The World Economic Forum released its 2018 Global Risks report last week. One business reporter dubbed it “the Pandora report,” and that is a fair assessment. If you have an interest in the welfare of future generations — or, for that matter, young people alive today — it makes for sober reading.
In their preface, Klaus Schwab, the founder of the WEF, and Borge Brende, the president, write: “Globally, people are enjoying the highest standards of living in human history. And yet acceleration and interconnectedness in every field of human activity are pushing the absorptive capacities of institutions, communities and individuals to their limits. This is putting future human development at risk.”
To this, they might have added the absorptive capacities of the over-stretched natural systems that provide the basis for our life and well-being, and that underpin our society and economy. Because when you look at the risks the report considers to be most likely and to have the greatest impact, as assessed by about 1,000 of their multi-stakeholder communities, almost all the greatest threats are environmental.
In terms of impact, only weapons of mass destruction are seen as having a greater impact than extreme-weather events, followed by natural disasters, failure of climate-change mitigation and adaptation, and water crises. Overall, when likelihood and impact are combined, these last four are the top global risks, followed by cyber-attacks, biodiversity loss and ecosystem collapse, large-scale involuntary migration and manmade environmental disasters.
In short, as the executive summary bluntly states: “We have been pushing our planet to the brink, and the damage is becoming increasingly clear. Biodiversity is being lost at mass-extinction rates, agricultural systems are under strain, and pollution of the air and sea has become an increasingly pressing threat to human health.”
So while Prime Minister Justin Trudeau is in Davos, Switzerland, this week for the meeting of the forum, let us hope he pays more attention to the environmental consequences of our current economic system, and their implications for human health. If he were to do so, perhaps he would eschew the narrow, short-term economic gains that have guided his choices on the Kinder Morgan pipeline and other shortsighted and harmful decisions that further encourage the fossil-fuel industry.
Since climate change lies behind most of the leading global risks we face, the last thing we should be doing is supporting the further growth and development of this industry. Instead, we should be divesting from fossil fuels, transferring all the many subsidies they enjoy to the conservation, renewable and clean-energy sector, and setting up transition support programs for the workers who will be displaced.
In thinking about this, Trudeau and Finance Minister Bill Morneau might be helped by these nuggets from the forum’s report: The World Bank announced in December 2017 that it was placing a moratorium on financing upstream oil and gas-related investments after 2019, while Norway’s Wealth Fund announced in November that it was divesting from oil and gas shares. Indeed, the time is swiftly coming, if it is not already here, when it will be fiscally negligent for pension-fund managers to invest in fossil fuels.
With more than $300 billion in investments, the Canada Pension Plan is one of the largest state-owned investment funds in the world. Its investment board is accountable to the government, and reports to Parliament through the finance minister. But in a 2015 report, the Canadian Centre for Policy Alternatives estimated that about 22 per cent of the CPP’s Canadian investments are in fossil-fuel producers or pipeline companies.
This is considerably higher than the four to nine per cent of funds the CCPA estimates are invested in fossil-fuel stock by the 20 largest public pension funds, meaning “the CPP is more exposed to climate-policy risk.” For example, the B.C. Investment Management Corporation, which manages the B.C. public sector’s pension funds, was estimated to have about eight per cent of its holdings in fossil fuels.
For the sake of the environment, our health and the security of our pensions, it is time the CPP and other public pension funds followed the lead of Norway and a growing number of investors, disclosed their fossil-fuel holdings and started to divest from fossil fuels.
Dr. Trevor Hancock is a professor and senior scholar at the University of Victoria’s school of public health and social policy.