Not taking economically rational climate actions can be a very costly business. You need to know the costs (likely to be uncertain and underestimated)- ignoring them won’t make them any less real. This is ignored by companies all too often. Understanding and overcoming the barriers to economically rational climate actions is required to minimise costs later.
The Fiscal Council and Climate Change Advisory Council recently issued a joint report entitled ‘A colossal missed opportunity’, which outlines the potential costs Ireland could face for missing agreed EU targets. These costs could amount to staggering payments of up to €26 billion to Europe.
The report underscores the clear choice facing the Government: act now or risk paying colossal costs in the years ahead. These costs could be avoided if the Government takes even a few stronger actions today. Doing so would allow this money to be invested in the Irish economy instead.
Why would a Government act against its own economic self-interest? And why would voters allow it?
A joint report from Boston Consulting Group and Cambridge University examines the barriers to economically rational climate action in ““Too Hot to Think Straight, Too Cold to Panic: Landing the Economic Case for Climate Action with Decision Makers” These barriers include ignorance of the opportunity costs of inaction, as well as the challenge of costs materializing before 2050 while benefits come later.
I believe this short-term thinking prioritizes short-lived “business as usual” over our children’s future. It is short-sighted cowardice. Less emotively, it is simply not a prudent financial decision.
The report identifies five priorities critical to overcoming these barriers, including reframing the debate to focus on the economic case for action. However, its recommendations on increasing transparency, including that “Individual businesses should file climate risk reports that are robust, streamlined, and harmonized, building on established standards” are somewhat discouraging in light of the EU’s backward trajectory on corporate sustainability, with the proposed rollbacks to CSDDD and CSRD in the Omnibus proposal.
Without the “stick” of CSRD compliance, some companies may be tempted to delay climate action indefinitely. These reports reinforce our view at Antaris that time is of the essence—spending now can yield benefits in the coming decades by mitigating and adapting to climate impacts.
Written By: Bruce Harper, Senior Sustainability Consultant
