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Short-term priorities can align with long-term goals
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After decades of reluctance on the part of world leaders, a rapid, smooth, and purposeful transition toward sustainable development seems unlikely. Indeed, throughout human history, such major changes have more often been forced upon the world by circumstances, with leaders focusing on shorter-term concerns like political turmoil or economic stagnation until serious disruptions to their economies and societies arise.
But this need not be the case. Policymakers can develop solutions that leverage immediate challenges to guide the shift toward a more sustainable, inclusive future. This year provides an ideal opportunity. At high-level meetings in Sendai, Japan, in March and in Addis Ababa, Ethiopia, in July, world leaders will pursue closer collaboration on disaster-risk reduction and on mobilizing finance for development, respectively.
Such multilateral frameworks catalyze progress. Indeed, agreements like last year’s deal between China and the United States to reduce carbon-dioxide emissions are unlikely to happen without them. Nonetheless, as Mancur Olson famously observed, it is the individual interests of the parties that drive collective success.
For example, China’s recent embrace of sustainable development, which will serve the planet’s long-term interests, is driven by the domestic challenges posed by air, water, and land pollution. Rather than agonize over growing disruptions, China’s government has decided to hasten the shift toward a dynamic green economy, even if it means stranding assets and allowing businesses that do not suit China’s shifting needs to fail — an approach that will deliver a long-term competitive advantage. The rest of the world should recognize the benefits of allowing short-term disruptions to drive, not distract from, the sustainability agenda.
Even perverse signals can be mitigated and leveraged. Instead of allowing low oil prices to encourage consumption, governments could take the opportunity to impose a small, politically acceptable energy or carbon-equivalent tax — an approach advocated by many economists and development specialists, including Jeffrey Sachs, Lawrence Summers, and Kemal Dervi. Such a tax would not only sustain the price signals needed to steer societies onto a more sustainable energy path, it would also provide revenues that could be channeled toward employment creation and long-term green investments, thereby leveraging private capital.
Likewise, central banks’ macro-prudential activities, which evolved largely in response to the global financial crisis, could focus on longer-term risks to the financial sector, including the cumulative impact of climate change, environmental policies, and disruptive clean technologies. Bank of England Governor Mark Carney has taken the lead in initiating a prudential review of the impact of climate change on the United Kingdom’s insurance sector. Other institutions should follow suit.
What the world needs now are leaders who are willing to bridge the gap between daunting short-term demands and desirable long-term outcomes. Instead of remaining preoccupied with the present, world leaders should view 2015 as an opportunity to ensure that today’s disruptive crises provide the foundation for tomorrow’s sustainable prosperity.
Simon Zadek is co-director of the UNEP Inquiry into the Design of a Sustainable Financial System and a visiting scholar at Tsinghua School of Economics and Management. Copyright: Project Syndicate.
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