Why tackling poverty and climate change should go hand in hand
By Jin Qin, Business Call to Action
People living at the base of the economic pyramid are more vulnerable to climate change. Inclusive businesses can work with these communities, bringing improvements in sustainability, productivity and profitability
When the curtain of the COP 24 Climate Conference closed in November after prolonged negotiations among 196 countries, the outlook on climate change was not bright. While experts reiterated the urgency of reducing global warming and a last-minute deal was made on a rulebook to govern the implementation of the 2015 Paris climate agreement, the Trump administration threatened to withdraw from the Paris Agreement, and Brazil backed out of chairing 2019 Climate Change Meeting. These disheartening developments come at a time when swift action is needed, especially for low-income populations who are most vulnerable to the effects of climate change.
How does climate change affect low-income earners?
Climate change has unequal impacts on people in different places, as a result of differences in climate, geography, infrastructure and income level. People living at the base of the economic pyramid (BoP), which accounts for 4 billion of the world’s population, are more vulnerable to increased weather variability and extreme weather events such as floods, cyclones and droughts, as they lack the financial or social safety nets to help them recover. Decreased food production has been widely reported in Africa, which threatens the food security of subsistence-based communities. It is estimated that climate change will be responsible for approximately 250,000 additional deaths annually between 2030 and 2050: 38,000 due to heat exposure among the elderly, 48,000 due to diarrhoea, 60,000 due to malaria, and 95,000 due to childhood undernutrition. By 2050, more than 570 low-lying coastal cities will face at least a half-metre sea-level rise, endangering more than 800 million people.
How can inclusive business contribute to climate change?
Inclusive business, which actively engages the BoP in company value chains, can help create synergies between tackling climate change and fostering economic growth. For example, inclusive business can help mitigate climate risks by providing energy-efficient irrigation kits to farmers in dry and remote areas, providing training on climate-sensitive crop management practices, distributing tools to predict weather more accurately, offer financing for climate-smart investment, and provide insurance for abrupt yield reduction due to climate change-related weather changes or events. Not only do interventions like this change the practices of the farmers they work with to become more climate-sensitive, they also help to improve productivity, thus increasing incomes. This is a win-win situation both for the BoP and the company in terms of sustainability, productivity and profitability.
Through increased income and access to critical products and services, improved employment opportunities and job quality and enhanced knowledge community, inclusive business can foster low-income earners’ capacity to anticipate, prepare, react, absorb and recover from the effects of climate change (pdf).
Business Call to Action member companies are already leading the way. In the agriculture sector, the ability to adapt to climate change hinges on the knowledge about best practices and new technologies, and also the ability to pay for it. Vietnamese social enterprise Fargreen trains farmers on environmentally sustainable farming practices, ensuring closed-loop production where no waste is generated. The company has committed to train rice farmers to cultivate mushrooms with rice straw, which will prevent more than 4,000 tons of greenhouse gases from being released by 2020 had they continued with their previous practice of straw burning. The leftover compost is used as bio-fertiliser, an alternative to chemical fertilisers previously used by farmers, further reducing emissions.
aQysta, founded in 2013 in the Netherlands, aims to develop and implement sustainable hydro-powered pumping solutions that can have positive economic, environmental and social impact. The company’s flagship product, Barsha pump, draws energy from rivers and canals to pump water. The Barsha pump does not require any fuel or electricity, doesn’t emit greenhouse gases and does not involve any operating expenses. It is a sustainable, cost-effective solution for high-value agriculture in developing countries, saving up to 70% of irrigation costs for farmers, compared to conventionally used fossil fuel pumps.
In the energy sector, inclusive businesses are already making good strides towards integrating climate change approaches into their business models. Transition to renewable energy sources can create new socioeconomic opportunities for countries, regions and local communities across the world, while actively reducing the use of fossil fuels. Green Generation – a social enterprise registered Vietnam – promotes the use of biomass as renewable energy sources for cook stoves, and creates jobs through a micro-distributor network. In a country where 70% of its 90 million inhabitants live in rural areas, and some still subsist on small-scale agriculture and use wood for cooking, initiatives such as this can have a significant impact. Green Generation has committed to decrease CO2 emissions by 150,000 tons a year by 2020, and provide 100,000 low-income households with access to clean-burning biomass cook stoves, improving the lives of 400,000 rural people.
Similarly, Biomass Supplies engages smallholder farmers in Sri Lanka to plant fast-growing, nitrogen-fixing Gliricidia and Calliandria trees, which enhance soil fertility and lead to higher yields. This fuel wood, endemic in Sri Lanka, is mainly grown by local farmers – 70% of whom are women – and the demand created by Biomass is increasing incomes, while decreasing dependence on traditional fossil-fuel energy sources.
Other inclusive businesses are providing financial support for climate victims. Sompo, a Japanese company, offers weather index insurance to smallholder farmers in south-east Asia, providing added protection against crop damage due to climate change, promoting self-sufficiency, and improving living standards. Similarly, Acre Africa functions as an adviser to insurers on risk management solutions for smallholders in east Africa. By providing farmers with insurance products, Acre is increasing their resilience to climate change and adverse weather incidences and improving their access to finance. The company has committed to strengthen the resilience of 1 million farmers in Africa against climate risks with its micro-insurance products by 2020.
Individual actions can result in collective impact
From an individual or a company perspective, these initiatives might feel like a drop in the ocean, but if more responsible enterprises integrate ways to tackle climate change into their inclusive business models, these actions can create a groundswell that can result in widespread change.
More support should be in place to stimulate, cultivate and scale-up environmentally sustainable inclusive business solutions. Governments can shift to renewable energy procurement contracts and help companies build their own sustainable electricity installations. Climate-sensitive policies can support with research and development of low-carbon technologies, along with grants and tax stimulates to make energy efficiency investments more attractive. In terms of green investment, unlocking financing from both the public and private sectors can provide essential support to enable environmental sustainability for the economic system. Development units can connect different bodies for dialogue and understanding, forming consensus on how to react, and keep track on implementation of the agreements.
Without concerted action, if the current patterns of climate change are to continue unchecked, the outlook is especially dire for low-income earners who live in areas affected by climate change. However, inclusive businesses are well-placed to increase the BoP’s resilience by providing stable employment and incomes; affordable healthcare, education and professional development; climate-sensitive training in areas such as farming and energy use, which also improve efficiency and thus returns; and using technology to overcome barriers of distance and poor infrastructure to deliver information, services and more. But they can’t do it alone. Inclusive businesses need the backing of governments, both at the national and global level, to ensure the right policies and regulations are in place to enable them to effectively tackle the twin challenges of poverty and climate change.
This article was originally published on the Guardian Labs Business Call to Action microsite, Improving lives through business innovation.