“DREAMING OF A BETTER RESTART”

Casina Pio IV, Vatican City, May 14th, 2021

The current crisis and global state of confusion must be overcome by ending the globalism of selfishness, exclusion, and the throwaway culture. The increase of inequality and hunger is posing major ethical, economic, and political challenges to which policy makers, civil society and the business community must react.

Pope Francis, like many other leaders, has stressed that this situation demands a new beginning of solidarity and fraternity in the global economic and political configuration from the perspective of human development. Since the 1980s a combination of forces, including the globalization of indifference, the misuse of digital opportunities, and institutional changes, has generated strong centrifugal effects in economies, deepening existing divisions.

Extensive changes in international policy and financial architecture are required to address inequality and poverty. Comprehensive plans to combat climate change and pandemics, and to transform the food system, must be put in place.

The good news is that, in principle, we already have the human, natural, scientific, and technological assets to ensure that such wealth and the gains resulting from the free movement of capital and labour are distributed fairly among the various countries and social groups. But we must want it.

Observations and Implications

While the consultations did not aim at a consensus, important messages for action emerged directly and indirectly from the perspective of the Pontifical Academies of Sciences and Social Sciences:

1.             The post-Covid world requires a fresh restart in the spirit of Pope Francis’ Encyclical Fratelli Tutti, fraternity for all. Openness is called for, allowing us to acknowledge, appreciate and love each person, regardless of physical proximity or country of birth or residence. When contemplating initiatives for financing a way out of the current crises, the needs of the poor and hungry, many of whom have stopped dreaming of a better restart, must be on the agenda. The approach to favour aims at transformational resilience of countries and peoples vis-à-vis their own vulnerabilities.

2.             The multifaceted health crises, i.e., the pandemic, rapid climate change, growing hunger and malnutrition, and lack of employment especially among youth, call for re-thinking fundamental economic and social concepts that preoccupy policy. Non-action may trigger more conflicts and wars. Efficient and effective economic policies are called for but are not enough: global problems such as pandemics, climate change, hunger, and biodiversity loss demand global collective action. This also applies to financing the actions to move forward.

3.             Addressing the debt problems of developing countries, climate finance for green transformation, dealing with Covid19, and overcoming hunger belong together in a coherent policy agenda. Rewiring finance is an urgent matter requiring that the financial accounting systems include social and environmental metrics, and that impact investing becomes a norm of behaviour. We record the value of what we harvest from nature but make no matching entry for its degradation. This means that the true cost of food and energy is not signalled to the markets. In support of this the following three actions are important: 1) Multilateral Finance Institutions and Development Banks need to be supported with significantly expanded resources. Impact and ethical investment funds, opting for justice, peace, and integrity of creation, are to be encouraged. 2) Tax havens must be eliminated and a unified global corporate taxation at meaningful rates must be established. 3) The global conferences of 2021 – Climate COP26, UN Food Systems Summit, Biodiversity COP15 – need to be connected in meaningful ways and must lead to clear action agendas and commitments.

4.             The urgency of stronger climate action is increasing with every year of lost action. Weak competition, feeble productivity growth, increasing inequalities, and degraded democracies are failing citizens. Countries have to cooperate to establish rules and standards, especially in the areas of finance, banking, and international trade regime. It is crucial to mobilize public and private sector finance to drive the net-zero greenhouse gas (GHG) transition and to help vulnerable countries cope with climate impacts on their people’s health. Having a global carbon price, which should probably be much higher than currently contemplated by most governments and corporations, if the direct and indirect costs of expected climate devastations are considered, is the single most powerful mechanism to promote private sector investments into mitigation and adaptation.

5.             A much stronger focus on the poor and hungry, and on equity is called for, related to health and food systems. A large share of the poor is connected directly and indirectly to food systems and farming. Food systems generate a third of GHG and are also crucial for adaptation. So far, relatively limited climate finance has gone for mitigation and adaptation of food systems, while opportunities are big in low- and middle-income countries, such as investments into land restoration, afforestation, avoiding climate-negative land use change, and investments into value chains for reducing food waste and loss.

6.             Ending hunger is possible with suitable policy reforms and focused investments at scale. It needs financing alongside climate financing and financing the restart post Covid19. Research-based estimates suggest a need of additional US$ 39 to 50 billion per annum for the next 10 years to end hunger. Financing this can be a combination of 1) doubling the annual development aid (ODA) dedicated to agricultural and rural development, food, and nutrition security; 2) an “End Hunger Fund”, as also proposed by Pope Francis; 3) fresh finance by the envisaged increased SDRs by the IMF that could facilitate “End Hunger Bonds”. The IMF, World Bank Group and regional development banks are positioned to find and facilitate best financing mechanisms to assure these investments. Private sector and philanthropies should be part of such an initiative that could be launched at the UN Food Systems Summit 2021.

7.             Investments in green transformation are a huge opportunity for sustainable growth and employment. The green-labelled market is experiencing rapid growth. The green bond market reached USD 1 trillion in cumulative issuance in December 2020. There are, however, no well-defined global standards of what constitutes “green” climate finance, i.e., risks of “greenwashing”. We need strong incentives based on sound data to mobilize finance for investments. Data and technology instruments can enable investments.

8.             It is understandable that governments would want the private sector to be more actively involved in funding climate action. But governments still need to shoulder a large part of climate mitigation and adaptation costs that mobilize finance. Climate change involves a lot of externalities; markets are not sending clear signals for action; voluntary actions by the private sector alone will not be enough.

9.             We emphasize that science and innovation to address climate and food crises – especially bioscience, and health sciences, digital innovations, and social sciences – play a key role for sustainability in the Anthropocene. Science investment is too low and global sharing of science is too constrained. Because of low income, inequality between countries in science spending and science capacities is huge and reduces response capacities of low- and middle-income countries to crises. Science is playing a key role in addressing pandemics and coping mechanisms, and in the development of vaccines. Scaling the production and fair sharing of vaccines globally is now critical. The pandemic is not over. Long Covid, that is, the long-term health effects of the virus, is a worrisome emerging issue. The effectiveness of a vaccination campaign depends on its being universal. Therefore, it is imperative to propose that Covid vaccines be considered a global common good, with the ensuing implications on the regulation front and sharing systems.

10.          As PAS and PASS underlined in 2020 in their joint statement at the outset of the Covid19 crisis, a thorough review of worldviews, lifestyles, and short-term economic valuations must be carried out to cope with the challenges of the Anthropocene. A more responsible, more sharing, more equalitarian, more caring, and fairer society is required if we are to survive. That call still needs to be emphasized. Integral human development is meant to be transformational in that it aims to improve people’s lives by enhancing their capabilities. As stressed in Pope Francis’ Encyclical Laudato Si’, the ultimate goal of an integral human development approach is that people become more truly the authors of their own lives.