Victor Galaz and David Collste

Finance for Resilience of People and Planet. Reflecting on 50 years after the Stockholm Conference in 1972


Fifty years might not seem long in the history of planet Earth, but the last 50 years have had profound implications for the climate system, natural systems and all life on Earth. The year 2022 marks the 50th Anniversaries of the historic 1972 United Nations Conference on the Human Environment, and the beginning of multilateral collaboration on environmental and sustainability challenges. Financial pledges to support developing countries in their efforts to achieve climate and sustainability ambitions, and the importance of economic indicators have always been at the center of international sustainability debates. This anniversary invites us all to reflect on the successes and failures of multilateral attempts to define economic and sustainability indicators, and the ambitions to accelerate funding flows in ways that support a transition towards sustainability. This article reflects on these ambitions, and concludes that the world has made limited progress on these issues in the last decades. The gap between funding needs and actual allocation is widening, and worsened recently due to the economic repercussions of the COVID-19 pandemic and the war on Ukraine. Wealthy countries have still do fulfill their promises to mobilize US$100 billion per year to support developing countries, at the same time as estimates show that the impacts of climate change could cost developing countries between $290 to $580 billion in 2030, and exceed $1 trillion by 2050. We propose a number of principles that will be needed both in the near (next 25 years) and long term (beyond 2050) to build resilience of both vulnerable groups and communities, as well as of important ecosystems, biomes and the climate system. These principles are based on the latest insights about the features of transformations include: a) defining a new direction, b) creating enabling conditions, c) support phasing out of damaging activities, d) drive accelerated investor action for resilience, e) act with urgency and speed.

1. Introduction

“International co-operation is also needed in order to raise resources to support the developing countries in carrying out their responsibilities in this field”. This sentence from the Stockholm Declaration from 1972 summarizes one of the most important and contentious issues of international collaboration on climate change: the lack of access to finance for mitigation and adaptation measures. Such lack of economic resources has stifled the ability of governments, local communities and individuals in climate-vulnerable countries to mitigate and build resilience to a rapidly changing climate.

The world has changed drastically in the last five decades since Stockholm 1972. Humanity and societies have truly become a global force of planetary change. The way economies are organized, and the way the financial sector acts plays a fundamental role in this context. Economic decisions by businesses, financial institutions, central banks, governments and many others have climatic and ecological impacts that, in turn, impact society and economies, threatening livelihoods, food security, and the resilience of vital ecosystems. A climate resilient and just future is not possible without the engagement of the financial sector, nor without economies that operate in ways that counteract social inequalities and contribute to the stewardship of global commons and the biosphere.

This brief overview summarizes what we view as major current challenges facing current international ambitions to allocate and redirect funding flows to support climate and sustainability ambitions. The overview is organized around five major topics. These are: a) a new and unequal planetary reality, b) failed promises of financial support, c) shocks and lock-ins, d) rethinking economic and financial indicators, and e) a new agenda for resilience of people and planet.[1]

2. A new and unequal planetary reality

We live in a different planetary reality compared to in 1972. The growth of the world’s economies has brought substantial benefits to many in the last decades (however in highly unequal ways), enabled by substantial consumption of resources from the planet’s oceans, rivers, forests, grasslands, coastal plains and other landscapes. Changes in the climate system and the biosphere, previously assumed to unfold in a distant future and affect only future generations, are happening now and with increasing speed and force as confirmed by the latest assessment made by the Intergovernmental Panel on Climate Change (2022).

By now, the human alterations of the planet (into cropland monocultures, forest plantations, filled wetlands, and fish farms) have changed the properties of the entire biosphere, and also led to the transgression of “planetary boundaries” (Folke et al., 2020; Steffen et al., 2018). Human societies are also more connected than in 1972. There is considerable evidence that cross-continental connections are part of our new planetary reality through information flows, global norms and policies, tourism, migration, trade, and foreign direct investments. Shocks – such as disease outbreaks, droughts, energy supply disturbances, and food price spikes – that previously occurred locally within one sector, risk becoming globally contagious (Keys et al., 2019).

This is our new planetary reality. Human societies are more connected than ever before; abrupt and sometimes irreversible changes occur; the climate system is destabilized; and the biosphere that supports humanity grows ever more fragile and depleted.

But there is another aspect of this new planetary reality that undermines our ambitions to build a sustainable future for all – the continued increases in social inequality. As the world strives to accelerate action towards sustainability, inequality prevents sustainable solutions. Inequality is persistent and associated with multiple social and health problems (Pickett and Wilkinson, 2015). High levels of inequality undermine the resilience of individuals, communities and countries, as illustrated by the COVID-19 pandemic (Sidik, 2022). The drivers of climate and planetary change are, in addition, the result of unequal societies. The wealthiest of the world’s population contribute the most to increasing pressures on the planet with high-income countries responsible for 74% of excess resource use (Hickel et al., 2022), while the poorest will suffer the most from the climate crisis and biosphere degradation. Without effective actions, our rapidly changing climate system will further amplify inequalities over the 21st century (Hamann et al. 2018). This is illustrated in Figure 1.

Figure 1 | Planetary change, responsibilities, and exacerbated inequalities. While many high-income countries (A and C) carry a historical responsibility for high emissions that are causing global warming and sea level rises (Hickel et al. 2022), some of them, such as the Netherlands (A), also need to significantly adapt to these consequences and have the ability to do so. Other high-income countries such as Switzerland (C) are less vulnerable to the direct consequences of global warming and therefore might need to spend less to mitigate its consequences. At the same time, lower- and lower-middle-income countries, such as Bangladesh and Mali (B and D), have limited historical responsibility for ecological breakdown, but are hurt at least as seriously by its consequences (including sea level rises, floods, and droughts) but with much less ability to cope with these. This exacerbates the inequality between countries and will have complicated consequences in our globalized society. Note, however, that this simplification hides that the wealthy, also in lower- and middle-income countries, heavily contribute to the excess resource use. Source: (Galaz and Collste, 2022).

3. Failed promises of financial support

Mitigation of planetary pressures and adapting to a changing planetary reality will require considerable investments to promote the resilience of both people and the planet, both in the short- and long-term. Such investments could for example include; nature-based infrastructure that protect coastal cities from increased floods; support to replace fossil-fuel powered with clean energy sources; and investments in more resilient health systems. With a more human and environmental well-being focused economic incentive architecture, such financing needs can be delivered through private capital toward commercially viable projects. However, many will require public finance support, especially in low-income countries (Voegele and Puliti, 2022).

Climate-related financial investment has steadily increased over the last decade, reaching USD 632 billion in 2019/2020 (Global Landscape of Climate Finance, 2021). Environmental, Social and Governance (ESG) debt issuance reached USD $1.6 trillion in 2021 (+116% compared to 2020, from IMF, 2022). This growth is likely to continue as countries and financial institutions such as the Glasgow Financial Alliance for Net Zero (GFANZ) and multilateral development banks follow up on their commitments after COP26 and the Glasgow Climate Pact (Robins and Muller, 2021).

These positive trends obscure the fact that current increases in climate finance are far from enough to help achieve the Paris Agreement target of limiting global warming to 1.5°C above pre-industrial levels (Global Landscape of Climate Finance, 2021), and the ambitions of the Sustainable Development Goals (OECD, 2021). Reaching ‘net zero’ emissions by 2050 and limit warming to 1.5°C have been estimated to require investments of around $7 trillion during 2020–24, but have failed to materialize despite promises to “build back better” after the COVID-19 pandemic (Nahm et al., 2022). Securing financing to increase the resilience of communities and important ecosystems has also proven particularly challenging in many parts of the world since such investments require a longer-term time horizon (i.e., decades) than investors normally operate on (Kreibiehl et al., 2022).

Data from the Climate Policy Initiative (2022) in addition show that climate finance flows in 2019/20 reached $653 billion on average, and estimates for 2021 suggest that climate finance flows amount to $850 –$940 billion. However, finance towards renewable energy made the most progress, whereas adaptation and resilience finance lags significantly. Investments in resilience hence need to consider not only total volumes of investments, however, but also to which sectors these investments are directed. Recent assessments by the Intergovernmental Panel on Climate Change (IPCC) show that the yearly total investments need to increase by 10 to 29 times in sectors like agriculture, forestry, and other land use by the year 2030 to be able to achieve the climate mitigation goals of the Paris Agreement (Kreibiehl et al., 2022).[2]

Estimates show that adaptation finance reached about $20 billion in 2021, creating a growing funding gap over time as developing countries need around $70 billion per year, with increasing costs to about $140 to $300 billion by 2030. (By comparison, in 2021, the world spent $423 billion in fossil fuel subsidies, from Stuart-Watt, 2022). Estimates also show that loss and damages associated with climate change (i.e., those impacts that are difficult or impossible to adapt to) also could cost developing countries between $290 to $580 billion in 2030, and exceed $1 trillion by 2050 (Markandya and Gonzáles-Eguino, 2019).

The financial sector has for a long time centered its work on sustainability on the reporting of carbon emissions and capture. As a result, financial risks are consistently viewed to evolve from climate change alone, rather than from the wider suite of changes in ecosystems and the Earth system (Crona et al., 2021).

High-income nations made a commitment in 2009 to mobilize US$100 billion per year by 2020 to support low- and middle-income countries in tackling climate change. These promises have yet to materialize, with funding estimates for 2018 ranging widely between US$19-80 billion. These are also likely to be stalled further owing to the COVID-19 pandemic, raising concerns that these commitments will never be fulfilled (Timperley, 2021). The COVID-19 pandemic and the war on Ukraine are widening the already existing economic gap between rich and poor countries even further. Many developing countries have been forced to cut budgets for education, infrastructure and other capital spending during the pandemic, with sovereign debt often growing as a result. The war on Ukraine has escalated these pressures with prices for energy, food and other commodities rising, and increased inflation and accompanying volatility in financial markets.

The need to build stronger multilateral mechanisms that fulfill the promises of finance mobilization, that increase both the volume of investments to sectors that build resilience for both people and planet, and that are able to help fragile countries navigate an increasingly turbulent global context, has become increasingly urgent.

4. Shocks and lock-in

The COVID-19 pandemic has exposed the systemic weaknesses of health systems and global supply chains, yet led to an unprecedented mobilization by the scientific community and governments to produce new vaccines at record-speed. However, the past two years have also exposed the vast fragilities and lock-ins that characterize our world, and the brittle abilities of governments and multilateral institutions to direct much needed structural changes (Galaz, 2022). Despite the rhetoric about the need to “build back better” through fiscal stimulus packages in support of economic recovery in the wake of the pandemic, it is evident that the opposite has occurred. Since the beginning of the pandemic, G20 countries have directed around $300 billion towards fossil fuel activities. Of the $3.38 trillion of proposed longer-term post-COVID recovery investments, only 15% is currently “green” with a focus on cutting greenhouse gas emissions or air pollution, with just 3% directed towards contributing to a more resilient biosphere (Rockström et al., 2021).

This underinvestment is notable considering that a stable climate future depends on the resilience of the biosphere. Recent analyses show that the world would have breached the Paris Accord 1.5°C target already today without the capacity of the living planet – our oceans and land-based ecosystems – to absorb human carbon emissions (Figure 1). However, this capacity cannot be taken for granted with continued greenhouse gas emissions, and the loss of resilience of the biosphere (Steffen et al., 2018).

Figure 2 | The importance of the biosphere for the Paris target. The world would already have breached the Paris target without the carbon sinks provided by a resilient biosphere. Source: from (Galaz and Collste, 2022), original source (Rockström et al., 2021).

5. Rethinking economic and financial indicators

The choice of economic and financial performance indicators shapes the trajectories of economies, businesses and policy decision-making. Our new planetary reality requires a rethinking of indicators for macroeconomic performance. GDP has mistakenly been used as a measure of human well-being. At the Stockholm+50 meeting, UN Secretary-General António Guterres highlighted the need to “shift to a circular and regenerative economy” (Guterres, 2022) and to move beyond GDP. Complimentary macroeconomic measures for national accounting include the Inclusive Wealth Index (IWI). IWI measures stocks of natural capital, reflecting prerequisite conditions of a functioning biosphere to achieve human well-being. According to estimates, natural capital in IWI decreased by 0.7 per cent per annum, and per person values nearly halved, between 1990 and 2014. This reflects a degradation of Earth’s life-support systems (Managi and Kumar, 2018).

Financial institutions have been accounting for sustainability through environmental, social, and governance (ESG) criteria. Current ESG data and criteria, however, fail in precision as there is limited consistency across ESG raters. What is more worrisome, however, is that they also lack accuracy. As an example, ESG ratings do not reflect what companies do to minimize deforestation in their supply chains. There is a need for open disclosure of ESG data and criteria, and for active engagements by regulators to delineate how they can prevent and reverse significant harm (Crona et al., 2021).

6. An agenda for resilience of people and planet

This summary has until now focused on the limitations and challenges facing the world as countries strive to allocate enough public and private funds needed to build resilience to a more turbulent climate future, both in the long and short term. However, lock-in processes are not insurmountable. Connectivity is not only a source of fragility, but also offers opportunities to unlock such rigidities, and support transformations.

Transformative capacities are a central feature of resilience as some forms of adaptation could result in increasing fragility and risks for people and nature, unless actors find ways to initiate a transformation (Folke et al., 2010). Such a transformation entails the ability to initiate fundamental shifts in the way authority, power, and resources are structured and flow in a particular social system. As has become increasingly clear, investments in climate adaptation can end up making people more, rather than less, vulnerable to climate change without a proper understanding of the drivers of vulnerability (e.g., gender inequity, marginalization of certain ethnic groups and other power inequalities) and local realities (Schipper, 2022).

Figure 3 | The X-curve of transformative change. The X-curve portrays the parallel processes of build-up and breakdown. Often, deeper system changes unfold following crises that temporarily dislodge vested interests and conventional ways of looking at the world. These disruptions sometimes allow innovative ideas and practices to be seeds for a new direction, but require the mobilization of strategic alliances (often between state and non-state actors), and the parallel dismantling of older and malfunctioning institutions, infrastructure and practices. Source: (Galaz and Collste, 2022).

As we elaborate in detail in (Galaz and Collste, 2022), the financial sector and governments need to focus less on tracking and stimulating growing volumes of “sustainable investments”, and more on complementing their work with interventions that use indicators and investments in ways that build transformative capacities (Figure 4).

Figure 4 | Building transformative capacities for people and planet. Visual summary of recommended principles to mobilize the financial sector, economic indicators and policy-actions towards resilience for people and planet. From (Galaz and Collste, 2022).

This includes the following:

1. Defining a new direction

A safe and just future is possible. The financial sector has, until now, been unable to properly direct their engagements and investments in ways that build resilience in the short and long term. Ample examples of initiatives that support resilience for both people and planet exist, and these create multiple social-ecological synergies – including a safe and just ocean economy and a transformed food system. The financial sector can, and should, align with such science-based visions and opportunities.

2. Creating enabling conditions

Existing institutions, political interests and economic incentives can all hinder the emergence of sustainable alternatives. Therefore, creating conditions that enable transformations is important. Three key actions contribute to creating such conditions:

a) Tapping into norms and values that support the change towards sustainability, using policies to guide the formation of new norms and behaviors.

b) Creating institutional and economic incentives for transformation – existing economic policy instruments can help accelerate transformations, but these policies require careful consideration during and after a transformation.

c) Daring to move without consensus. Change often causes disagreements about ends and means, resulting in impasse and halting the process. To help accelerate transformation, identify co-benefits and find innovative ways to collaborate across ideological differences.

3. Phasing out

Transformative change is as much about letting go as it is about promoting innovation. Older defective structures that reproduce inequities and unsustainability – such as investments in fossil fuels, subsidies to deforestation risk industries, and activities that lead to overfishing – should be phased out. Policy-makers, financial institutions and others can support the destabilization and phaseout of unsustainable systems, and can ensure that people are not left behind during such a change.

4. Accelerated investor action for resilience

Phasing out must be matched by growing investments in biosphere-based sustainability. Increased investments for resilience should be directed towards activities that help both people, ecosystems and the biosphere as a whole to cope with the changing planetary reality. Accelerated investments in resilience also need to 1) integrate biosphere stewardship with equity, 2) act in ways that enable people to be part of the transformation, and 3) help reform malfunctioning economic and financial structures.

5. Act with urgency and speed

Our planet has changed profoundly in the last 50 years. Today the prospects for a just and safe future for all look bleaker in many ways. But the science, innovation and action-based experience developed through efforts to tackle these challenges, have improved in astounding ways as well. The science is overwhelmingly clear: we must act with urgency and speed to secure a safe and just future for all on a thriving planet. This is both our opportunity, and our responsibility.  


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[1] This summary builds on our report prepared for and presented at the international meeting Stockholm+50 on June 2nd-3rd, 2022. For details, see Galaz, V. and D. Collste (2022). 

[2] Note that the mentioned IPCC assessment was unable to provide a synthesis for investments needed to protect the world’s oceans (70 percent of Earth’s surface) that sustain life and support the well-being of billions of people worldwide (see Sumaila et al., 2020).