North Meets South!

North Meets South!

With extreme weather stresses becoming the reality of today’s world, we will sound delusional if we still say that climate change is a matter of the future. Nations all across the globe are experiencing climate change in some form or another. Weather patterns are shifting, there are frequent cyclones and tornadoes, flooding, forest fires, heavy rainfall, and freezing weather. Summers are becoming hotter and winters are becoming more and more frigid and all this continues to happen despite the governments and nations being conscious of the fact that the pollution and emissions caused by rapid industrialization and development post-industrial revolution is causing all this. Although the developed countries are equally facing extreme weather stresses; the developing countries bear the brunt, as it is difficult for these developing nations to bounce back to normalcy after extreme weather stresses. Rescue and rehabilitation need extra time and money for countries that are already reeling under the pressures of declining gross domestic production (GDP), poverty, increasing population, and food insecurity. Extreme weather stress exasperates the situation further.

It’s been eight years since the Paris Agreement, where the developed nations of the world agreed to reduce greenhouse gas (GHG) emissions to hold global temperature increase to well below 2°C above pre-industrial levels and pursue efforts to limit it to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change. A few developing nations too have joined the group towards this pursuit over the past few years. However, we have constantly emitted more and more GHG, burned more and more fossil fuel, and been oblivious to the fact that we are almost at the threshold of the 2°C mark and all this is in the name of development.

Manufacturers cannot reduce carbon emissions and this would mean lowering production levels, for airline companies, this would mean reducing the number of flights resulting in increased ticket costs, for IT firms, especially those that need to work 24X7, this just does not seem possible. Their only resort is offsetting. This is where the developed north meeting the developing global south.

The developed northern nations have been depending on the global south for their offsetting goals. Large corporations are financing decarbonization as a means to lower their carbon footprints; and exactly how are they doing this? Financing climate-smart agricultural practices in Asia, protecting rainforests in the Amazon, empowering women farmers, and so forth.

However, climate financing has also resulted in greenwashing by large corporations to create an image of themselves as socially responsible. Due to greenwashing the climate financing efforts of many large corporations have come under massive media scrutiny. Just like any consumer that can be categorized into five stages of technology, corporations too could be classified under the five categories of technology adoption based on when they started carbon financing. There were large corporations from the IT and IT service industry, fashion, clothing and beauty, oil extracting companies, the airline industry, the manufacturing sector, and many more that started financing climate-smart and low carbon farming, regenerative agriculture, nature-based solutions, the building of bio-gas plants and other environmental conservation and protection projects across the global south. This media scrutiny intensified around 2022-23 by the media on the claims of carbon neutrality by large corporations across North America and Europe where large corporations were spending billions of dollars on carbon financing projects in Africa and in turn receiving a certificate of sustainable business from the carbon credits so earned. The large corporations that often use traders or brokers to allocate their funds, don’t delve deeper into their use, which may result in investing in projects that may have implications on human rights, may not be lucrative, etc.

A report by the Guardian suggested that in 2022-23 there has been a decline of 61% in carbon financing due to the scrutiny on decarbonization funds. The carbon markets which are primarily voluntary are unorganized. This dissuaded corporations from investing in the carbon market due to the absence of robust regulations related to its operations. When fewer corporations invest on carbon credits, fewer funds will get channelized for conservation and development work, resulting in frequent extreme weather stresses and ultimately increasing poverty in developing countries.

The impact:

Scrutinizing investments in carbon credits by corporations in developing countries is good as it builds accountability of these large corporations in carbon neutralizing projects, however, it also slows down the progress of such offsetting projects. When corporations and their carbon finances are put under magnifying lenses, they are discouraged from allocating funds for decarbonization, which directly affects the allocation of funds in developing economies, chances to come out of the clutches of poverty remain less for communities in these developing economies, for the reason that the carbon market is still not perfect and is evolving.

However, waiting for carbon markets to get regulated and become perfect is not the solution as the more funds go into the carbon markets more and more projects on climate resilience, mitigation, and environmental conservation will see the light of the day, which is the true path towards development for communities in the global south.

Supporting change:

Developing nations are a trove of carbon credits and can use carbon finance to build their economies. Communities in developing nations need carbon finance for climate mitigation and resilience. Climate-smart technologies are the need of the hour to build resilient communities against extreme weather stresses. The private sector investing in carbon markets to build sustainable businesses is a move in the right direction but, accountability is paramount.

Organizations like FCF India, guide the private sector to invest in carbon markets in trusted community development projects, for building a socially responsible and sustainable business. With a vision of fairness in reaching even the last mile communities, being inclusive of women and youth, and maintaining the highest level of transparency in monitoring fund allocations and impact, the organization aims at building sustainable businesses and communities in India.