By the Blouin News Business staff

Jeffrey Sachs gets creative on fighting climate change

by in Global Economy.

Dow Jones Industrial Average Opens Sharply Higher

AFP/Getty Images

What does the world need to beat back the threat posed by climate change? How will its remediation and reversal be financed? Even if it’s clearer than ever that the worst is yet to come, as the latest Intergovernmental Panel on Climate Change¬†report details, policymakers have proven their ability to avoid effective action on the issue. Big industries have largely shown that implementing sustainability measures is not a priority for them. And civil society, while making strides, is also subject to many difficulties in getting its voice heard.

The economist Jeffrey Sachs, Director of the Earth Institute and a senior U.N. advisor, has come up with a few creative approaches to deal with these issues, and he detailed them in a recent interview with Blouin News:

The first creative approach is that people pay their taxes honestly – that would be very unusual, very creative but it would make a very big difference.

The second one is that we regulate the financial system. This may seem a little outlandish given the power of big finance over politics, but we have got to get this reckless casino-like finance back under control.

The third aspect that we need is to direct our attention to long-term challenges, not just short-run trading of financial assets. That’s also innovative: We should take our pension funds and our insurance funds, which are long-term savings, and devote them to building a new energy system and a new long-term infrastructure, rather than just trading in derivatives in short-run financial speculation.

Finally we should allocate public and international finance towards the challenges of extreme poverty, protecting biodiversity and towards the challenges of finding new scientific and engineering solutions to climate change.”

Global Handwash Day - New YorkThis complex topic is also currently being considered by a special Intergovernmental Committee of Experts on Sustainable Development Financing ahead of an international climate change agreement set to be approved in Paris 2015. However, there is a major hurdle here, according to Sachs:

We need a revolution in finance. Finance is a broad rubric for allocating our resources to our real priorities and when a financial system misallocates the resources we go way off-track and we live in danger as a result. We need a financial system that properly directs our resources to the highest priorities in the planet: the sustainable development priorities for further economic progress, for much more social inclusion, for the end of extreme poverty and for making the environment safe for us and for future generations.

Mr Sachs, who is the co-author of the report “The United Nations in the Age of Sustainable Development”, also takes aim at a financial culture that hasn’t been modified, even if the past years have highlighted the possible devastating consequences failure to reform can have:

We have reckless, rapid financial speculation that can bring down the whole world economy as it did after the crash of the stock market in 2008. We have a financial system that very unnervingly caters to big interests and wealthy people hiding their money in tax havens or in secret accounts. All of this means that our financial system isn’t what it needs to be for an integrated world society aiming to achieve sustainable development.