Rules governing economic markets need dramatic changes so that they can better deliver and accelerate transition to a zero-carbon future.

“Addressing climate change and restoring nature are the defining challenges of our time,” said Odile Renaud-Basso, president of the European Bank for Reconstruction and Development (EBRD).

“They are market failures of epic proportions that demand urgent and collective action.”

Delivering the annual Mais Lecture at London’s Bayes Business School, Renaud-Basso appealed to governments, investors, producers and consumers to assign more value to biodiversity and the ecosystem services and impose higher costs on pollution and carbon-intensive consumption.

“We must seize these opportunities. This is good business. This is the right thing to do because we want a liveable planet for our children.”

EBRD four-point climate plan

The London-based multilateral development bank invests across three continents. The EBRD president laid out a four-point plan covering the changes such a transformation would require.

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“One, we must transition the energy system out of fossil fuels. Our use of coal, oil and gas is a recent innovation. It must also be a brief one.

“Two, we must reverse the tide of deforestation. That is by preserving and protecting the remaining intact wild forests, including the Amazon and the Congo basin forests.

“Three, we must reshape agriculture. For example, by rapidly converting the nitrogen fertiliser industry to green ammonia. That means eating significantly less meat and transforming farming through sustainable intensification practices. It means precision agriculture, and addressing food loss and waste across the entire value chain.”

“Four, we must manage carbon. Even if we reduce emissions, we will still emit some CO2 and we will still have too much in the atmosphere.”

Renaud-Basso’s address marked the first time the annual lecture has been devoted to the climate since it launched in 1978.

EBRD last year, for the second year running, invested more than half its annual business volume in the green economy. As of the beginning of this year, the bank has also fully aligned all its activities with the Paris Agreement.

How the private sector can help the shift to zero-carbon

The President also listed four ways the private sector could help make the shift to a zero-carbon world.

Disclose. Tell customers, employees, and shareholders about the climate-related risks they run and the impacts they cause.

Avoid: step away from unsustainable actions. Do not continue with practices or investments that are not consistent with a sustainable future.

Step up: invest and promote sustainable business activities.

Campaign: businesses have an interest in a well-functioning market. So, they should be first to argue for a carbon price and for regulation of unsustainable practices.

Renaud-Basso noted that two previous Mais lectures, those of Rishi Sunak and the late Chief Rabbi Jonathan Sacks, had cited Adam Smith, the 18th century economist, and his belief in the power of sympathy for others as a driver of human action.

“We need a market, and financiers, that are efficient allocators of capital. But ones that also engage with the seriousness of the crisis unfolding around us and the human cost it exacts.”