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Breaching planetary boundaries - Rockström warns the window to act is closing

Breaching planetary boundaries - Rockström warns the window to act is closing

There is still time to build a stable, sustainable future for our children, “but the window is closing fast.”

That was the message from Johan Rockström, one of the world’s leading thinkers on sustainability, when he spoke at the Swiss Impact Forum 2022. The meeting, held in Bern, brought together chief executives and senior figures from a broad range of companies to explore how to implement the emissions cuts needed to reach net zero.

In his keynote address, entitled ‘Planetary Boundaries – A Safe Operating Space for Humanity’, Rockström spoke of the imminent threat from climate change, and underlined the urgent need to act. Should we fail to meet the Paris Agreement target and limit global warming to 1.5 degrees Celsius, he warned, massive social and environmental instability will follow.

Should we fail to meet the Paris Agreement target and limit global warming to 1.5 degrees Celsius…massive social and environmental instability will follow

Breaching the planetary boundaries

In 2009, Rockström and his team of 28 scientists devised the ‘Planetary Boundaries’ framework. These nine thresholds – climate change; ocean acidification; the ozone layer; forest degradation; agrochemical pollution; freshwater overuse; air pollution; toxic waste and biodiversity loss – regulate how close we are to abrupt environmental change. As we cross these boundaries the stability of the natural world is put at growing risk. In effect, they are the safe operating spaces we must live within if humanity is to thrive, or even survive.

As we cross these boundaries the stability of the natural world is put at growing risk

Rockström told the forum that four of these tipping points have already been breached. Meanwhile, a persistent focus on some areas has left others to deteriorate. “We are so focussed on CO2 that we are undermining other planetary boundaries,” he said. “We do need to achieve net-zero by 2050. But we also need to revolutionise our food systems, protect our oceans and keep our carbon sinks alive. We’re talking about achieving prosperity and equity within planetary boundaries.”

The boundaries theory says that breaching any one of the nine thresholds will have a profound effect on the health of the planet, increasing the risk of large-scale damage and the possibility of irreversible environmental change.

Read also: Trigger warning: five ways to buy time for net zero and prepare for net negative

 

Reality checks

The heatwaves of the summer, where the UK registered its hottest day ever, came as a result of the slowing polar jet stream. The audience heard that this change is itself due to Arctic warming, with the region seeing temperatures rising three times faster than the rest of the world.

If the 1.5 degrees Celsius ceiling is breached, meteorologists say climate impacts will become increasingly harmful to people and the planet

The goal of the Paris Agreement, Rockström said, which aims to limit temperature rises to 1.5 degrees Celsius above pre-industrial levels, is “not arbitrary – it’s a scientific boundary.” If the 1.5 degrees Celsius ceiling is breached, meteorologists say climate impacts will become increasingly harmful to people and the planet.

“We are losing resilience and coming up to more and more tipping points. And they interact with each other,” Rockström warned. “The social implications of failure will be massive. We will see social instability on a global scale.”

 

The role of finance

The forum also heard from a panel of industry experts on the role of the financial sector in achieving the 2050 goals.

Dr Tillmann Lang, the CEO and founder of sustainable investment platform Inyova, told the audience that finance houses must allocate the capital needed to create the world of tomorrow.

“We need to be able to upgrade progressively, because we cannot just wake up tomorrow to a brand new world. We will need to adapt and upgrade the things and systems of today – and of tomorrow,” he said.

Lombard Odier believes it is companies that have plotted a clear path towards the 2050 goal that will thrive…

On behalf of Lombard Odier, Elise Beaufils, Deputy Head of Sustainability Research, told the audience that companies transitioning towards net-zero offer the most attractive investment opportunities. Lombard Odier believes it is companies that have plotted a clear path towards the 2050 goal that will thrive, she explained.

“People often look to solution providers and ‘pure-players’ in green energy for sustainable investing, but it’s not enough. What matters most is high-impact companies. Steel and cement companies, for example, who are looking to set objectives and begin their transition.”

Beaufils cautioned against a confrontational stance with companies that have not built a positive structure towards net-zero. “We help them identify the right way forward, instead of simply divesting from these companies,” she said. “It’s about stewardship rather than disinvestment.”

Dr Lang agreed, drawing an analogy from education. “If you want to improve education, you don't sit down with an A* student. You talk with the underperforming students to see how they can improve,” he said.

Read also: The unexpected portfolio – a holistic approach to investing for net zero

 

The private sector takes the lead

Along with academia, the private sector has taken the lead in advancing the sustainability agenda, with companies now saying that sustainable business models are not only viable, but also profitable, Rockström said. “More and more, businesses say it’s not just something we need to deal with, it’s at the core of the business model and values – in all aspects of a company. And it improves competitiveness,” he said.

At Lombard Odier, we believe that sustainable investing is the way to generate long-term returns and grow our clients’ prosperity. More than half of global GDP depends on nature – our economy and prosperity is reliant on a healthy planet.

We believe the transition to a sustainable economy is already underway, underpinned by major systems transformations in energy, materials and land & oceans systems

We believe the transition to a sustainable economy is already underway, underpinned by major systems transformations in energy, materials and land & oceans systems. Together these transformations are creating a new economic model that can operate within Earth’s planetary boundaries, as we cut land and water use, and reduce pollution and GHG emissions.

This transition is being driven by an unstoppable combination of forces, including regulation and consumer pressure. The private sector has an essential role to play, encouraging and incentivising businesses to adopt robust transition pathways, and scaling up solutions that will bring about this new economic model at speed. For investors, we believe this is a once-in-a-generation opportunity to achieve returns while building an economy that restores and maintains our planetary boundaries.

Important information

This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

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