AEGN

Sustainable economy

A sustainable economy enhances the environmental and social systems on which it depends.

Written by Professor John Quiggin, The University of Queensland.

Overview of sustainable economy in Australia

Australia’s economy, and the world economic system it operates within, are depleting our life support systems.

We now face critical challenges that require both immediate action and a commitment to creating a sustainable economy over the longer term. Regulation and market based responses both have roles to play in driving the economy down a more sustainable path. Achieving a sustainable economy in Australia requires policies to be in place which:

  • stabilise the climate, by limiting global warming to a 1.5°C increase in mean global temperature relative to pre-industrial levels  — this will require a substantial restructuring of the economy
  • protect and replenish natural resources, including food and water supplies (the economic cost of Australia’s degraded natural resources and environment is at least $2 billion a year)
  • preserve species diversity, in line with our role as a “megadiverse nation”.

We need to shift towards a “circular economy”, where economic activity is decoupled from the consumption of finite resources and waste is designed out of the system. We need to account for the true value of Australia’s natural assets and the true cost of their depletion and pollution.

As a public good, strong public institutions including laws and public funding are essential for the environment to be managed in the interests of the public. Knowledge is also a public good, and government has an important role to play in funding the research required to solve environmental problems. Over the past two decades our system of “public good” research has largely been dismantled.

Transitioning to a sustainable economy will deliver financial and social benefits as well as positive environmental outcomes. Australia is in a strong position to capitalise on shifts in global economic demand and investment towards renewable energy, resource efficiency and rebuilding natural capital.

The main obstacles to achieving this transition to a sustainable economic system are political, not technical. As such we need to effectively communicate the economic benefits of a healthy environment and the evidence that shifting to a sustainable economy is both possible and desirable.

What philanthropy can do for a sustainable economy

Philanthropy is uniquely positioned to drive changes to Australia’s economy towards a more sustainable future. Philanthropy has a wide range of tools available to support economic transformation, in particular grantmaking, corpus divestment and investment, and exercising influence.

Grantmaking

A growing number of charitable organisations are recognising that economic instruments are powerful ways of achieving change. Philanthropy can support these organisations to:

  • intervene in regulated markets as a means of reducing extraction, for instance by purchasing and shelving licences (such as fishing licences) or buying water for environmental flows
  • advocate for changes to government subsidies and incentives to promote environmentally sustainable behaviour
  • communicate and educate the wider community about the environmental, social and economic benefits of change to win the hearts and minds of the Australian public
  • work in alliances and coalitions to bring together the wide range of skills and expertise needed to have impact

Grantmaking can also play a crucial role in supporting the communities whose economies are under transition, such as in coal mining and electricity-generating regions, by resourcing transition planning, capacity building and new ventures. Members have wide-ranging experience in grantmaking to improve the sustainability of our economy. We can connect newer funders with more experienced funders who are happy to share their knowledge.

Divestng and investing

Foundations can unlock the power of the market through participation in the international philanthropic divestment and investment movement. DivestInvest explains the steps philanthropists can take.

Our members are leading the way in identifying innovative financing mechanisms and investing their corpus to maximise their impact on a wide range of issues including energy, water and food systems. Members can share information on investment opportunities through participation in our impact investment funder group.

Influence

Many philanthropists have the ability to exercise influence over government policy because of their reputations as respected social change agents, business leaders, or both. While some philanthropists are comfortable speaking publicly on issues in the public domain, others require some support and encouragement to be active in this way. We can support members who are interested in adding their voice to campaigns for economic change.

Explore funding at a more detailed level. View funding ideas for a variety of amounts, ranging from small grants to large grants. See the different approaches you can fund to help you hone in on the specific type of types of projects you want to fund.