Can society reform the system that has enabled growth but simultaneously brought the long-term health of the planet into question? UN Climate Change High Level Champions Finance Youth Fellow Natalie Mangondo contemplates choices and change with AIQ.
Read this article to understand:
- How the world’s vulnerable are being challenged in the climate emergency
- Why bolder action to reform policy frameworks could drive positive environmental feedbacks
- Why the financial sector needs to take a more active role delivering the change agenda
The scale of change needed to deliver on net-zero targets is colossal. Today, concerted efforts are underway to ensure a range of voices are heard from those calling for action.
One thing is clear within the climate debate: the voice of young people – the most affected group – needs to be incorporated into decisions over how to redesign our economic and social systems. The UN has created a Youth Fellowship scheme to draw in young professionals from around the world, to draw in best ideas and drive momentum.
Natalie Mangondo is a Finance Youth Fellow studying under the Southern Africa Climate Finance Partnership; she has been researching how climate resilience can be integrated into Zimbabwe's investments to mitigate greenhouse gases better. We spoke to her about the actions she believes are needed to ensure an economic pivot and ensure a transition that delivers for all.
Is the financial system broken? If so, what should we be doing about fixing it?
For a long time, we have been in pursuit of exponential growth. This pursuit has been working for a tiny minority of the world’s population, but without taking equity, justness or fairness into account. At the same time, that drive is undermining the system itself and could ultimately lead to its collapse. It is the most vulnerable among us, young people and those from the most climate-vulnerable countries, who will bear the brunt of these impacts.
But there is also an incredible opportunity to harness the interrelatedness and interdependence of our economic and financial systems to build something better; for example, in changing demand and developing momentum for civic engagement for younger people within finance and the markets. That’s what I believe will give political actors and policymakers the impetus to drive change further.
It has always been about the three Es for me: the intersection of economy, environment and equity. Addressing these problems means taking a whole society approach – looking at what we choose to produce, how we consume, how financial institutions determine what to invest in. Changing these elements together will allow us to bring systemic change about, rather than us pressing on in established ways and continuing to work in silos.
Why is this so important? Why do you personally feel driven to get involved in climate finance and advocacy work?
It partly comes from a place of self-interest. I've seen the impacts of climate change quite visibly in Zimbabwe. We had Cyclone Idai at the end of 2019 before COVID-19 hit. It was one of the worst tropical cyclones on record for the Southern Hemisphere, and we are still recovering from it.
It doesn't make sense to keep doing the same things that are leading us towards destruction
It impacted young people: some lost their lives; others lost their livelihoods. In these emergencies, women often bear a heavy burden. Following the cyclone, some women were displaced and ultimately some were trafficked. Of course, there are many more vulnerable than I am to events like this, who have fewer resources to respond.
I’m also driven by recognition that the path we are on is unsustainable. It doesn't make sense to keep doing the same things that are leading us towards destruction.
Is it the role of people within the financial system to try and change it?
They have a role to play, because historically they have been a part of the problem. In my view, they should care as citizens with a sense of altruism, but they should also care from a sense of self-preservation. A credible shift in how we invest and do business is required, because we are all so interconnected.
Simply moving towards sustainable development is not ambitious enough as an objective
We can continue with business as usual and on the path to what a friend of mine calls ‘planetary suicide’. Alternatively, we can harness and reinforce the best practices within financial services. Simply moving towards sustainable development is not ambitious enough as an objective; we also need to move towards regenerative development.
Financial actors have an important role to play. They have a choice to either change or die. We know this: in the past those that have been inflexible to change have found themselves failing, while those who have been open and adaptive have found new opportunities and been able to thrive.
What about the balance of responsibilities between financial actors and others – governments and other non-state actors?
The UN’s phrase – about common but differentiated responsibilities – is relevant. Those who have done more to exacerbate this crisis should be held to account. But we all have a role to play; I'm not a fan of individualising the problem.
As consumers, we all have signals we can give to governments. We can decrease emissions, change from one consumption model towards less carbon-intensive ones and give our institutions clearer signals about what might be desirable.
Financial institutions need to have credible plans to monitor and report on the emissions generated by their investments
Financial institutions need to have credible plans to monitor and report on the emissions generated by their investments. Those who don't want to do that must be held to account. We need to see further action, through investing money to deploy negative emissions technologies and by deploying nature-based solutions.
But I don't think this should be done as part of a specific subset of activities falling under ‘climate finance’ or ‘sustainable finance’. I'm thinking of Article 2.1C of the Paris Agreement, which flags aligning all financial flows with low emissions, climate-resilient development. The actions taken by a few players working within specific asset classes or segments are not sufficient to maintain a liveable planet for all. That means the rules of the game as well as the mindset of the actors within the game need to shift, and hopefully drive wider changes in behaviour as well.
What are the most powerful levers of change available to financial services actors?
Firstly, plans to report and reduce emissions and take accountability for emissions reductions; that's one huge lever.
Second, policymakers need to create an enabling policy environment to ensure mindful actions become profitable, and behaviours that have negative environmental and social implications are penalised.
Which actions should be prioritised to promote positive behaviours and disincentivise others?
If carbon pricing is carried out in a credible and transparent way, it is certainly an option
If carbon pricing is carried out in a credible and transparent way, it is certainly an option. But there is a whole other conversation to be had around subsidies given to the oil and gas industry, rather than to promote nature-positive behaviours.
It is important to shift those subsidies towards nature-positive industries to allow them to scale up their work and ensure people who are inflicting negative externalities on our society pay the full cost.
How should financial institutions advocate for a more positive and enabling environment?
The toolkit for systems change involves creating a reinforcing cycle. When governments create an enabling environment, financial actors are more likely to engage in positive behaviours; that in turn can reinforce the appetite of policymakers to create enabling environments.
We all need to come together to make the changes. We don't have the time to say: "You should be doing this before we think about doing that."
If we think about complex systems and feedback loops, can you clarify where you think the most useful interventions might come?
Governments set signals, business responds, and that in turn creates space for governments to go further
If we take the financial system, we need to be looking closely at what is seen as profitable – which assets are insured, which assets are invested in. These are the factors that create impetus for consumers to change their behaviour, and drive the ambition for politicians who are beholden to voters to create the supportive frameworks financial institutions need. That is what will drive change.
Governments set signals, business responds, and that in turn creates space for governments to go further: that’s how I believe we can drive the ambition loop.
How has your studying influenced your advocacy and campaigning work?
Many people in academia have been doing good work, but the first challenge is how we connect people within the different spheres. It is an environment where you may get tunnelled into a specific area, and not connect with a lot of people outside it.
If we could bring more people together with different perspectives, there is an opportunity to take meaningful action now with what we have and what we know.
What is delaying change?
I think we have enough answers to make more change than we are currently. But the question really is: we have a complex system, so how do we connect all these things?
We have enough answers to make more change than we are currently
From a finance perspective, we have capital sitting on the sidelines yet we have a strong case for investing in sustainable and regenerative economies and for developing the Global South. What is stopping us from seizing that opportunity? How do we connect the Global South to the capital that is potentially available, with the intention of creating a nature-positive, inclusive economy, where economy, environment and equity intersect?
For years I have been asking what financial actors are doing to ensure young people and marginalised groups are included in that conversation. How will they be brought to the table? Will they be equal players and collaborators in the process, or will they be excluded as we continue to follow the old models that are largely extractive? A large part of the solution lies in answering these questions properly.