Addressing the dual crises of climate breakdown and deepening inequality
The dual crises of inequality and climate change call for urgent, bold action. These crises represent the visible manifestation of a broken economic system – one that no longer protects people or the environment – and the long-term consequences will be severe. From poverty and marginalisation to rising global temperatures, we are arguably at a tipping point where further inaction, or insufficient action, will inevitably lead to greater suffering and hardship.
At the start of 2020, we launched Laudes Foundation with the mission to challenge and inspire industry to harness its power for good, joining the many funders who have been working tirelessly toward a climate-positive and inclusive economy. At that time none of us could have predicted the horrific human toll and economic impact of Covid-19. Yet, just as has happened with the pandemic, these two crises demand an ambitious, global response.
Power of philanthropy to elicit change
Our vision is one where global markets value all people and respect nature. We believe philanthropy – through its power to take risks, be disruptive and develop, test and scale ideas – can play an important role in realising this vision, particularly if we collaborate with like-minded allies in business, finance, government and civil society.
To this end, we have developed a five-year strategic plan – and a dynamic economic system map – to guide us in how we, along with others, can effect change in such a complex world. We have also set ourselves a bold, time-bound ambition. By 2030, we want to see a more climate-positive and inclusive economy, where ideas have been reshaped, incentives redesigned, and business and markets are working – bravely and proactively – to mitigate climate change and reduce inequality.
How will we achieve this ambition?
We are targeting three specific areas of industry. Fashion and the built environment, both of which have an outsized negative impact on emissions and social inclusion, and the finance and capital markets sector, whose influence extends throughout the real economy. We focus on specific areas within these industries where we believe we can have the biggest impact.
- Finance and capital markets: a primary issue is that money is available, but allocated poorly and does not necessarily result in long-term value creation for people or the environment. To influence this, we have identified four main areas of intervention:
- Integrating the price of climate-related externalities into policy;
- Influencing investors and banks in becoming Paris-compliant across all assets;
- Engaging investors to drive business and industry toward Paris-compliance; and
- Expanding new economic thinking into practical application with policymakers and business.
- Fashion: global competition concentrates power at the top of the supply chain and price pressure is borne both by those with the least power to negotiate – factory workers and farmers – and by our natural environment, particularly in countries with weak regulation. We are addressing this challenge via six main interventions:
- Ensuring a just transition, including social protection for workers;
- Promoting incentives for accountability, including transparency and regulatory mechanisms;
- Promoting collective action, the agency of workers and communities, and the organisations that support them;
- Enabling legislation to incentivise next generation and circular materials (and disincentivising fossil fuel-based materials);
- Accelerating investment into next generation and circular materials; and
- Transitioning business models (in materials) to landscape approaches, creating more income security for farmers and enabling climate-positive practices.
- The built environment: we see this challenge playing out via misaligned incentives which slow the path to net zero and do not encourage new business models. We are addressing this via four main interventions with an initial focus on Europe:
- Establishing and implementing industry roadmaps, as well as enabling legislation on whole life carbon and circular economy;
- Accelerating the equitable distribution of investment in net-zero carbon and resource-efficient buildings;
- Supporting communities to ensure sector decarbonisation and increased resource efficiency promote equity and inclusion; and
- Accelerating the uptake of sustainable wood and bio-based materials construction.
For us to succeed in these interventions we need to influence the mindsets and behaviours of those actors most capable of accelerating this change. These include workers, producers, and the movements that support them; business owners and industry leaders; financiers and investors; as well as policymakers and regulators.
How will we deliver these interventions?
As a philanthropic foundation, we see our value not only in the resources we can bring to the table but also in our ability to experiment, build the field, connect unlikely allies, and form coalitions.
To achieve the greatest impact, we intend to accelerate advocacy by building capacity; strengthen accountability via funding mechanisms to motivate progress and enforce standards and protections; scale research and innovation to enable adoption, monitoring and evaluation of proposed solutions; amplify and change economic narratives to build support for change; and reimagine, with others, the economic system in order to redefine the purpose of the system and the actors within it.
What will success look like?
A climate-positive and inclusive economy means we will see the following movement in each of our focus areas.
- Finance and capital markets: Capital flows will be redirected towards Paris Agreement-compliant assets. Central bank policies, operations and communications will be fully compliant with the Paris Agreement. And new economic thinking, which redefines value for the benefit of all (including just transition), will be the dominant narrative within the sector.
- Fashion industry: Governments will ensure social protection schemes are implemented and businesses respect the human rights of workers throughout the supply chain. Materials will transition to more environmentally-sound practices and use of circular materials.
The built environment: A critical mass of industry will have started the process of achieving set embodied carbon and resource-efficiency targets. The value of, and demand for, low-carbon buildings will increase and sustainable wood will become mainstream.