25
Feb
Trillions in Subsidies Worldwide Are Driving Environmental Collapse Instead of Advancing Solutions
(Beyond Pesticides, February 25, 2022) Together, governments of the world over are spending at least $1.8 trillion annually — 2% of global gross domestic product — on subsidies that drive the destruction of ecosystems and species extinction, and exacerbate the climate crisis. This news comes from a study commissioned by The B Team and Business for Nature, and released in a joint brief, Financing Our Survival: Building a Nature Positive Economy through Subsidy Reform. The Business for Nature website offers a remedy to this entropy: “With political determination and radical public–private sector collaboration, we can reform these harmful subsidies and create opportunities for an equitable, nature-positive and net-zero economy.” To that end, the two organizations have issued, in their brief, calls to action to multiple sectors, including one to the governments participating in the coming UN Biodiversity Conference (COP15): “Adopt a clear and ambitious target within the Global Biodiversity Framework . . . that commits governments to redirect, repurpose, or eliminate all environmentally harmful subsidies by 2030 and increase positive incentives to enable an equitable, net-zero, nature-positive world.”
A press release from The B Team reports that the fossil fuel, agriculture, and water sectors are the recipients of more than 80% of all environmentally harmful subsidies (EHS) annually, thus “depleting natural resources, degrading global ecosystems, and perpetuating unsustainable levels of production and consumption, in addition to exacerbating global inequalities.” Other recipients of significant subsidy include the forestry, construction, marine capture fishery, and transport sectors. Business for Nature (BFN) comments, “In other words, public money is financing our own extinction.”
The release of the brief and study is timely, given the early March UN Convention on Biological Diversity (CBD) COP15 Open Ended Working Group meeting in Geneva; the follow-on UN Biodiversity Conference (COP15) scheduled for April 25–May 8 in Kunming, China; and the next UN Climate Change Conference (COP27) in Sharm El-Sheikh, Egypt (rescheduled for November 2022). The study and report hope to inform decision makers in government and business on the case for, and how to, reform these environmentally damaging subsidies.
EHS, as the brief defines them, are government support programs that — though often established (at least ostensibly) to solve socioeconomic problems — ultimately encourage unsustainable production and/or consumption patterns, largely because they were deployed without consideration of environmental impacts. Beyond Pesticides notes that many of the health and environmental crises we face have arisen because of such a “siloed” approach to problems, and that broadly, precautionary and holistic approaches can avoid such unintended and harmful impacts; see “Scientific Findings Support Replacing Poisons with Precaution” (p. 9).
The World Economic Forum puts failure to act robustly on climate, resulting extreme weather events, and biodiversity loss as the leading threats to humanity — catalyzed in part by the enormous amounts of money given by governments to support harmful industries and practices. The research finds that globally, the fossil fuel industry receives $640 billion in EHS annually; the agriculture sector, $520B; water, $350B; forestry, $155B; construction, $90B; transport, $85B; and marine capture fisheries, $50B. (The report also mentions that, though no metrics are available on EHS for it, illegal gold mining accounts for billions of dollars in damage each year.)
These subsidies are significant contributors to many of the crises the world faces: the rapidly heating climate, ecosystem and biodiversity loss, air and water pollution, land degradation, and social and economic inequality. A UN Development Programme and Food and Agriculture Organization report suggests, for example, that of the subsidies provided to farmers, nearly 90% distort prices or cause other harm, and that most fossil fuel subsidies hamper the critical and urgent need to transition to a clean energy economy globally.
The report also scolds governments for terrible follow-through on pledges made — and then ignored or unrealized. It notes, “During the 2010 UN CBD Summit, 190 countries committed to phasing out or reforming subsidies harmful to biodiversity by 2020 as part of the Aichi targets. Governments missed the target, and we cannot afford for history to repeat itself.”
The brief acknowledges the extreme difficulty of reforming these subsidies: “Many of [them] are so deeply embedded in our economies that attempts to define, measure and track them often struggle to be comprehensive, and progress to reform them has been slow. This is due not only to the power of vested interests, but also because both the governments and beneficiaries — including business — are unaware of the full scale of the subsidies and their impacts. Businesses often lobby for continued or increased government support that often has negative unintended environmental consequences.”
Among its observations are the needs for greater public awareness and visibility of EHS, and much more transparency and disclosure about subsidies from governments and recipient businesses. In the U.S., such subsidies tend to be “worked out” behind semi-closed doors among legislators, federal agencies, lobbyists, and private business entities, and occasionally reported on by journalists — hardly the stuff of open, democratic, and accountable governance.
The report’s summary asserts that reform adequate to the goals of reversing “nature loss” by 2030, and achieving net zero carbon emissions by 2050, will require roughly $700 billion annually — far less than is currently spent on funding climate- and nature-destructive governmental subsidy programs. The researchers and authors, Doug Koplow and Ronald Steenblik, say that these government efforts need to occur in parallel with (1) a realignment of all private financial flows so as to be “nature-positive,” and (2) increased public and private financing that can deliver innovative financial solutions to protect, restore, and conserve nature.
“Nature-positive” is not comprehensively defined in the brief, but these outcomes can be inferred, from the brief itself and commentary on the BFN and The B Team websites, as qualifying: emissions reductions and the transition to renewably powered economies; restoration of damaged ecosystems and initiatives to arrest further biodiversity loss and restore damaged and endangered populations; support of social and economic needs of human populations, including redress of economic and environmental inequities; and support of nature-based solutions broadly. Importantly, BFN asserts that EHS reform must consider social and economic forces at play as it pursues “the imperative for a just and equitable transition. Reform managed sensitively means providing support for the poorest households and most vulnerable communities, such as via targeted cash transfers.”
In the authors’ view, such redirection of resources from harmful subsidies toward nature-positive outcomes would:
- free up substantial government resources to support social needs and local livelihoods
- redirect capital toward ecological restoration, including nature-based solutions
- close the biodiversity finance gap by reducing environmental degradation and unlocking the funding needed to mitigate it
- send more accurate signals to public and private investors and producers on where to direct R&D efforts and future investments
- accelerate innovation to reduce greenhouse gases and environmental damage
- create a level playing field for businesses, which would further encourage rapid transformation of business models
- unlock social benefits such as poverty reduction, improvements in education and other social services, and more sustainable approaches to providing basic access to energy, clean air, and water
The brief calls on businesses and investors to advocate with governments for reform of EHS through their repurposing or redirection, or elimination, and funding of “an equitable, net-zero, and nature-positive world by 2030.” In addition, it asks that businesses (1) collaborate broadly to increase awareness of reputational, competitive, and investor advantages of subsidy disclosure, and (2) support the development of international standards, frameworks, and guidance for mandatory ESG (environmental, social, and governance) disclosures, including subsidies.
The report goes on to make a compelling business case for reforming systems of subsidies that fund destructive entities and practices by identifying risks and opportunities. Central to the risks is the inescapable fact that virtually all businesses rely on functional natural systems and resources for every aspect of their value chains. In addition, EHS, as noted above, distort pricing, investment decisions, and resource allocation; encourage unsustainable production and consumption (chickens will eventually come home to roost!), and unfair competition; and generate supply chain, reputational, and operational risks.
On the other side of the ledger, the draft points to opportunities that EHS reform and redirection of funding to nature-positive objectives would present. The authors assert that among those would be increased competitive positioning, increased ESG investor interest, reduction of the risks noted above, and progress on the “ambitions of the Paris Climate Agreement.” (Inadequate as that particular set of accords is, that would still be a giant step in the right direction for many private enterprises.)
The brief summarizes: “Informed reform of subsidies can boost business and investment opportunities, create jobs, reverse nature loss and help ensure a sustainable future for our planet. Businesses can mobilize and implement change with speed (often faster than policy-makers), setting a precedent for improvement across industry. Investors are starting to acknowledge the financial and sustainability risks of environmentally harmful subsidies and forward-looking companies recognize they need to prepare for subsidy reform.”
The brief ends with a slew of endorsing comments from members of The B Team, business leaders, and advocacy groups. Several stand out to Beyond Pesticides:
- “It’s time to stop the self-serving, short-sighted lobbying instead directing public money towards supporting responsible companies transition to nature positive business models.” — Paul Polman, business leader and The B Team member
- “It is more important than ever to put in place ambitious targets to reverse nature loss and to redirect, repurpose or eliminate all subsidies that harm our natural world.” — Marco Lambertini, Director General of World Wildlife Fund International
- “We must break down the siloed approach that has led to putting subsidies in place without consideration of their long-term environmental costs.” — Jennifer Morris, CEO, The Nature Conservancy
Activist 360 reports the comment of Mary Robinson, former president of Ireland and member of The B Team: “Climate action is at a crossroads, in part because of the large scale of public money flowing to harmful industries and practices. We need to see thorough subsidy reform from governments and businesses, with social and environmental considerations at the heart, to ensure a just and equitable transition for all.”
Enacted, EHS reform could go a long way to mitigating climate and environmental harm, but such reform will likely be a slog, given the complexity and entrenched nature of national and international economic systems, the inherent conservatism — never mind the centrality of the profit motive — of most private enterprise, and the typically glacial pace of governments on reform efforts. Still, it is encouraging to see some portion of the business community stepping up to recognize its responsibility to remedy what it (as well as governments, militaries, and others) have caused, and advance the possibility of a livable and functional climate and environment.
Beyond Pesticides would add to the ambitious scope of this brief and its sponsors that EHS reform, and the implied reform of supply chains, should directly address the toxicity of so much of the global materials stream — particularly, synthetic pesticides and fertilizers, plastics, and chemical ingredients of industrial and consumer products (see, e.g., this Daily News Blog article on PFAS and other toxics). Multiple other articles have covered the need for companies to clean up their supply chains, and Beyond Pesticides advocacy on the issues — whether about garden center and other retail sale of plants treated with toxic pesticides, sale of contaminated “biosludge” as fertilizer, the ubiquity of untested chemicals, including those in plastics, or myriad others. Beyond Pesticides has also detailed the systemic ecosystem impacts of toxic chemicals and their damage to biodiversity.
Many, many products and ingredients are integral in causing the harms this brief addresses, and whose authors and supporters hope will inform decision makers at COP15 (the UN Biodiversity Conference). Beyond Pesticides encourages that the report be taken seriously, and that its influence leads to a genuine shift across the global business community toward nature-positive goals — redirection of policy and investment to repair and restore, rather than ravage, the climate and natural systems of this world.
Sources: https://static1.squarespace.com/static/5d777de8109c315fd22faf3a/t/620d33b868c7486475f06303/1645032379783/Financing_Our_Survival_Brief_FINAL.pdf and https://www.businessfornature.org/news/subsidy-reform
All unattributed positions and opinions in this piece are those of Beyond Pesticides.
