As the weather becomes more extreme and unpredictable, the ecological and human cost are only two parts of the story. Unless we take adaptation more seriously, everyone is about to get much worse off.
With rising unemployment, stagnant growth, and notoriously problematic productivity levels, Britain has been in far better fiscal shape than it is today. But most people don’t factor in the implications of environmental collapse when considering the future of UK prosperity. Or lack thereof.
In July, the Bank of England broke with tradition by becoming one of few non-ecological organisations to try and force people to acknowledge the relationship between economic gloom and climate doom. Simply put, our changing weather systems, nature depletion and squandered natural resources are increasingly posing a threat to the country’s economy.
And we’re not the only ones staring down the barrel. According to the Financial Times, the European Central Bank has issued a similar rallying cry, with some figures suggesting a potential 1-3% rise in global food prices by 2035 without adequate steps to adapt to the new normal. Meanwhile, extreme weather could see average national GDP fall by 5%.
It’s a troubling prediction, and one that we have the power to mitigate. Keen to understand just how much risk there is for the UK’s economy specifically, we invited biodiversity expert Dr Samuel Sinclair, to answer some quick questions about the emerging turmoil. As the Director of Diversify, which advices companies like Amazon, Kering and Primark on improving their footprint, his opinions and thoughts are well worth heeding.
From your perspective, what are the greatest risks when it comes to the relationship between economics and ecology?
Ecological collapse isn’t gradual and it doesn’t come with a warning. Because the main overall effect of a healthy ecosystem is resilience, you can remove quite a lot without noticing the increase in risk exposure.
Nature risks are generally not linear, but rather they cascade. You don’t often see a slow decline in yield, instead a series of weather extremes allow an invasive species population to explode, a new crop disease to spread, erosion to ramp out of control and algae populations to bloom and turn rivers toxic.
As more nature is lost, the exposure to a potential cascade of risks increases undetected until suddenly entire supply chains fail and commodities soar in price. We’ve seen this with cacao quadrupling in price in one year and we will most likely see this happen again with other commodities.
Most companies are still in the early stages of understanding these risks and so have no ability to predict or manage them. As many companies would struggle to survive a price increase in their supply chain comparable to the one we’ve seen with cacao, we are likely to see some dramatic economic impacts in the coming years.
Which environmental tipping points do you think pose the greatest threat to our economic system?
I think the biggest risk is that the scientists who study these tipping points have been chronically underfunded for decades so whilst there are a few obvious candidates, for the most part, we simply don’t know.
If some companies take action to become greener and embrace net zero, but others do not, is it possible for the more environmentally friendly firms to thrive given the climate crisis would continue, drive further ecological collapse, and our financial markets/businesses are interconnected?
Yes absolutely. Companies that take action to understand and improve their relationship with nature may find themselves far better equipped to handle the uncertainty and shocks that we’re likely to see. Fundamentally, they’ll be forewarned, allowing them to work with their suppliers to mitigate risks. Those that have no supply chain transparency will be fully exposed and unprepared.
What environmental steps do you think organisations ‘reading’ this should take to protect their future?
Treat this like any other strategic issue. Don’t think about this as a sustainability topic, think about this as an opportunity to differentiate, manage risk, and achieve commercial outcomes. This isn’t charity, this is about commercial survival in an increasingly unstable world.
Each year we recognise Earth Overshoot Day — when our annual allowance of natural resources is exhausted. This gets earlier every 12 months. Given capitalism is rooted in constant growth, and the finite nature of our planet, is it even possible to reconcile the current economic system with nature and the environment?
I’m not sure I am qualified to answer this question, but I certainly hope so.
Image: Jan Antonin Kolar / Unsplash
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