Changemakers for the future

Ben Caldecott, Oxford Sustainable Finance Group

The IKEA Foundation helps many organisations accelerate their efforts in combating climate change. Facts and figures speak for themselves, but who exactly are the people behind this extraordinary work? In this storytelling series, we spotlight brave individuals who move mountains in their climate action strategies and solutions. Today: Ben Caldecott, founding Director of the Oxford Sustainable Finance Group, at the Smith School of Enterprise and the Environment, University of Oxford.

We need to focus on doing less harm”

photo (c) John Cairns

The importance of the environment, and thinking about global environmental challenges, was instilled from a very early age. That’s partly because my father is a tropical ecologist and my mother also trained in ecology. We were always surrounded by their colleagues and family friends working on these and related topics.

As a child we lived in places like Sarawak and Nigeria, and so I was exposed to very biodiverse habitats and ecosystems. I’ve also seen how human activity has profoundly affected them.

Turning ideas into policy

My route into finance really started while I was a policy wonk. Many of the issues I worked on in the policy sphere were essentially about how we get capital to flow into solutions to big environmental challenges. That interest in mobilising capital to tackle climate change and biodiversity loss led me into the finance sector as a practitioner and then into academia. Here, we’re working to shape the future of financial practice through research, teaching and convening.

The centre that I now lead – the Oxford Sustainable Finance Group – works to try and make sure the global financial system supports sustainability goals: tackling climate change, enhancing resilience and restoring nature.

Stranded assets

One topic I’ve been very focused on for a long time is the idea of stranded assets. By that, we mean how environment-related factors can affect asset values, creating risks for financial institutions, as well as for the financial system as a whole. Back in 2010, I recognised it was something central banks should think about. While it has taken a long time to convince them to take it seriously, it is now a mainstream issue. Central banks are completing the first climate stress tests, in large part because of concerns about stranded assets.

Training sustainable finance policymakers

One thing I am very proud of is the work on capacity building and training that we do at Oxford. This includes the Public and Third Sector Academy for Sustainable Finance that the IKEA Foundation is supporting. We’ve trained more than 1,000 policymakers and people from civil society organisations and regulators around the world, with a very strong representation from emerging and developing economies. That’s very rewarding.

Hopes for the future

A lot of people working on environmental issues have moments where they think: “My God, we’re just so far away from delivering what needs to happen. Will we ever succeed?” I absolutely have those moments. But I’m confident that we’re making progress and that the change underway is non-linear.

If I had 10 minutes to speak at the 27th UN Climate Change Conference (not that I think this is necessarily the most impactful forum), I would highlight the fact that we really need to focus on doing less harm. A windfarm doesn’t undo the carbon pollution from a coalfired power station. There’s this pervasive notion that if we just build enough renewables, we can tackle climate change. That’s not how it works. We’ve got to stop polluting.

Secondly, we don’t have any more time when it comes down to biodiversity and habitat destruction, with much of this damage being irreversible. Ecosystems are reaching key tipping points and may never come back. Currently we don’t have a way of paying people to protect and restore nature at a really meaningful scale, anywhere in the world. I would focus some urgent attention on solving that problem.

We’re in a critical decade. We’ve got less than eight years until 2030. We need to enhance the efficiency of the “transmission mechanism” between rhetoric and real-world impact. The finance sector is particularly bad in this regard. If it doesn’t improve, it will challenge the credibility and longevity of green and sustainable finance. My biggest hope is that we can convert more of the energy and enthusiasm out there into action, especially in finance. And that we can do it really, really quickly.

Dr Ben Caldecott is the founding Director of the Oxford Sustainable Finance Group at the University of Oxford Smith School of Enterprise and the Environment.

The IKEA Foundation is supporting four interdependent research projects by the Oxford Sustainable Finance Group that make a significant contribution to aligning finance and the financial system with the goals of the Paris Climate Agreement.