Financing the Future we want- then why are we subsidizing the future we don’t want?

Reflections on the United Nations Conference on Sustainable Financing –Beijing, China, 2013.

What is the price of Climate Change? And how do we finance the change to a more sustainable future? I attended the United Nations Environmental Protection –Finance Initiative -Annual Global Round Table Event, (UNEP-FI –GRT pfft) here in Beijing, 12 and 13 November at the China World Hotel. It was a productive meeting, where Regulators, Bankers and Insurance Companies, Research Institutes and sustainability experts discussed how to get out of the deadlock of who would do the first major step of putting money where the mouth is on Climate Change.

The Language of NGOs and CSR minded people needs to transform more into the price taggers (Insurance) language for more effectiveness.

For me it was refreshing to hear from insurance companies how far they have come into price tagging the Future, and the risk of Climate Change for Companies: as a communication strategy, they know what the costs are of Climate Change and can convince compellingly the business community and government bodies of change needed.  I also met their frustration in their ongoing debate with financial institutions on one hand and the NGOs on the other, the latter seeming to speak a very different language on Climate Change, and that does not make it easier to convince the business community to make a big change, but makes it harder. CSR experts could talk more like the people working in Banks and Insurance companies and with this, the cause would be ‘sold’to public more convincingly. 

The Financial institutions are half willing to lend money to sustainable SMEs, but the Governments are continuously more than willing to hugely subsidize fossil fuels.

I met a COO of a small cooperation of sustainable farmers at the conference, and I talked about his business case and if the products his farms produce are ready to be put into the larger market, say a Wal-Mart or Jing-Ke-Long here in China. He responded that that was very risky action for a Small Enterprise like his, as you have to bring 500.000 Dollar with you to get started at Wal-Mart, and you don’t know if it will sell there.  Getting a loan for this would be not possible at a reasonable price as an SME. At the same time China is still building more cheaply made coal factories all over the Country. Yes they also invest in all kinds of clean energy, but just to diversify. The long term costs of these coal factories are felt, moreover, coughed up by society within a year. And I am not even talking about the Climate risk..

It’s not just China, Indonesia as well as other countries have huge Fossil Fuel Subsidies that need to be taken down- this will be a Global effort to do so, but it is possible; in Iran (IISD, May 2013) there is an example of this that is hopeful, and other countries could consider this, asap please!