO equivalent to traditional finance, saving money, while also digitising the security that backs these assets.

Presented by: Philip Bernstein, University of Zurich

Blockchain Technologies as a Digital Enabler for Sustainable Infrastructure