The selfish case for climate reparations

This long-neglected pillar of environmental justice will top the agenda at COP27. The Global North must get real on Loss and Damage – for our own sake.

With COP27 just a month away, the cyclical momentum of climate reporting is back in gear. Sadly, if predictably, the news in 2022 is not good. The UN just reported ‘no credible pathway’ left to 1.5 degrees, following years of inaction; only a ‘root and branch transformation of our economies and societies,’ can save us from disaster. Instead, we are heading to 2.8 degrees (at least – who knows what runaway tipping points that pathway will trigger). The IEA latest World Energy Outlook, meanwhile, forecasts carbon emissions will fall by only 13% to 2050. We are a long, long way from net-zero.

Meanwhile, the real-world impacts of climate change starting to bite – and bite hard. This summer’s floods in Pakistan, which devastated up to a third of the country, affected over 33m people at a predicted cost of $40bn. On the other side of the world (geographically and economically), Hurricane Ian tore into the Caribbean and South-East United States, becoming the fifteenth billion-dollar disaster to hit the US in 2022.

This is the context in which Egypt takes up the COP presidency, and – as the first Global South host since 2016 – it is no surprise that they are pushing hard on getting real dollars deployed to the developing world. A major part of this push is for reparations. But, compared to mitigation and adaptation, this issue is often forgotten, particularly in the corporate sustainability conversation. That needs to change – and here’s why.

What are climate reparations?

This is a term that may be more familiar to people in other contexts – around war, race or restorative justice. In the climate arena, is it mostly associated with ‘Loss and Damage’, the third pillar of the Paris Agreement. But the idea first emerged in 1991, four years before the COP process even began.

The argument is straightforward: Historically, the vast majority of total carbon emissions have been produced by the now-developed world of the Global North, who used fossil fuels to supercharge their economic development and build up stores of huge wealth. The majority of the direct damage from climate change, however, will fall on less-developed countries in the Global South, who are least able to bear those costs. The call for reparations is a call to rebalance this inequality.

The world has had an existing rebalancing facility (sort of) for over a decade – The Green Climate Fund. Sadly, despite a target of $100bn a year in support, only $2bn dollars had actually been spent as of 2021. Complaints are growing about unmet funding commitments, bureaucracy, and political wrangling. Meanwhile, developing economies say that, together, they are going to need $1.3 trillion a year by 2030. Once again words fail to translate into action – and yet what is needed is even greater ambition.

Why reparations matter

As welcome as it is, any renewed emphasis on loss and damage at COP27 is going to meet pushback, namely: we can’t afford it. 2022 has been a horrible year for the global economy, with developed markets crushed between inflation, rising interest rates, sinking public markets, and a brutal energy price spike. With households in Europe and beyond wondering how they are going to heat their homes this winter, isn’t the idea of climate reparations politically unrealistic?

This was the question I put to Sam Baker, for our latest episode of Conversations on Climate. Sam was a fascinating – and very rare – kind of guest: a world-striding business executive who left it all behind to become a grassroots climate activist. His arguments for reparations in a time of economic difficulty are worth expanding upon here.

Firstly, the demand is not simply financial, but moral. The evidence is irrefutable: the North caused this problem, and so they should bear the consequences of their actions. To have claimed all the benefits of historic economic development over 250 years, only to kick the ladder away and ignore the impacts on the poorest nations today, is morally indefensible. Yes, the price may pinch today – but what about all the years of plenty since 2011, when we refused to properly fund the GCF against a background of record-low interest rates and soaring profits?

No alt text provided for this image

Secondly, there are strong pragmatic arguments for properly funding reparations. Sam pointed to migration as an example, citing research which has found that the Syrian war and the consequent European Migrant Crisis in 2015 were, in part, caused by climate change. Immigration is already tearing the politics of the North apart, from Brexit to Trump’s Wall the recent election of an Italian government (Brothers of Italy) with neo-fascist roots. The World Bank estimates that climate change will create another 143m environmental migrants by 2050 – what will that do to political cultures in those countries they seek out for safety?

Immigration is not the only story here. The economies of the North are also far more dependent on the South than most voters realise. As Sam put it: ‘we’ve spent however many decades driving globalization, particularly in the private sector. What do we think is going to happen to our global supply chains, our networks, our security?’ These countries most at risk are our suppliers, and our future markets. The pandemic and the Ukrainian war have shown how supply disruptions in just a few distant markets (semiconductors, natural gas) can cripple the strongest economies in the world.

Practically, we are to reimagine a Marshall Plan for loss and damage – a grand transfer of resources to protect and rebuild those markets which will be the basis of future trade, peace, and prosperity.

Freeing ourselves from our past

There is one final argument for reparations I want to make here – the most self-interested of all. Whilst the Global North may be less effected by climate chaos materially, it is already bearing a different kind of burden. In short, the knowledge of what we have done to the world places a huge strain on the collective psyche. The guilt, shame, and sense of futility in the face of our historic responsibility threatens to crush our cultural spirit, and sap our desire to continue to play a part in the economic system which is responsible. Our crises will manifest in our collective internal weather: floods of traumatic feeling, storms of political disfunction, sapping droughts of psychic malaise.

This is already apparent on an individual level. Sam himself left a Partnership at Deloitte because, as it dawned on him that his net contribution to the world through this work may have been deeply negative, he felt he could no longer continue. I applaud his decision to walk away and dive into activism – but we would all be better off if he didn’t feel he had to. How many more talents must we lose?

This is not just an issue for activists: it is already showing up more broadly in younger generations. Child mental health is getting worse each year, and eco-anxiety is a rapidly-growing component of that story. A Lancet report, titled ‘Young People’s Voices on Climate Anxiety, Government Betrayal, and Moral Injury,’ found that 60% of children are extremely or very worried about climate change, and 45% say that it impacts their day-to-day lives. Their emotional response? Fear, powerlessness, guilt, and indifference. Companies report increasing difficulties in hiring and motivating young employees, as burnout and ‘quiet quitting’ bubble up into the collective conversation.

No alt text provided for this image

Paying for loss and damage will never unilaterally erase this history, and nor should it. That history belongs to the Global South as much as ourselves, and can only be resolved in dialogue. But reparations are what developing countries are demanding right now, so let’s start there. Because unless we face this psychic shadow honestly – and begin to make proper restitution for it – we risk continued cultural withering. That is something economists are never going to measure; they do not have the tools, nor (and without wanting to be cruel) the imagination. Instead, it is our artists who can remind us of the costs of a psychic wound, ignored.

‘Out, damned spot!’


Written by Chris Caldwell CEO of United Renewables, originally published on Linkedin on November 8th 2022


If you liked this article you may like:

Are Renewables Firms are Ignoring Government Relations?

How Decision Making and Judgement affect Climate Change

Bloom and bust – regenerative business lessons from a microalgae start-up