SB60: Cooperate to unlock the climate value economy

The SB60 round of UNFCCC negotiations could open a door to the great promise of climate-resilient development, but the Bonn Conference also comes at a time when the world community risks permanently falling behind the climate crisis curve. The ripple effects of the COVID pandemic, multiple major conflicts, profound challenges to international law itself, and rapidly accumulating climate-related debt and disruption, are creating conditions for institutional failure in countries across the world. 

At the same time, the SB60 will grapple with the high-ambition mandate handed down by the COP28—to “transition away from fossil fuels” and protect “the integrity of all ecosystems”, while fostering new economic vibrancy and reimagined trade arrangements. That better future is possible, in part because the Paris Agreement creates conditions for enhanced multilateral cooperation, and alignment of mainstream economic activity with climate-resilient development. 

As a global network of citizen stakeholders, we at CCI see one critical missing ingredient in the standard geopolitical reasoning about these challenges: the greatest opportunity for expanding economic value in this century will come from investing in, supporting and sustaining, the everyday dignity and wellbeing of those left out of conventional economic and industrial performance metrics. In other words, the climate value economy is an economy for everyone, and that will require significant institutional adjustment.

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What is Climate Value? 

To understand what climate value is, and how we can accumulate and secure it, it is helpful to look at where value is lost, due to climate risks, impacts, and costs. The most obvious area of climate-related loss, for most people, tends to be natural disasters. 

• In recent years, we have seen wildfire seasons spread to be year-round, blanketing whole continents in toxic smoke, with even Siberian snows concealing simmering “zombie fires” that spark up in spring.
• Major storms have become more frequent and more intense. In the US, hurricanes, tornadoes, straight-line derecho windstorms, and catastrophic floods have imposed immense devastation and cost.
• The Syrian civil war is now largely attributed to a prolonged extreme drought affecting most of the country, over more than 12 years; multiple conflicts around the Lake Chad region are also attributed to prolonged drought. Drought and disrupted water cycles are affecting agriculture regions around the world, and causing mass migration.
• Some nations have lost more than a full year’s worth of economic output in unprecedented rains and floods. These shock events can radically alter a country’s economic future, creating pervasive threats to human wellbeing and to political stability.

These costs are accumulating now, and pushing dozens of countries into debt distress and prolonged food insecurity. A recent study finds climate impacts will reduce median household income by 20%, in coming decades. Imagine your life with $1 out of every $5 unavailable to cover your needs; imagine your community with everyone suffering such setbacks, including public authorities.

This finding echoes the Global Turning Point report, which projected $178 trillion will be lost to the costs of climate breakdown, across the world, by the year 2070. According to the Food System Economics Commission, unsustainable food systems are estimated to have cost us  $124.8 trillion in just the last 8 years. (Just that 0.8 on the end of that number is an additional $800 billion.) US financial regulators project mounting costs from climate impacts will eventually collapse the entire financial system, undermining the wider economy. 

In some sense, all the money in the world is at stake, because most of what we consider to be normal economic activity is dependent on political, social, and financial stability strong enough to give us the impression that institutions, cities and villages, and nations, are permanent fixtures. How long would your household budget, or your municipal public services, or your employer, survive in a recognizable form with 20% reductions in resourcing, or without help from national government agencies?

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How does this translate into everyday experience? 

For perspective, food price increases of just 10-25% can be enough to spark social and political unrest. In some contexts, the threshold for political unrest will be higher, but since people cannot go without food or water, embedded climate value losses—linked to unsustainable fuels, unsustainable practices, or worsening and compounding climate disruption, including effects such as biodiversity loss, nature breakdown, and degradation of watersheds—can signal economic and political disturbance and instability. 

A few examples stand out: 

• The North American colonies of Great Britain rebelled in 1776 partly because of taxes imposed on everyday food items.
• The French Revolution of 1789 was also driven by food scarcity, rising costs, and hunger.
• Food prices in North Africa spiked in 2009-2011, sparking what became known as the Arab Spring, which toppled long-ruling dictators in several countries.
• Wage declines, ecological devastation, and food scarcity during the Great Depression, caused unprecedented economic upheaval and mass migration in the United States in the 1930s.
• And Germany in the 1930s suffered a major mortality and nutritional crisis, which worsened under totalitarian rule, but was also among the causes of the collapse of the Weimar Republic.
• Across the world today, we see situations of conflict and instability that are linked to consistent background conditions of inequality, environmental degradation, and unaffordability. 

In other words: the costs we see coming are beyond catastrophic, and could be permanently destabilizing for nations, institutions, and the communities we know and love. This loss of everyday stability and macroeconomic value is the result of depleted climate value. Building climate value means creating a more stable foundation for human security and prosperity. 

In ‘The Right to Resilience’—the 2023 Reinventing Prosperity Report—we wrote that: “The right to resilience—like human rights in general—is a golden thread that can reset the baseline for all our climate ambitions,” adding that: 

“If no one should be left without real protection against non-linear, compounding climate damage, then we can quickly shift to envisioning all investment and industry as either working toward or against that goal.”

This is effectively what we mean by Climate Value. Better conditions for climate resilience expand the overall potential for wellbeing and sustainable prosperity. More money and more resources are available in an economy with expanded Climate Value; less will be wasted dealing with chaos, so more can be invested in things that make living conditions better. 

Insurers are already starting to measure climate value, by acting to avoid climate-related risk and potentially catastrophic losses. 

This is why, as The Right to Resilience report noted: 

“Resilience Value—as a multidimensional, integrated metric for tracking the value creation performance of capital and business activities—can be used to reveal to all decision-makers the cost or benefit of specific choices.”

Resilience Value could be another name for Climate Value—a measure of how well positioned the overall macroeconomy is to thrive, as conditions play out and compound each other’s effects. In a climate-disrupted world, with nature breaking down and watersheds and food systems deeply disrupted or collapsing, macro-critical (economy-shaping) resilience is low; in a world where Climate Value is stable and expanding, macro-critical resilience is higher—meaning greater financial AND non-financial returns on investment are available to private-sector investors and to public institutions, and to enhance the experience of everyday life.

An example of how macrocritical considerations fit into everyday experience is upstream investment in ocean health and resilience. The core idea—outlined in the 2019 report Invest at the Source—is that in order to reduce harm to coastal and marine ecosystems, it is necessary to clean up everyday commercial activities across the landscape. Ocean health and resilience starts as a question of watershed health and resilience. In the Mississippi-Missouri Basin, that means favoring, investing in, supporting, and expanding clean, sustainable practices from northern Montana and Minnesota, all the way down through the Great Plains, to the Gulf of Mexico. 

A few of the local beneficiaries of such investments would be: 

• Farmers that can earn more and sustain more stable landscapes for long-term production;
• Farmers and service providers in rural communities that can expand the overall local economy to include benefits of investment in soil carbon and ecological restoration; 
• Cities and communities that benefit from cleaner water and reduced costs of infrastructure and public services; 
• Consumers that see a proliferation of sustainably produced foods with no chemical interference; 
• Front-line communities that see reduced pollution from mining operations, chemical plants, power production, and other industries; 
• Investors looking to shelter their assets and future earnings from climate-related liability and other risks inherent in polluting business models; 
• Public agencies that can spend less on crisis management and more on pro-active investment in resilience-building practices; 
• Coastal communities downstream that see a rebound of ecological vibrancy and related economic activities—from fisheries to tourism and recreation;
• Small start-ups in local communities that can capture ocean-smart investment to deliver these non-financial co-benefits everyone else wants. 

The broader Climate Value Economy should consistently provide people and communities with:

• Reduced risk, harm, and cost related to climate impacts;
• Improved, readily available, affordable options for filling day to day needs in climate-friendly ways; 
• Conditions conducive to improved health—cleaner air and water, more natural food, communities that are greener, more walkable, and better attuned to human health needs and outcomes;
• Better livelihoods, on average—work that is purposeful, builds value locally, pays more, and supports sustained economic wellbeing.

In subsequent briefs, we will provide detail for each of these local benefits as co-benefits of mainstreaming climate value. 

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How can we establish and utilize Climate Value as a mainstream metric? 

We propose three key innovations, to allow all institutions large and small to make the needed adjustments, to keep their feet in this time of unrelenting change: 

1. Welcome stakeholders to the table;
2. Focus on building climate value;
3. Leverage multilateral climate cooperation to diversify and revitalize local economies.

Including stakeholders makes decisions smarter. Institutions cannot accurately guess what will work in all contexts; there is never enough detailed local information to allow for that. Stakeholders want decision-makers with resources and reach to be responsible, ambitious, and committed to delivering the best possible outcomes. Public authorities that welcome active, ongoing stakeholder participation create better conditions in local communities; enterprise that responds to stakeholder concerns avoids costly mistakes and more easily identifies meaningful innovations. 

Climate value is a measure of the coordinated and sustained reduction of risk related to global heating pollution. It reflects the embedded resilience and innovation capacity of a given economy—at the level of communities, nations, or regions. It also helps to draw clear distinctions between activities that destroy value for others and must lose favor over time and those that serve the vital non-financial interests of people, communities, nations, and nature. 

Multilateral climate cooperation starts from the agreement made in 1992 to “prevent dangerous anthropogenic interference with the climate system”. Dangerous climate disruption is upon us, so the need to act is more urgent than ever; the common worry that we do not know how to enact full-spectrum climate-smart transformation is evidence that cooperative acceleration is imperative. No nation can afford global failure on this all-encompassing crisis. 

Linking a multidimensional Climate Value metric—or macro-critical Resilience Value—to everyday experience means making it relevant to the decisions people make every day. It means everyday decisions need to reflect a generalized understanding of improved, investable climate value. It means that investable opportunity must turn into local activities that allow people to have decent work, to earn a living, to make sustainable prosperity possible. 

Here, we should highlight the important work being done by partner organizations, through the Good Food Finance Network, toward multidimensional metrics informed by integrated data systems. The Blueprint for Good Food Finance Data Systems Integration will inform technical explorations to link data to decision-making for improved local outcomes. That technical work will build on four core insights: 

• Never before in human history has it been more important that we understand the extent of our impacts on the Earth system and its ecological life-supports.
• We need to develop data systems that are complex enough to not misrepresent the complexities of the living world, while producing integrated metrics that are easy to understand and act on, even for non-experts.
• The prevalence of affordable nutrition and good health shapes the overall quality of life and economic vibrancy of whole societies.
• Multidimensional metrics, based on integrated data systems, that provide summit to seabed health and resilience insights, can support new SME business models that diversify and revitalize local and rural economies.

The work of unlocking climate value—through multilateral cooperation—must connect to community experience through prioritization and investment in small- and medium-sized enterprises that support these better outcomes. Metrics are not just references for nation states to cite in high-level negotiations; they must be rooted in local experience and actionable for local decision-makers, including small businesses and consumers. 

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What does integrated and holistic climate action look like? 

Article 6, paragraph 8 of the Paris Agreement calls for “integrated, holistic and balanced non-market approaches being available to Parties to assist in the implementation of their nationally determined contributions, in the context of sustainable development and poverty eradication…” It also calls for raising ambition across climate concerns, involving the public and private sectors—mainstreaming climate action—and “coordination across instruments and relevant institutional arrangements.”

This implies coordination across ministries, across sectors, between finance, technology transfer, capacity building, and resilience efforts, and across Conventions. The same nations are making commitments on climate, biodiversity, water, food, health, human rights, the ocean, and toward scientific and humanitarian cooperation, and trade. 

We take note of the recent Advisory Opinion from the International Tribunal on the Law of the Sea, finding that nations have a legal obligation to reduce global heating pollution to reduce pollution of the marine environment. Together with recognition by central banks, finance ministries, financial regulators, and panels of world-leading experts, that unchecked climate change will impose intolerable costs, this is recognition of the need for nations to respond to the climate crisis in an integrated and holistic way. 

As the web-based platform on non-market approaches is now live and gathering inputs, we wish to remind negotiators and observers in Bonn, and policy-makers working back home on local, national, or international, priorities, of the Long List of Non-Market Approaches established at the SB56 round of negotiations. 

We also wish to highlight some of the key elements of our own SB58 brief on non-market approaches. We encourage reading the full brief, for wider context. Below, we provide a rough overview of non-market approaches that can fit into multidimensional multilateral climate cooperation agreements that make life better, safer, and more prosperous, at the level of human experience: 

1) Policy, Pricing & Incentives

1. Standards and regulations – Financial regulations, trade-related conditionalities, and border adjustments and related negotiations, that allow nations to cooperate to secure a faster pace of decarbonization;
2. Climate income policies, which create an economically efficient, fast-moving decarbonization pathway, and foster green recovery by setting strong, steadily rising carbon prices, with revenues returned to households and communities, to ensure price pressures fall on polluters;
3. Carbon-related border adjustments – Domestic and cooperative mechanisms that support carbon border adjustments, to ensure climate leaders don’t lose trade to pollution offshoring;
4. ‘Floor price’ measures – Diplomatic, fiscal, and policy action toward an effective international “floor price” for carbon pollution.

2) Prioritization & Performance

1. Accounting and avoidance – Regulatory measures that mandate accounting, disclosure, and avoidance of carbon-related liabilities;
2. ‘Labeling’ and tracking – Labeling, accounting, data-sharing, impact tracking, and transparency practices that expand opportunity for mainstreaming of climate-smart finance—noting labeling of ‘green’, ‘blue’, and ‘pink’ finance (fostering human capital benefits across health and other SDGs);
3. Data integration – Policies, institutional arrangements, and business model innovation incentives that support integration of Earth science data platforms into financial decision-making information flows;
4. Multilateral coherence – Action by existing international institutions (and central banks, through cooperative frameworks) to become engines for climate action incentives and enforcement, connecting climate action aims, impacts, and metrics, to their respective decision-making, financing, and multilateral policy intervention capabilities.

3) Operational Support

1. Investing in nature – Enabling policies that create conditions for climate-smart, nature-positive financial instruments, support for regenerative agriculture, and other forms of green finance—not linked to emissions trading markets;
2. Fiscal rescue funding – Linking Special Drawing Rights (SDR) to Paris Agreement action and funding, given the urgency of scaling up mainstream finance for climate mitigation, adaptation, and resilience, from the public, private, and multilateral sectors;
3. Food systems innovation measures, supported by policies, financial instruments, consumer health and safety regulations, and the linking of multifocal science insights to innovative co-investment strategies, mobilizing resources from public, private, multilateral, and philanthropic sources.
4. Transition assistance – Direct and indirect incentives and blended financing strategies that support accelerated transition of emissions-dependent local and regional economies to climate-smart low-emissions standards and practices.

4) Vulnerability-Responsive Measures

1. Vulnerability response resourcing, linked to Loss and Damage, but applying to a broader range of climate resilient development imperatives, including adaptation, nature-restoration, and sustainable economic transformation;
2. Climate-responsive debt relief – Leveraging more integrated, just, and inclusive value accounting, in line with the Bridgetown Initiative, to structurally reduce sovereign debt burdens, recalculate interest rates, and deliver targeted assistance;
3. Early warning-related co-investment strategies, facilitating wider flows of finance—across public, private, multilateral, and philanthropic sources of capital—to support countries’ expansion of early warning systems and integration of relevant planning and response at local and provincial levels;
4. Insurance for livability – Expanding on the work of InsuResilience, the Global Shield, and the Resilience and Sustainability Trust, to provide targeted expanded flows of capital to support ongoing livability before, during, and after major climate-related shocks.

We have news, every day, of governments and other interests focusing attention on building value through combustion-based practices popularized in the 19th and early 20th centuries. Evidence makes clear there is a very limited remaining timeframe over which even the perceived short-term benefits of such investments will hold up against proliferating cost, risk, and destabilization. The SB60 round of negotiations can, and should, mark the beginning of the period in multilateral negotiations—across conventions and areas of work—in where multilateral climate cooperation becomes the lever for improving human lives and prospects in all dimensions.