Capital to Communities

How cooperation & solidarity can address the climate crisis at speed & at scale

Introduction

When the COVID pandemic disrupted lives and livelihoods across the world, the CCI team held regular consultations with our network of citizen stakeholders around the world. The result was a common understanding that multiple converging crises were going to cause deep and possibly permanent changes in the local experience for many people. Addressing fear, insecurity, and uncertainty, would require careful planning—not only around COVID safety and economic recovery, but also toward a future free from climate emergency, in which inclusive sustainable development was the mainstream norm.

The search for a strategy for constructive, inclusive future-building led to the Principles for Reinventing Prosperity:

We are all future-builders.
Health is a fabric of wellbeing and value.
Resilience is a baseline imperative.
Leave no one behind.
Design to transcend crisis.
Maximize integrative value creation.

Last year, in the first annual report on Reinventing Prosperity, we highlighted:

addressing hunger and food insecurity;
what science tells us about the global climate resilience project;
COVID trends and impacts globally;
COVID recovery in light of macrocritical resilience factors;
disruptive economic and technological trends;
rooted, distributed systems to operationalize major commitments.

Part I – Economic Freedoms

In 2021, Resilience Intel launched its Economic Freedoms program, to identify levers of policy action and structural incentives that can result in greater economic empowerment and sovereignty for individuals and communities. Sustainable development is critical for achieving such outcomes, because scarcity of critical resources and affordability pressures tend to reinforce structural injustices and impede economic progress for the majority of people.

2022 was not a good year for economic freedoms. Russia’s invasion of Ukraine severely disrupted world food supplies, adding terrible import costs, cost-of-living pressures, and destabilization to the already difficult ripple effects of the COVID-19 pandemic.

Are we not ready, finally, for a world in which the humanity in each of us is what our economic and political structures most prize and protect?

If we are to fully live as free, empowered, and cooperative individuals, communities, and nations, we need to:

work to end poverty and hunger for all people;
rebuild our food systems so everyday health and thriving are open to all;
ensure full access to education, information, and empowerment;
ensure women and girls are included from the earliest age and throughout our political and economic systems;
actively counter environmental injustice and recognize that climate protection is a human right;
coordinate globally to counter corruption everywhere and to ensure institutions are open and focused on service to all.

The Sustainable Development Goals provide a useful, detailed, and far-reaching reference for how we might do all of these things, while combatting climate change. We must also recognize that within each goal, there are diverse ways we can protect and honor the humanity in everyone. Mental health and psychosocial wellbeing, for instance, are intimately linked with the climate crisis, and if not addressed, can undermine our overall ability to respond to converging and compounding crises.

The United Nations set up a Global Crisis Response Group on Food, Energy, and Finance, to address the worsening ripple effects of unsustainability in these systems and their collision with food and energy price shocks linked to Russia’s invasion of Ukraine, a background of COVID hardship and post-COVID inflation, and a worsening debt crisis affecting more than 90 countries.

The International Monetary Fund is showing signs of recognizing the inherent injustice—and the practical conflict of interest—in imposing high borrowing costs on highly vulnerable countries forced to spend large sums on responding to a climate crisis they did not cause. In September, the IMF reported; “Barbados is the first country to reach a staff-level agreement to access the IMF’s Resilience and Sustainability Trust (RST), which aims to provide affordable, long-term financing to help build resilience against climate change.”

In 2020, when we introduced the Principles, we wrote:

Resilience is not only the ability “to bounce back from a shock”. It is also the ability to respond in a flexible, agile way, to continue functioning in the midst of crisis, and to be of value to others in mutually beneficial ways, even when resources are scarce. Resilience is not a luxury; it is a baseline imperative, and the reason societies of all sizes first came into existence.

Resilience is a baseline imperative. Where one section of the global fabric of humankind faces resilience failure, our collective ability to mitigate climate disruption and address other threats is reduced; that allows vulnerability to spread and raises the cost of achieving climate resilient development.

The IPCC warned this year that the window for successful climate resilient development is closing, fast. The result of failure will be widespread human suffering on an unprecedented scale. The Secretary-General called the Working Group II report on Impacts, Adaptation, and Vulnerability “an atlas of human suffering”.

Reducing vulnerability is necessary to safeguard the everyday sovereignty and capability of the human individual, communities, and nation states. 2022 has seen a rapid erosion of major progress toward greater global wellbeing, achieved over decades of hard work between and within nations.

The World Food Programme has issued a clear alarm call:

As many as 828 million people go to bed hungry every night, the number of those facing acute food insecurity has soared – from 135 million to 345 million – since 2019. A total of50 million people in 45 countries are teetering on the edge of famine.

While needs are sky-high, resources have hit rock bottom. The World Food Programme (WFP) requires US$24 billion to reach 153 million people in 2022. However, with the global economy reeling from the COVID-19 pandemic, the gap between needs and funding is bigger than ever before.

The economic empowerment and capability of people, communities, nations, and institutions, is under intense stress, due to the convening and compounding crises in food, energy, and financial systems, including price shocks, supply disruptions, and the precarious situation of dozens of countries facing urgent debt distress.

We have seen critical innovations emerge, like the Global Shield Against Climate Risks, jointly agreed between the G7 and the V20 countries. The aim is “financial protection cooperation that responds to loss and damage as a contribution to the Paris Agreement on climate change.” Such cooperative arrangements will be critical for the global effort to reduce vulnerability, build adaptive capacity, and mainstream resilience measures, while investing in Early Warning Systems that can cover all people, communities, and nations.

Part II – Decentralizing Value Creation

Addressing the ‘Capital to Communities’ challenge through active and ongoing engagement of communities and stakeholders

After the massive commitment of net-zero alignment by more than 450 financial institutions controlling more than one-third of all financial wealth in the world, last year in Glasgow, it became clear that the challenge of scaling climate finance would be defined by how effectively such institutions are able to deliver resources to some of the most vulnerable and least affluent communities. Financial integration and inclusionwould be critical to making the right investments possible, at scale, and at the right scale for delivering climate action capability to the billions of people most in need.

Resilience Intel, informed by CCI’s policy work in relation to stakeholder insights, put forward a Capital to Communities concept during the mid-year UNFCCC negotiations. That concept is updated and refined here, noting the need to connect and coordinate efforts across:

Action for Climate Empowerment(ACE): civic engagement, public access to information, capacity-building;
Non-Market Approaches (NMA) under Article 6.8 of the Paris Agreement: locally led development, international cooperation, fiscal space measures, and policy-making;
Finance for mitigation, adaptation and resilience measures, and funding for Loss and Damage.

By recognizing and acting on the constructive overlap between these areas of action, it becomes possible to more effectively address common and unique concerns of low and middle-income countries, communities, and economies, regarding the availability and verifiability of climate-related finance and general ongoing support for climate-resilient development activities.

Context

There are concerns among developing low and middle-income countries (LMIC) that sustained support for locally rooted Capacity Building is insufficient to meet urgent needs, especially in lower income and highly vulnerable communities, landscapes, and regions.

There is also serious concern that prospective donor countries (PDC) prefer to define funding to overcome Loss and Damage (FOLD) as a sub-category of finance for Adaptation and Resilience measures (FARM). We suggest these two phrases as cognitive strategies for distinguishing between loss and damage response, on the one hand, and the wider project of reducing vulnerability and building resilience, as distinct areas of critical need.

Advocates for a clear and defined distinction between FOLD and FARM note that Loss and Damage is an experience of costly impact where mitigation, adaptation and resilience measures either failed or were not in place to begin with. It is also important to note that such failures may not be under the jurisdiction or capabilities of the affected Parties, due to the transboundary nature of climate disruption and climate impacts.

Article 7.2 of the Paris Agreement states clearly:

“Parties recognize that adaptation is a global challenge faced by all with local, subnational, national, regional and international dimensions, and that it is a key component of and makes a contribution to the long-term global response to climate change to protect people, livelihoods and ecosystems, taking into account the urgent and immediate needs of those developing country Parties that are particularly vulnerable to the adverse effects of climate change.”

FOLD is a way to insure against mal-adaptation and the under-resourcing of mitigation activities, both of which become increasingly probable as resources and capabilities are depleted across whole economies, due to climate-related loss and damage.

Human Rights

All of this comes back to foundational human rights questions—and to the question of coherence across matters relating to engagement, public access to information, capacity-building, locally led development, non-market approaches, international cooperation, policy-making, finance, mitigation, adaptation and resilience measures, and funding to overcome Loss and Damage.

The rights questions include:

The right to a livable climate future, undiminished by preventable climate damage;
The right to engage in policy processes and in the implementation (and benefits) of climate crisis response policies;
The right to access, share, and acton climate-related information and innovations;
The right to restoration (FOLD);
The right to resilience (FARM).

An ongoing challenge—both from the perspective of vulnerable and affected communities, landscapes, and regions, and from the the perspective of prospective donor countries—is how to ensure sufficient capital and related resources reach communities and pay for the intended climate-related interventions.

We can call this the Capital to Communities challenge, one level of the overall climate-resilient development (CRD) challenge.

A solution might be found in mechanisms that demand, facilitate, and trace engagement of communities and stakeholders in the delivery of resources, the activation of programs and projects, and the overall process of assessment and follow-up, including with new rounds of sustained and/or catalytic and crowded-in funding.

The benefits of such engagement would include:

enhanced transparency and accountability;
diversified opportunities for monitoring, verification, and reporting; and
improved alignment between financing and investment priorities and local experience, capability, and development needs and aims.

Strong models already exist for FOLD (restoration) and FARM (resilience), as separate and distinct categories of locally led development, disaster response, insurance, and infrastructure investment. These mechanisms work best when local communities hold capacity to assess and deliver impact, and when some of the critical services involved are everyday activities of effective community organizations, transparent public agencies, or local businesses.

Action for Climate Empowerment

ACE should include the widest, most diverse, ongoing, and sustained support for:

inclusive, participatory process,
open access to information, and
the defense of human rights and climate-related rights and capabilities.

ACE could also be an investable form of capacity-building that:

enhances transparency,
builds capacity,
catalyzes locally led development, and
creates new opportunities for effective decentralized MRV.

The critical detail is that community inclusion in the deployment of climate-related finance—whether for mitigation, adaptation and resilience, or loss and damage—should expand, not reduce, the overall flow of finance to climate-resilient development—broadly, locally, and inclusively.

This could be uncomfortable for some national authorities, because some decision-making authority in such circumstances must naturally reside with the community.
Decentralization of authority is necessary to ensure local experience can inform local policy response, and to avoid bureaucratizing open and dynamic processes of engagement.
The benefit of this decentralization is that we can achieve more precise alignment of funding flows with local needs and capacities, and we can bring more people, perspectives, and diverse talents to the complicated problem of matching radically distinct scales—connecting institutions with billions to people who operate day to day in single units of currency.
The setting of clear standards—including anti-corruption, transparency, and accountability, the defense of human rights and the right to climate-resilient development—can make sure funding both for FARM and FOLD “gets it right” and actively works for the benefit of locally led climate-resilient development.

Ultimately, this idea should not be a constraint on ACE-related activities; it certainly should not link ACE to pre-requisite funding sufficient to achieve long-term successful climate-resilient development at national levels. Because of its diversity of activities, benefits, and connected and affected constituencies, ACE is best suited to be a core design feature of collaborative processes and of measures designed to respond to and reduce risk to communities—whether that risk reduction is classified as mitigation, adaptation, resilience, or loss and damage.

Mainstreaming ACE in climate crisis response can be useful and beneficial to actors at all scales of authority and influence.

Diversified Engagement and Future Visioning

A strategy for acting toward Capital to Communities as a catalyst for ACE could be to create standards for climate-resilient future visioning processes that include stakeholders at the community level. This could be supported and expanded by ensuring ACE aims are served by diversified engagement of stakeholder groups and local communities in supranational processes.

Engaged local observers and community networks can facilitate active, context-specific sharing of knowledge regarding progress towards the Principles for Reinventing Prosperity, for instance. Engagement sessions can ask participants to address in specific local context or in alignment with national plans and priorities (NDCs and NAPs, for instance), what progress looks like—and where it stands—on each of the Principles:

We are all future-builders.
Health is a fabric of wellbeing and value.
Resilience is a baseline imperative.
Leave no one behind.
Design to transcend crisis.
Maximize integrative value creation.

Locally rooted analysis and insight can also inform—and track progress on—cooperative non-market approaches to raising national and global climate ambition. Those cooperative non-market activities can foster climate-smart trade, expanded investment for sustainable development, as well as food systems that build health for people and nature.

The mural ‘For the Planet’ by the artist Kobra is shown in front of the main tower of the United Nations Headquarters, in New York City. Photo: Joseph Robertson.

Everyone’s empowerment and agency have real value for everyone else. The most vulnerable have a right to participate in the design of a better future, and to support the active, detailed, and locally relevant, tracking of progress toward successful climate resilient development.

Part III – Toward Planetary Health

Many of our most destructive decisions, as a global civilization, are rooted in a hurried quest for short-term gains or comforts.

We are rapidly eroding the capacity of natural systems to absorb excess thermal energy and repeated and far-reaching degradations. That means we will soon find ourselves without the ability to reliably grow enough food for everyone, to find affordable fresh water supplies for everyone, to sustain the security and integrity of nation states. The intensifying poly-crisis, whose effects make it harder to escape from any one of the segments of the crisis, is adding up to planetary emergency—sooner than most experts and institutions expected.

If we are going to break the cycle of unsustainable overconsumption, we need to become more skilled, inventive, and consistent, in our understanding of and investment in Resilience Value. In short, it does not make sense to reward institutions that profit by generating immense harm and cost for others; we should incentivize and reward activities that generate external benefits for people and for nature.

Our institutions were established at a time when governance and rule of law were priorities, and the rights, wellbeing and consent of people were primary controlling factors. Institutions needed to find ways to respond to the people they serve, and to achieve useful outcomes. After more than two centuries of industrialization, however, we can now see that nature needs a seat at the table. Degraded natural systems threaten human safety and wellbeing, so we cannot only view nature as a resource to be exploited. Science and experience show this exploitative standard makes no practical or mathematical sense.

The controversy will not be whether nature has value but rather how it is valued.

Natural systems rarely have strict boundaries; they blend, mix, and influence each other, endlessly. Bioregions do not know or care about political boundaries. Ecosystems migrate. If we want to protect a particular natural system, we need to be conscious of what flows into it. For this reason, we suggest a Summit to Seaapproach. To protect the anchor of our habitable biosphere, the ocean, we need to adjust our behavior upstream, to ensure we are not feeding threats into watersheds that will eventually cause serious harm to the ocean and its vital ecosystems.

We need to develop critical innovations that allow financial interventions to evolve, so they do better for people and planet. The Good Food Finance Network(GFFN) is one example of a cooperative coalition, working across sectors, to provide instrumentation for the great finance transition, so mainstream investments and institutional priorities can foster and sustain health-building, sustainable food systems for all.

Through new good food finance targets, farms and businesses with over $108 billion of business volume will be asked by investors and financiers to help meet specific and time-bound targets in areas such as zero deforestation, carbon removal and gender equality. Integrating data systems, developing smart, scalable co-investment strategies, and incentivizing business models that surround consumers with better, healthier, more sustainable food choices, will enhance humanity’s ability to operate complex economies of scale in harmony with nature.

The African Adaptation Acceleration Program (AAAP) is another example of a multiscale, multisector international collaboration to realize the value-building potential of adaptation finance. Adapting to climate disruption is not only about absorbing climate impacts; it is about adjusting our priorities and practices so we are better able to mount an effective climate crisis response. That requires vulnerable communities to have action capability, both for responding to impacts and for building a future of robust climate-smart opportunity and prosperity.

Finally, the poly-crisis of 2022 effectively demands the most ambitious possible approach to activating available policy levers. The non-market approaches invited by paragraph 8 of Article 6 of the Paris Agreement (Article 6.8) include a vast and diverse menu of policy levers, including but not limited to:

pollution pricing and related actions to align prices;
recycling of revenues from pollution pricing to enhance incomes and sustain local economies;
border adjustments and trade policy;
central bank standards and practices;
valuing vulnerability in financial regulations and cross-border exchanges;
green bonds and other climate-friendly financial instruments;
resilience measures, across sectors;
realigned agricultural policies, to foster nature-positive and health-building food outcomes;
coordinated transition pathways and enabling policies and investments.

Activating these cooperative engines for climate-resilient development marks a new stage in the evolving strategic seriousness of our collective response to the climate crisis. We need openness, creativity, a focus on genuine cooperation, and standards and practices that deliver high-integrity verifiable interventions that improve conditions for people and foster the health and resilience of natural systems.

UPDATE, 21 December 2022