The world faces a growing existential crisis. It’s no longer possible for anyone to ignore or refute this. The evidence indicates that the impact of climate change has become increasingly prevalent in our lives, communities and economies.
Fortunately, we have solutions, most wrapped up in the apparently simple concept of a green economy — an economic system based on sustainable development principles that enables social equity, societal wellbeing, environmental protection and economic growth, all while minimising humanity's negative effects on the environment.
Achieving such an economy, particularly in Africa, demands understanding of what it is and what it takes to get there. Possibly most important is understanding that a green economy is not just about a shift from its high-carbon counterpart. It requires complete rethinking and rebuilding of our economic systems to ensure they are sustainable, equitable and resilient. It also requires significant investment in infrastructure, technology and human capital, as well as bold policy changes that support a sustainable economy.
In recent years there has been much discussion around the importance of a just transition, particularly in South Africa. Any green economy in Africa can only be meaningful and successful if it is based on social inclusivity, mutual support and benefit, and equitable opportunity creation.
However, while the need for an equitable and inclusive future is beyond argument, the word “transition” needs to be understood and implemented.
A truly green economy is not just one in which fossil fuels have been removed from the country's energy mix. Rather, it's an entirely new economic model that values sustainability, equitable opportunity and social responsibility
A truly green economy is not just one in which fossil fuels have been removed from the country's energy mix. Rather, it's an entirely new economic model that values sustainability, equitable opportunity and social responsibility. This means such an economy is cross-cutting and involves every area of the economy and society — from city design, infrastructure and energy to social structures, mobility, production methods and consumption patterns.
In other words, we can't just make a few changes to how things work now and expect a green-economy outcome. We need to actively build it through a holistic approach that considers the impact of every decision we make on the environment, economy and society.
It's no secret that building a green economy requires significant investment. And there has been a notable shift in financial allocation towards delivering at least some of the capital needed. Green bonds and green loans, for example, have promoted and enabled the mobilisation of private capital towards sustainable projects.
Sustainability-linked solutions are also promoting the adoption of cleaner and greener technologies by embedding sustainability performance indicators into debt arrangements.
The sheer magnitude of the sustainable development funding needed in Africa can be overwhelming for potential financial participants. The solution is prioritisation — not just of projects that are most urgently needed to accelerate forward momentum towards the green economy, but also in terms of the meaningful tilting of capital by financiers towards a concerted focus on sustainable development funding and innovative finance structures that are appropriate to the challenges and opportunities created by the green-economy imperative.
Ultimately, achievement thereof is non-negotiable. Not only from the point of view of the resilience it will build into society to be able to withstand future shocks, but also because it is a vital cornerstone on which Africa's economic progress and competitiveness rests.
The green economy will allow for those on the continent to participate in new global industries, develop new technologies, attract investment and generate future wealth.
In the wake of the pandemic, the term “build back better” became widely used. While one hears it less and less these days, the sentiment remains as important now as it was in the immediate aftermath of Covid-19.
More than ever, we need to focus on rebuilding the world's economies to be greener and more sustainable. No longer because a pandemic has decimated them, but because if we don’t do so earnestly now, we will be unable to avert a potential future global crisis that may be much larger.
* Singh is head of sustainable finance solutions at Nedbank Corporate and Investment Banking
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