Climate and the economy
The climate crisis, loss of biodiversity and worsening environmental breakdown are directly linked to our economic systems. Here’s how:
In today’s world, the success of a nation is often measured by a single yardstick: the size of their economies. This measurement, known as Gross Domestic Product (GDP), has become the dominant way of assessing the health and progress of a country. However, relying solely on GDP as a measure of success fails to capture the full picture of societal wellbeing and environmental sustainability.
We need to capture the true cost of doing business
Fact: If you took the balance sheet of the top S&P 500 businesses and looked at their balance sheet from an ecological perspective, 70% would be bankrupt.
The main purpose of the economy today is to grow and make profit, and extracting the planet’s resources without paying the real cost and without regenerating these resources has been immensely profitable. Governments continue to subsidize fossil fuels, providing as much as $5.9 trillion, more than double the sorts of investments needed to keep the planet below 2 degrees centigrade, as urged by the Paris agreements.
Our economic system itself has now become uneconomic, and is undermining our planetary health, but we have a choice. We designed our economy this way, but we can choose to set up differently.
Measurement of success requires moving beyond GDP toward wellbeing indicators and metrics. GDP does not consider the impacts of the economy (climate change, biodiversity loss, pollution). The central need of Nature should be measured by the capacity of the economy to cherish, restore, and protect our natural environment and the species we cohabit the planet with.
Wellbeing economies repurpose the economy toward human and ecological wellbeing and away from profit maximization. True cost accounting helps scale down harmful investments (fossil fuels). Transforming finance can scale up purpose oriented social and environmental objectives for example with Norway´s Social Wealth Fund.
WEAll is partnered with a number of environmental organizations to help shift the conversation on the environment and our economy.