3 Ways to Strengthen Global Environmental Governance

Localized economic slowdown due to Covid-19 is by no means a substitute for climate action

The environment and climate crisis is a race that we can win. A global crisis needs a global action.

Projections for human population growth and the impact of human activities indicate that the crisis will worsen considerably. Just 100 companies are responsible for 71% of global emissions. It’s, unfortunately, the poor and other vulnerable groups who contribute the least to climate change (e.g. greenhouse gas emissions) but are the ones who suffer the most from climate change and its consequences.

The impacts of environment and climate change are different for different countries. Yet, as the Paris Agreement states, environment and climate change is a common concern for humankind. We live in an interconnected world. A drought or flood in one part the world can disrupt supply chains or move commodity markets in another with serious implications for the poor and the vulnerable like women and youth.

Shrinking economic activities as a result of the Covid-19 pandemic have led to calls for more inclusive and improved environmental performance. There are encouraging trends that show strengthening social protection programs and other support to disadvantaged and excluded groups, as well as a dip in coal and oil demands across the world. Many cities are experiencing significant drops in air pollution.

There could also be high risks of worsening climate change impacts in post-Covid-19 recovery through reviving outdated, polluting industries and practices for the sake of bringing quickly back jobs and increasing production. This may further weaken and delay environmental protection measures.

For more meaningful and longer impacts, we need to enhance global environmental governance. This means working on sustainable development as the supreme consideration for managing all human activity, whether political, economic, or social.

The quesiton then is: how can we rebuild global environmental governance and make a difference to the environment and climate change?

Walking the talk

1. Enabling ‘new’ champions of climate justice

There is a growing volume of climate-related legal actions globally, particularly against energy companies as well as governments and financial firms. Climate litigation has emerged as the next frontier in shareholder action, as investors respond to the urgency of the threats posed by climate change.

Shareholder action has been prolific around the world. For instance, a district court in Poland ruled that the decision by a Polish energy company to participate in the construction of the country’s last coal-fired power plant was legally invalid. The lawsuit was brought by one of the company’s shareholders. The shareholder argued that the investment posed major financial risks to the company in the face of rising carbon and falling renewable prices.

Another example is the oil industry, which continued to invest heavily in projects all but certain to lose money as the world moves toward a lower-carbon economy. The projects were incompatible with the goal of the Paris Agreement to limit global warming well below 2 degrees Celsius. Investors have increasingly turned to shareholder lawsuits to protect their investments as the world transitions to cleaner energy.

Civil society, as well as the private sector, have taken more active roles as more and more stakeholders have created a political space for the inputs of factors such as environmental, human rights, business, and other organizations in decision-making processes at the global level. Young people across the globe are not only fighting the dynamics of environmental injustice but organizing and leading the way to a new reality. All these factors combined have shifted the burden of implementing global solutions to environmental issues to such groups that can tackle issues as quickly as possible and with a special focus.

2. Reforming the intergovernmental political system

One of the components of global environmental governance is a collection of intergovernmental organizations. They are the UN Environment Program (UNEP), the UN Development Program (UNDP), and other UN agencies that deal with coordinating policy on the environment at the global level. They are also charged with creating a global agenda to protect the environment and promote sustainable development.

The UNEP—a relatively small, normative organization—has contributed to the development of legal regimes, such as the Convention on Biological Diversity, the Convention to Combat Diversification, the Montreal Protocol, and the Paris Agreement. One constraint comes from not being able to coordinate such a complex system with a set of actors. These actors create gaps in policy-making and competing decision-making structures.

UNEP is, in theory, the lead UN agency for policy coordination, but in practice, its mandate overlaps with those of other UN agencies such as the UNDP. Thus, it has neither real authority to set the agenda nor the resources to play a role in the system regarding global environmental issues.

A major problem concerning the inconsistency of organizations in the system is that they have weak support from countries. UNEP, for instance, is financed voluntarily by UN members. It is not a national obligation for any country to finance UNEP.

Another problem arises from the governments’ decision-making on production, international trade and investment do not often pay attention to the environment. Environmental protection has too often been viewed as a luxury that needs less attention and is considered as the last option for economic growth.

3. Rethinking financing

All countries will need to work on how the hundreds of trillions in the financial system can become fully aligned with climate security to meet the goals of the Paris Agreement. What we see in the financial world is that never before have so many investors, bankers, as well as central bankers, started to commit their core operations to align with climate change. But the question is: whether these commitments are enough and how do we accelerate this action?

There is absolutely no question that climate change is the world’s biggest contemporary ‘market failure’. The international financial system was never designed to deal with climate change. It has been operated under private authority, i.e. managed by private actors in the capital market. They cannot respond to a crisis like a climate crisis and so indeed the Covid-19 crisis.

The issue that falls under this include leveling the playing field for greener products by phasing out antiquated subsidies that reward or encourage behaviors and decisions that increase, rather than decrease, environmental impacts; reforming policies and providing new incentives (e.g. feed-in tariffs to promote renewable energy technologies)[1]; strengthening market infrastructure and market-based mechanisms, and redirecting public investment, and greening public procurement.

Stimulus and rescue packages should target cleaner industries, such as renewable energy providers, sustainable modes of transport, and carbon-neutral businesses. Evidence suggests that environmental taxes are less detrimental to economic development than other taxes, such as labor or income. More growth-friendly tax systems and the desire to promote more efficient use of both energy and other resources can play a role in environmental fiscal reform as a means to set the economies on a trajectory of inclusive development with a strong shade of green.

If implemented sufficiently, environmental taxes practically contribute to a healthier society and hence lower health-related costs. They trigger eco-innovations that generate wealth and jobs, while the broad diffusion of environmentally-friendly technologies supports sustainable systems of production and consumption.

Implications for our work

Helvetas is partnering with the Swedish International Development Cooperation Agency (Sida) to facilitate an inclusive economic development program in 12 countries in Eastern Europe, South Caucuses, and the Western Balkans. The majority of countries that we work in are acting, but aggregate efforts to reduce greenhouse gas emissions are not sufficient.

Drivers such as environmental knowledge and awareness, recognition of the business case for a green economy, and environmental regulation and legislation should contribute to a shift in public policies and private-sector enterprises to focus on the ‘double dividend’: the intersection of activities that both decarbonize the economy and lead to inclusive economic development.

Changes in practices and business models will focus on innovative ways of production and consumption patterns. This includes limiting the use of fossil fuels and plastics and stimulating public and private investments that align with the SDGs. There are legitimate concerns about an overemphasis on economic growth in the market systems development (MSD) approach to program design and management, which many people feel pays insufficient attention to, or even willfully ignores the environment.

For the Helvetas-Sida regional program, facilitating the transition to a green economy means understanding and addressing economic driving forces to environmental degradation. The program will pay attention to the importance of access to, and the role of, natural resources for production and consumption (e.g., water, energy, land, minerals, etc.) and environmental constraints and opportunities.

The inclusive nature of economic development for products and services will not be sustainable without considering skills, collaboration, practices/business models (supporting functions) as well as policies and norms/values on issues such as resource efficiency, climate mitigation, carbon removal, and biodiversity protection.

Practically, the regional program will focus on three specific areas of work:

1. Building and stimulating the business case for the transition to green economic development: facilitating green business service providers, including advisory services and financing, and test products and technologies that can support private sector enterprises to integrate them into their core businesses.
2. Public-private dialogue: this requires deliberate policy and investment decisions and the redoubling of efforts by both governments and private sector actors. Examples include strengthening market infrastructure and market-based mechanisms, and redirecting public investment, and greening public procurement, as well as responding to policy reforms and price signals through higher levels of financing and investment.
3. Enhancing learning and skills: including knowledge, values, and attitudes, technical skills, as well as changes in awareness about the importance of transitioning to green economic development. This means changes in citizens’ awareness and consumption patterns and behaviours.

Related readings

• For a More Inclusive Post-COVID-19 Economic System
• ‘Business as Usual’ in Post-COVID Worsens Vulnerability
• Using a Systemic Approach to Analyse the BioTrade Market System
• Integrating Disaster Risk Management into Projects Applying a Systemic Approach

[1] A feed-in tariff (FIT, FiT, or renewable energy payments) is a policy mechanism designed to accelerate investment in renewable energy technologies by offering long-term contracts to renewable energy producers.