There is a big myth that transitioning to a green economy in some way means de-growth, but exactly the opposite is true. Building a green economy accelerates growth in all sectors, not diminishes it. Now, the explosion of AI threatens the advancement of sustainable practices to grow a green economy. The energy required to compute and manage AI systems is exponential; AI uses four to five times more energy than a conventional web search.With such a high energy demand, AI energy generation currently relies on fossil fuels, which means efforts to reduce carbon emissions can potentially be thwarted.
The issue is scale and seriousness.
It’s no secret that people are inherently worried about climate change and therefore more interested in adopting and investing in sustainability wherever possible–whether investments, owning an electric vehicle, or in their day to day efforts to act more sustainably overall–but the problem is many economies around the world face serious challenges in considering sustainability embedded into market economies as a whole versus the demand and hype of AI which they also seek to integrate into their economies.
Although large corporations are hurrying to secure AI into their product or service offerings, there is more national economies can do to build a better and more sustainable future overall, without compromising on growth. In fact, sustainable development, encouraged by national citizens in their voting and policy efforts, can deliver growth to an economy that secures its future.
In this article, we’ll delve into some of the key takeaways around why sustainable development offers a future in responsible market growth.
Climate Change Poses More Risk to National Capital
Dimitri Zenghelis, in Forbes Magazine, writes that “tackling climate change and preserving natural capital must urgently take priority over economic growth.” Though this may seem like a contradiction, he’s pointing to two ideas that, if acted upon, will help stabilize growing economies. Climate change threatens national capital, with the potential to devastate homes, environments, cities, and other densely populated areas.. All of this can lead to significant financial burdens. Implementing innovative sustainable practices, such as creating green spaces around roads to manage stormwater or making homes more risk-safe by building them higher amongst flood levels, can lead to less financial loss overall, and thus contributes to growth in a reverse scenario. In fact, a recent study found that for every $1 invested in preparing for natural disasters, society can save $6.
Focusing on New Materials and Resources Can Lead to Profit Overall
The green transition also relies on new ways to secure energy. For economies like Canada’s, where mining material resources plays a huge role in local and national economies, the refocusing on new materials can lead to sustained growth. To decarbonize the future, materials such as lithium are needed for low-carbon technologies. By focusing resources on extracting new materials that support building and scaling low-carbon technologies, a national economy can spawn more innovative strategy while recruiting and attracting more talent overall.
As McKinsey & Company writes in their Global Materials Report 2024: “Demand projections remain strong from now until 2035. In fact, except for steel and thermal coal, demand is expected to outpace absolute historical growth in the coming decade compared with the previous decade for all materials considered in this report, with lithium and copper in particular standing out.”
It will take fierce policy to abate fossil fuel lobbyists, but facts and metrics serve as useful guides to show just how much economic growth can be scaled when the attention is diverted to new resources.
It is also important to note that mining companies are transitioning to strategic leadership and greener ways of material extraction overall. According to ESG The Report, sustainable mining consists of practices founded on “three core pillars: environmental stewardship, community engagement, and economic resilience, aimed at ensuring the industry’s activities contribute positively to both environmental sustainability and social welfare.” Not only are local communities being involved in local mining discussions and opportunities earlier, but new technologies are fueling more sustainable extraction, such as revolutionized water treatment cycles where less freshwater is used in the course of mining for materials overall. As well, land rehabilitation is becoming an avenue of more concerned mining operations where the environment involved in mining operations is cultivated, maintained and restored throughout.
New Investors and Companies Will Align with Economies that Match their ESG (Environmental, Social, and Governance) Strategy
One last item deserves a lot of attention, and it’s the fact that populations across the globe are reshaping the way they think about the future. More specifically, communities and populations are aligned with the need to secure responsible growth so that everyone is profitable in the future– people and the planet. With increasing risks of storm surges, including wildfires and hurricanes, and the ramp-up of devastated resources from climate change overall, including safe supplies of water and supportive infrastructure, the future threatens to affect livelihoods of local economies and its citizens, especially with regards to poorer regions overall.
All of this is to say that people are motivated to invest in practices and corporations that have a suitable development strategy, commonly referred to as an ESG trajectory, built into their bottom line. The same goes for national economies.
When growth can be secured by refocusing an intentional effort on sustainability, there will be more investor money, which means more talent is attracted to solve these issues in innovative ways.
As the World Economic Forum reports, “Human capital is the key to a successful ESG strategy.” Revenues for companies that support sustainability and ESG frameworks can grow upwards of 10% more than their peers, and, as McKinsey & Company also report, “The analysis shows that companies that achieve better growth and profitability than their peers while improving sustainability and ESG outgrow their peers and exceed them in shareholder returns.”
So now what?
The promises of sustainable development are clear: a transition to a green economy can power its growth in unprecedented ways. But it takes the concern and diligence of many people to continually raise the stakes of what corporations and governments are able to do. But the opportunities that sustainability promises need to be taken seriously as well, where local and national economies can exponentially power their growth by focusing on creating more prosperous and sustainable systems, processes, and environments overall.
About the Author:
Madeline Medensky
Madeline Medensky is a content writer and editor based in Canada. She was recently the Public Relations Specialist for the University of Waterloo's Hub for Sustainability Integration where she reported on sustainability implementation for business development and economic change. Madeline's content expertise extends to other positions and opportunities in the tech sector. In her spare time, she exercises her storytelling abilities by writing and consuming creative fiction. You can read more of her content here: https://medium.com/@maddiemedensky
Comments