Gerda Žigienė: Humans are not only partly responsible for wasting the planet's resources but fully so
In the world where issues of ecology and sustainable development are becoming increasingly pressing, it is particularly important to hear from experts who are at the forefront of combating climate challenges.
In this context, as well as in preparation for the upcoming COP29 in Baku this November, we are pleased to present an exclusive interview with the renowned Lithuanian expert in finance and financial technologies, as well as a strategist in sustainable development, blockchain, and artificial intelligence, Professor Gerda Žigienė. This interview provides a unique opportunity to understand the complex interconnections between ecology, technology, and finance, and to explore approaches to solving some of the most pressing problems of our time.
- Mrs. Žigienė, how do you define the concept of "ecological civilization" and how is it related to sustainable development? What key principles should underpin the creation of an ecological civilization and what role can blockchain and AI technologies play in promoting an ecological civilization?
-The concept of ecological civilization is an ambitious vision that aims to harmonize human activities with the natural environment to ensure sustainability and well-being for current and future generations. I would like to be optimistic and say that such a goal is attainable, but the Industrial Revolution , which started more than two hundred years ago, has already made it virtually impossible to fully achieve an eco-civilization with the current level of consumption and the people's desire to live comfortably. As far as the use of technology is concerned, such as artificial intelligence and blockchain, I would like to stress first of all that technology is a means, not an end in itself. Whether ecological civilisation is reachable depends on various factors, including political will, economic systems, technological advancements, cultural shifts, and international cooperation.
- Today, the world is facing global natural disasters, and humans share some responsibility for this. What are the most effective strategies and practices you see for combating climate change on a global scale?
-I want to emphasise that humans are not only partly responsible for wasting the planet's resources but fully so. Every year, the Global Footprint Network counts down Earth Overshoot Day, which marks the date when humanity’s demand for ecological resources and services in a given year exceeds what Earth can regenerate in that year. This year Earth Overshoot Day is estimated at the 1st of August. This means that humans consume an average of 1.7 of the earth's resources per year. If we can import raw materials from another country and borrow scarce capital from the financial market, we can neither borrow nor import Earth's resources from anywhere.
Therefore, no one else but humanity has the power to influence the processes towards the destruction of the planet or the recovery of the planet. The question is whether we are prepared to sacrifice our present prosperity for the sake of future generations. If so, the only questions that remain are those of setting goals and implementing them.
- What is the role of the private sector in combating climate change and sustainable development?
- There is no single stakeholder who is capable of tackling climate change. Individuals, the private sector, and the public sector need to join forces to achieve meaningful results. The private sector should forget Milton Friedman's 1970 doctrine that “The Social Responsibility of Business is to Increase Its Profits”, and move towards embracing the triple bottom line - people, planet, and then profits.
- In just a few months, the 29th session of the Conference of the Parties to the UN Framework Convention on Climate Change (COP 29) will be held in Baku, the capital of Azerbaijan. What key issues and problems do you think should be addressed at COP29 in Baku?
-At COP29, it is crucial to address the strengthening of Nationally Determined Contributions (NDCs) and climate finance. Countries should be encouraged to set more ambitious targets and provide detailed plans for achieving these goals, with a focus on sector-specific strategies. Ensuring developed countries meet their commitments to provide climate finance is essential, alongside developing new funding mechanisms to support adaptation, mitigation, and addressing loss and damage in vulnerable nations.
Additionally, the conference should prioritize the transition to renewable energy, nature-based solutions, and carbon pricing. Establishing clear timelines for phasing out fossil fuels and assisting developing countries with technology transfer and financial support for renewable energy is critical. Promoting nature-based solutions like reforestation and biodiversity protection can enhance carbon sinks, while improving the transparency and efficiency of carbon markets and implementing carbon pricing mechanisms will incentivize emission reductions.
Finally, COP29 must emphasize international cooperation, equity, and public engagement. Enhancing global coordination to address transboundary climate issues, strengthening international legal frameworks, and ensuring accountability are key steps. Ensuring a just transition that supports affected workers and communities, addressing climate justice, and increasing public awareness and education about climate change are essential for building a sustainable future.
- What are the main challenges and opportunities for the financial sector in the context of sustainable development, and how can financial technologies contribute to achieving sustainable development goals?
-Any decarbonisation decisions inevitably involve financial decisions. Whether it is the development and deployment of clean technologies, energy efficiency solutions, the use of renewable energy, or changing business models. This will open up opportunities for the financial sector to finance sustainable projects, especially as, in many cases, the development of such projects will be supported by public finance.
In terms of challenges, this would include the proper assessment of projects or investments, and identifying the level of sustainability. Recently, various definitions of sustainable, green, or impact finance have been floating around in the public domain, and there is not always a common understanding of what is what. There are two actors involved in a financing transaction: the financier and the one being financed. Therefore, there must be a common understanding on both sides of what constitutes sustainable, green, or impact projects to which capital will be directed.
Fintech and sustainability may not seem like an obvious pair at first, but they can actually work together to promote environmentally friendly practices. Fintech, with its innovative technologies and data-driven approach, can contribute to sustainability in several ways: 1) Green Financing: Fintech platforms can facilitate green financing by connecting investors with sustainable projects. This can include renewable energy projects, eco-friendly infrastructure, or initiatives focused on reducing carbon emissions; 2) Blockchain for Transparency: Blockchain, a technology often used in fintech, can enhance transparency in supply chains; 3) Digital Payments and Paperless Transactions reduce reliance on physical currency and significantly decrease the environmental impact associated with the production and disposal of paper currency. 4) Data Analytics for Risk Assessment can be applied to assess the environmental risks associated with investments, enabling better-informed decisions that align with sustainability goals; 5) Financial Inclusion for Sustainable Development: Fintech has the potential to improve financial inclusion, bringing more people into the formal financial system. This can empower individuals and businesses, including those in underserved or rural areas, to participate in sustainable economic activities; 6) Carbon Footprint Tracking. Fintech applications can help individuals and businesses track their carbon footprint. By providing insights into spending patterns and associated carbon emissions, people can make more environmentally conscious choices. And many more.
- Our readers would be interested to know what inspired you to engage in the topic of sustainable development and climate change?
-When I was working on fintech projects, the potential of technologies such as artificial intelligence and blockchain in the field of sustainability became apparent, and I started to look more deeply into the links between fintech and sustainability. For example, artificial intelligence can be used to refine the creditworthiness assessment of small and medium-sized businesses, thereby increasing the financial inclusion of SMEs. Or AI used to turn the world's unstructured data into actionable risk and ESG intelligence for financial services customers for informed, proactive investment decisions. Blockchain technology provides auditable, traceable, and reproducible records that document the process and lifecycle of environmental assets, like carbon NFTs or blockchain-based green bonds, which reduces fraud in sustainability markets.
- What advice would you give to young researchers and professionals interested in sustainable development and combating climate change?
-Be persistent and have principles. The word "sustainability" has been used a lot lately, and for some it has already evoked negative emotions. But we don't really have a Planet B, however trivial that may sound. Be ambassadors of sustainability who believe in it and don't compromise for the sake of someone else's profit.
Abulfaz Babazadeh
Kaunas-Baku
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