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As global leaders gather in Paris for The Summit for a New Global Financing Pact on 22-23 June, BRAC and Groupe SOS directors, two global champions of social entrepreneurship, are calling for large scale investment in innovations in countries on the frontlines of social, environmental and climate crises – not only because it is the right thing to do, but because it is the smart thing to do.
If you want to predict the effects of global warming in Europe, just look to Bangladesh. Despite producing merely 0.56% of global CO2 emissions, this country in South Asia is among the most vulnerable to the climate crisis. Floods, storms, intensifying cyclones, rising sea levels: the consequences of the climate crisis are numerous and visible, and could lead to the displacement of one in seven Bangladeshis by 2050. As a response, the country has introduced a number of measures and allocated a significant proportion of its national budget to combating climate change (over 7% between 2021 and 2022), while innovating with civil society organisations.
In Europe, we can’t ignore record-high temperatures in the summer and uncontrollable fires. Despite this, the climate crisis is not seen as a matter of life or death – but it is.
Investing today in the global south to mitigate and adapt to the effects of the climate crisis not only responds to an emergency, but – if that weren’t enough – will also result in long-term benefits for the rest of the world, which will sooner or later be faced with the same issues.
We have much to learn from those whose lives are being torn apart by the climate crisis now. Today’s most innovative thinking and solutions are being generated by some of the most impacted countries. For instance, Barbados Prime Minister Mia Mottley is advancing the agenda on reform of the global financial architecture, and climate experts from Bangladesh are leading the charge on the Loss and Damage agenda. To stem the tide of displacement and climate migration anticipated in the decades ahead, Bangladesh is innovating climate-resilient farming practices and developing salinity and drought-resistant crops, creating pathways for more resilient livelihoods for households living in extreme poverty in the process. The experiences of international non-governmental organisations such as BRAC, a pioneer in social development and social enterprises which works with over 100 million people living in the global south and Groupe SOS, European leader of social and solidarity economy, is proof that we can scale-up such green and social innovations.
Considering the cost of inaction
Fighting the climate crisis and social inequalities offer attractive returns on investment (ROI) for society. However, because their returns materialise over a longer term, obtaining critical catalytic investment is often difficult. The associated risk of these investments is often considered high, when in reality, this short-term vision obscures the real risk by missing a major element in the equation: the cost of inaction, or the opportunity cost of doing nothing or too little.
There are examples of bold investments in times of crises. During COVID-19, France deployed massive loan programs in order to avoid the disastrous human, social and economic consequences in the long term. The same is true for Brazil, Thailand and South Africa, for example, where this radical investment approach proved its worth in the fight against AIDS, by anticipating very high human and social costs over the long term. These investments paid additional dividends as solutions developed in these countries were then reverse-adapted in the global north, such as the practice of transferring tasks from doctors to nurses, and then to patients themselves.
We don’t need more loss of life at an epidemic scale to take action. The situation is already dire: 700 million people live below the extreme poverty line, and current forecasts predict a 4°C or even 5°C rise in temperatures by 2100 compared with the last century if greenhouse gas emissions continue to rise. The cost of our inaction today will be massive in the long term. We therefore need to encourage public and private capital to target players in the social and solidarity economy, who provide solutions to the climate crisis and the fight against extreme poverty.
A new ROI calculation for long-term, sustainable investments
On 22-23 June, heads of state from around the world are expected in Paris for The Summit for a New Global Financing Pact. The aim is to ‘reshape the architecture of development and climate finance for a stronger and more efficient international financial system.’ This is an opportunity to rethink our investments, beyond short-term, financial returns. Currently, our ROI calculation is incomplete. It will remain so if we fail to take into account the multiplying, long-term and global returns that occur from applying the solutions and innovations developed in the South.
In order to respond to the social and climate emergency, in the short term in the most affected countries, and in the longer term at a global level, we need a new ROI calculation that factors in the cost of inaction as well as the long-term indirect financial, social and environmental returns. Where global financial resources are limited, we can’t afford not to invest where ideas and solutions thrive, and where the returns are highest.
Jerôme Oberreit is the Executive Director of BRAC Global
Alexandre Lourié is the International Managing Director at Groupe SOS