Podcast | 14 Jun 2024

Greenomics – Ep. 11 | Social disruption: The impact of climate change on vulnerable communities

Sarah Nelson

Senior Economist, Economics & Sustainability

A climate, sustainability and economics podcast from Oxford Economics

Climate change is a threat multiplier – disrupting ways of life, threatening food sources, and fundamentally changing the environment in which we live. In this episode we explore the potential impacts of climate change on vulnerable communities, from increased migratory and conflict pressures to the unique relationship between Indigenous populations and nature. Sarah Nelson is joined by three of the team from Oxford Economics who have been working to understand the profound social implications of these factors, Shilpita Mathews, Beatrice Tanjanco, and Ilana Gottlieb.

They discuss:

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Sarah Nelson:
Hello. Welcome to Greenomics, a podcast from Oxford Economics, where we delve into the complex relationships between climate, nature and our global economy. I’m your host, Sarah Nelson, in the Economics and sustainability team here at Oxford Economics. And today I’m joined by two economists who have been doing a lot of thinking about how climate change could affect vulnerable communities and why businesses should care. Today in the studio, we have Shilpita Matthews and Ilana Gottlieb, both colleagues of mine from the Economics and Sustainability team. Thank you for joining me you two.

Shilpita Matthews:
Thanks for having us Sarah.

Ilana Gottlieb:
Yeah, thanks Sarah. It’s wonderful to be here.

Sarah Nelson:
So Shilpita I understand that you spoke to another Oxford economics economist, Bea Tanjangco in our Global Climate Service about climate migration. Let’s cut to that convo and we can have a debrief in the studio afterwards.

Shilpita Matthews:
With me in the studio today is Beatrice Tanjangco, lead climate economist in the stress testing scenarios and modeling team. She produces research briefs on climate change and the economy and supports the expansion of Oxford Economics, climate capabilities under the Global Climate Service. Bea recently worked on a research on the dynamics of climate migration. Bea, Welcome back to the podcast.

Beatrice Tanjagnco:
Thanks. Happy to be here.

Shilpita Matthews:
Bea before we get started, can you tell us a bit more on what we mean by climate induced migration?

Beatrice Tanjagnco:
Oh yeah, that’s a great question. So as the name suggests, it’s a type of migration that is brought upon by extreme environmental and climate risk factors. So migration has essentially become like a means to adapt. For example, if you tried everything else and your livelihood and well-being continues are affected by these climate shocks and extremes, the only option left to you might be to move.

Shilpita Matthews:
And Bea tell us a bit more about your latest research brief and how you start to unpick some of this.

Beatrice Tanjagnco:
Well, in a nutshell, it’s about the nuances of climate migration. So as we start seeing more of these extreme events occur, it becomes a more pressing issue. And the thing is, climate migration is a multifaceted, yet contentious topic, and it’s been sparking many debates. And it’s also the more alarmist side because, you know, we’re afraid of what we don’t know. So the report itself is about trying to better understand these common assumptions and misunderstandings.

Shilpita Matthews:
Absolutely. And a lot of these misunderstandings we see often in the press as well. And what are some of the most frequent assumptions you’ve found in the IRP?

Beatrice Tanjagnco:
Well, one of the big ones is like, for example, a lot of people commonly assume climate change causes migration when in fact it is more often a indirect link. So people leave for different types of economic, political and social reasons and climate is usually just like a threat multiplier which does what it says. It just makes things worse. And another assumption that people have is that they assumed that there would be like this mad rush from the global South to the global North, because there’s this assumption that the global North might be better suited for withstanding a lot of these climate shocks. But in reality, most of these movements are due to climate are actually across short distances. So this means people move within their own countries or like just next door, like if they share a border or something and after all moving internationally, it’s not easy and it’s expensive and it requires a lot of upfront costs. And one of the things I caveated in the RB, actually, is that the reality of climate migration today looks very different from what we have tomorrow. Much of what we have are based on historical trends, but we are already seeing record breaking warming. So if we do not mitigate climate change and we reached certain tipping points, the scale of movement might actually be worse.

Shilpita Matthews:
And just picking up on this last point that you raised Bea, I was having a look at one of the World Bank reports that you cite in your research brief. It stated approximately 216 million people are expected to migrate within their own countries, within their own borders by 2050. Now, that’s a huge, huge magnitude of mass flows. Could you please tell us a couple of examples of policy solutions to address this climate induced migration?

Beatrice Tanjagnco:
Yes, I guess you could think of policy solutions in different levels. So the first order of business would be to get emissions down. So we don’t reach those temperature levels, which would bring upon this need to migrate in the first place. And the second is to provide people the resources they have so they can adapt and stay. So this means like financial support, disaster aid, relief, anything to limit the need to migrate, because if people can afford to stay, they’re going to stay. And governments can also improve adaptive capacity so they can help communities say, for example, diversify their crops or they can provide resources, teach them water and soil management, anything that makes moving a last resort, really. And when migration is the only option left, governments can help shoulder the cost of relocation so they can provide the infrastructure and services to help with the move. Because moving it moving is hard. And in the brief, I noted that countries like, say, Fiji, they already have guidelines for relocation if they have to. So some countries already know that this would actually be a reality if we’re not careful.

Shilpita Matthews:
As you mentioned, Bea climate and this migration has increasingly become a very polarizing debate. How is adopting some of this economic lens helped you unpack the nuances behind migration?

Beatrice Tanjagnco:
So seeing from this lens, it helps you understand why some of these misunderstandings arise, and it just helps me cut through it. So for example, one misunderstanding, as I mentioned in the paper, is that some people have this fear that climate migrants will come in and steal their jobs and raise rent, and that kind of thing. These are thinking, will they affect my livelihood? It’s true that the economy will need time to adjust and that this influx of new workers and these new people could have an impact on wages. But people forget that the economy is not static, it’s not zero sum. It’s that the you and I lose that kind of thing. Instead, it’s dynamic. So economies that absorb migrants, if it’s managed well, the economies will adapt and change, and it’ll change as the composition of people change. So when you actually think about the economics of climate migration, it’s really just based on drivers and incentives, but understandably, it’s just one side of the story.

Shilpita Matthews:
Thanks, Bea. That’s provided a huge clarity in an otherwise very contentious debate of our times. Thanks, as always, for joining us on the show.

Sarah Nelson:
So back in the studio now. Shilpita, that was a really fascinating conversation you had with Bea. Like many things, it sounds like a much more complex issue than it might seem on the surface, although it already seems like a fairly complex issue. What were your key takeaways from that conversation?

Shilpita Matthews:
Thanks Sarah, Yeah, absolutely. I found that conversation very insightful and separating climate change as a cause of migration towards thinking more of it as a threat multiplier and very fascinating on how Bea highlighted and debunked some common myths, like how most migration today is internal and in fact migration being extremely expensive at a lot of upfront costs, leading to, say alternate, more cheaper and affordable adaptation solutions to be adopted by community. At first, I don’t know what your reflections were, but one of my highlights of that discussion were those tangible policy responses that Bea had discussed, right from mitigating emissions to supporting communities and relocating when climate change impacts have come to a particular irreversible extreme. Bea had mentioned the example of Fiji, and I did some more research on this topic and came across an example of Tuvalu which is an island, and they are also preparing for relocation and currently have a treaty signed with Australia which was legislated last year. And as part of this Tuvalu union treaty, there’s an agreement on climate mobility which allows permanent residency to approximately 280 citizens from Tuvalu to relocate to Australia every year given the dangers that they’re experiencing from climate change. There’s a lot happening even as we speak today.

Sarah Nelson:
That’s really interesting. And I heard of that sort of relocation policy from Tuvalu. And so 280 people per year. Is that what you said?

Shilpita Matthews:
Yes, that is the provision in the treaty.

Sarah Nelson:
I suppose that sounds like a tiny number, but compared to the population of Tuvalu, that’s probably more than more than it sounds like. So Ilana listeners may not have got quite yet, but Ilana is actually Australian. So, Ilana, how has this been received in Australia, or what’s the history around the kind of relationship between Australia, the Australian people and climate migrants?

Ilana Gottlieb:
I think in Australia we’re close to a number of communities in different island nations which we know are significantly susceptible to climate change and I think there’s an understanding among communities that I’m in back in Australia that there is some obligation to be assisting them, whether it’s in with this kind of agreement, the ability to migrate and to come to Australia. But also more broadly in adaption, financing and investment to support communities like Tuvalu in their adaption projects. So I know that in addition to the recent announcement of this migration agreement, there was also a $110 million in investment that was agreed between the Australian Government and the Tuvalu community. And I think it’s understood that that’s very important as we are a big country in Australia with more available financing and these are really vulnerable communities who need the broader regional support.

Sarah Nelson:
Yeah, it’s going to be interesting to see how it plays out in the Pacific because obviously New Zealand is also a lot smaller and less wealthy than Australia, but it is a relatively large and wealthy economy compared to a lot of Pacific Island nations. So it feels like there is a bit of an obligation to support some of those nations that are going to be really affected by climate change. I guess much of what Bea talked about on migration was kind of driven by environmental change, although I really like that framing of it as I guess like as a strong word. But, you know, I think that framing of it as a threat multiplier is really interesting. And today, of course, most forced migration comes about due to conflict. But those drivers complex and climate change are increasingly linked as we see food shortages, extreme temperatures disrupting, peace basically across the world. I think you’ve done some research on the links between climate change and conflict. How might these factors evolve over the coming decades?

Ilana Gottlieb:
Yeah, so I guess upfront it’s important to note that the research findings on that relationship between climate change and conflict is diverse and decently contested. But research has generally shown that climate change and climate variability influence conflict risk. 2019 Study by Katherine Marr canvased the opinions of experts and found that the best estimates are that 3 to 20% of conflict risk over the last century has been influenced by climate. But that study also found that other drivers of conflict, particularly socioeconomic drivers, the strength of governmental institutions, are significantly more influential for conflict overall. One way to understand that relationship is similar to what Shilpita and Bea were discussing in regards to climate change migration and it’s to also see climate as a threat multiplier of conflict risk as it exacerbates existing social, economic and environmental factors. Now there’s various ways in which we can see that this might evolve over the coming decades. Firstly, as we all know, climate change is expected to both increase the severity and frequency of climatic extremes, but also have long term and potentially reversible climatic shifts. So we view climate change as this threat multiplier of conflict risk. We can predict that we’ll see increased conflict risk impacts in the economy, socioeconomic inequalities, biodiversity degradation and migration. But additionally, a transition to a net zero future is going to bring about changes in the distribution of some valuable natural resources such as fossil fuels and critical energy transition minerals, for example, the cobalt and lithium that are required for electric vehicle batteries and with demand for critical minerals set to grow by estimated around three and a half times over the course, the net zero transition. This is also thought to exacerbate the risk of conflict, particularly in countries with significant reserves of these critical minerals where rights may be contested, but also in countries that have historic been rely on fossil fuel grants.

Sarah Nelson:
So there’s both sort of conflict risk coming from the actual environmental change and from the societal and economic changes associated with the low carbon transition. Exactly right. That presents challenges, to say the least.

Ilana Gottlieb:
It does. But I think there’s a hope that adaption, financing, technological developments and greater support for socioeconomic challenges could achieve some kind of decoupling of the future. Obviously, there are many risks and challenges ahead, but not were not to give up hope.

Sarah Nelson:
Yes, that’s good. I’m glad to hear that. Glad to hear that. I mean, we are economists, so I can’t not ask this question. Shilpita, did you discuss with Bea some of the costs of climate migration or for that matter, conflict, migration?

Shilpita Matthews:
Absolutely. so in the conversation with Bea, she’d mentioned a number of upfront costs that are associated with migration that can include right from government shouldering the costs of infrastructure and services that support communities to move as well as, say, the economic costs of some of the impacts that Ilana was talking about around conflict. And a lot of these costs are difficult, but still there are frameworks that exist to help quantify them. However, despite a lot of these efforts, there remain non avoidable costs, or especially when we look at the climate change debate, something that is referred to in these spaces as losses and damages or impacts which are baked into the system and cannot be minimized through adaptation efforts. Now losses and damages and particular impacts small island developing states disproportionately and have been a focus of a lot of international negotiations, most notably operationalising the Loss and Damage fund that was agreed in the 2022 Sharm el-Sheikh COP. Though a lot of these debates focus on economic losses. There’s, of course, another emerging category, which is often defined as non-economic losses. Now, non-economic losses refer to broader losses which are hard or intangible in terms of quantification. And these could relate to loss of territory, as we were previously discussing, the loss of cultural heritage or indigenous and local knowledge, as well as damages to the natural environment that can occur due to environmental impacts such as loss of biodiversity or damage to particular habitats. I brought up the example of Tuvalu earlier and that’s actually a great case and point in terms of minimizing these types of not non-economic losses and damages, and there is a project called the Future Now Project that the Government and Tuvalu has implemented and this focuses on implementing climate solutions that embody local cultural values, securing statehood and maritime borders, as well as developing what they call a digital nation. Now this digital nation includes right from, say, 3D scans of all the different 124 islands to issuing digital IDs, as well as amending the national Constitution and the definition of statehood to go beyond land and territory. And very much touches on those questions of statehood and identity, which I think is something beyond the realm of us as economists. But I’d say one of the biggest questions or challenges when it comes to talking about losses, when it comes to climate change.

Sarah Nelson:
Because it’s not really something you can kind of quantify or pay for that sense of statehood, identity, belonging that comes with being from somewhere and being from somewhere that’s beautiful and hasn’t been affected by climate change. But you can’t pay for that. Is that what you’re saying?

Shilpita Matthews:
Absolutely. One, It’s hard to quantify. Two, it’s hard to assess for policymakers their particular trade offs when it comes to thinking about places like Tuvalu and policies like relocation in terms of say, in economic terms, they talk about the opportunity cost for thinking about the next best option. But actually these are specific values or aspects that are integral to a particular community. And thirdly, and most importantly, a lot of these changes are irreversible. And as we look into the future, especially when it comes to climate change, the future is quite uncertain and that makes it harder in terms of thinking of say, and a likely scenario where some of these changes would not be implemented. And that will harder to see the cost benefit analysis as some traditional economic policies often encompass.

Sarah Nelson:
Yeah, as you say it kind of goes beyond our expertise as economists, but it is, yeah, it seems like a real challenge and something that, as you said, is being thought about and addressed at forums like COP. But certainly we haven’t got to the bottom of it by the sounds. I think it’s something that you kind of touched on, particularly in the sort of Pacific Island nations, is, is that climate change will affect different communities in different ways and in particular have quite stark impacts on Indigenous communities who are very closely tied to the land, tied to locations, which I know is something that you’ve thought a lot about. Ilana. Can you tell us a little bit more about your background and interests in the effects of climate change on Indigenous communities?

Ilana Gottlieb:
Yeah, thanks, Sarah. Before working as an economist, I actually studied and worked as a lawyer, and back in Australia I volunteered at a native title representative body, which is a body that both advocates for Indigenous groups in Australia in their claims for native title over land, but then also assists these groups and works with Indigenous groups in how to manage their land once they’ve received native title determinations. And over that experience I really gained a deep understanding of the connection between Indigenous people and land and how that dynamic is very different from the way in which other societies and other groups understand human societies relationship with nature. And I think as we’ve touched on central to the belief systems of many Indigenous groups is this belief that humans and nature are equal and interdependent. There’s not the same hierarchical view of people exploiting nature. It’s a much more deep and reciprocal connection. And that means that the traditions and belief systems of indigenous groups lead them to have deep respect for nature and a strong sense of place and belonging and land is defining of the identity for indigenous people, and this is passed on to future generations. Now, this kind of knowledge and way of life, it matches up well with more modern notions of nature conservation, sustainable use of natural resources and the first important point to note in understanding the differences in their experiences, Indigenous people, while they only account for approximately 6% of the global population, research indicates at least 36% of the global area covered by what’s considered to be key biodiversity areas is contained within the territories of indigenous peoples and local communities. So we the wellbeing of biodiversity on a global scale is much more dependent on Indigenous people in the way that they are managing land than it is on other minority groups. And what we’ve seen is that traditional management of these areas using Indigenous knowledge and practices has proved to be sustainable. So for example, a 2018 study found that total Indigenous communities cut forest carbon emissions in Brazil, Bolivia and Colombia, and as a result, ecosystems and species of indigenous managed territories are often less degraded than others. So that’s just at a base level to understand how thankful the broader community should feel to indigenous peoples conservation of land. The other side of the coin is because of this deep connection and often reliance of Indigenous groups on land for livelihood. They also are more vulnerable to changes in climate and degradation of biodiversity. They also often inhabit ecologically sensitive areas like coastlines, mountains, forests, which are areas which can be highly vulnerable to the impacts of climate change. So an example of a climate challenge faced by Indigenous community are the Kalash community in Pakistan, approximately 5000 people in the community, and they’re currently grappling with accelerated climate change. That is around 3000 glacial lakes in northern Pakistan. 33 are deemed to be at high risk of bursting, and this is amplifying the threat of glacial floods and reshaping entire landscapes. And the Kalash community is facing serious risks at the same time, multiple of them. So soil erosion, species displacement, food insecurity and this community, which has a long standing history in the region of being caretaker of the region there, now confronting an existential crisis. And there’s contemplation of needing to relocate or migrate because of these serious environmental challenges. So, yes, there’s a really positive side of why we see this different relationship between indigenous communities and nature and climate in terms of their caretaker role. But we also see this increased vulnerability as well.

Sarah Nelson:
And back to this sort of positive side in the caretaker role, presumably that depends on sort of Indigenous communities being allowed or sort of given the space to manage their land as they see fit rather than their land being placed under threat by economic pressures or other sort of factors?

Ilana Gottlieb:
100%. And that study I talked about was referring to titled Indigenous Communities. So that positive impact in that case was dependent on Indigenous communities actually receiving actionable right to that land and to manage it as they see fit. And we’ve seen Indigenous groups contest the use of land or other natural resources that impact the environment because of the impacts it has on biodiversity in the area and the broader impacts of climate change on their communities and their wellbeing. So there’s some notable cases of that that you can look into. So for example, in 2022, The United Nations human Rights Council found that Australia’s failure to adequately protect Indigenous Torres Islanders against climate change impacts has violated their rights to enjoy their culture free from arbitrary interference, as we were talking about, and their rights to enjoy their private life, their family, their home, their land and they claim their rights have been violated. Australia had failed to adapt to climate change through upgrading seawalls on the islands and reducing greenhouse gas emissions, among other necessary measures. So we’re seeing firstly the positive impacts of Indigenous people being given actual rights to land. On the other side, Indigenous people saying when you’re interfering with that land, that’s an interference with our rights and it’s causing broader degradation of natural landscapes, not just for us but for others.

Sarah Nelson:
So I mean, a lot of countries have indigenous communities, but not all do. How does the relationship between land and a lot of Indigenous communities affect how the countries that do have these communities think about climate change?

Ilana Gottlieb:
Indigenous groups are often on the forefront of attempting to hold governments and businesses to account for the impacts that they are having on climate change and the environment. So just earlier this year, I think in March we saw a landmark decision in New Zealand which found that Mike Smith and in the Indigenous Maori community was able to sue seven New Zealand based corporate entities, claiming that they are contributing to climate change. And so there is this push from these communities to people who hold power and some degree of influence over the management of natural resources or the trajectory of climate emissions and saying you are impacting us, you’re impacting the broader community and this is out of step with the relationship we should be having with nature. And we’re going to talk about how we’re going to push you to think about it. And I think it’s a really important perspective on the relationship that we have with nature and our reliance on the natural world that we all need.

Sarah Nelson:
Yeah, it’s going to be really interesting to see how that case and New Zealand plays out and I hope that it has sort of more wide, far reaching ramifications across court cases across the world. But just, you know, a final segment that I want to touch on before we have to wrap up is why businesses should care. And a lot of our listeners are kind of business owners or business leaders, and they may be personally interested in the role of indigenous communities and the effect of climate change on vulnerable people. But I think it’s also very important to part this conversation in the realm of their kind of professional spheres. So I have questions for both of you. But Shilpita, I’ll start with you beyond the obvious fact of, you know, climate migration affecting millions, if not billions of people, so why should the business sector care about this topic?

Shilpita Matthews:
That’s a great question, Sarah. And for the longest time I think businesses have approached this issue from, say, a reputational risk perspective and increasingly a lot of legislation, which is very good, requires businesses to disclose their human rights implications associated with their supply chains. Say, for example, employment of low risk of migrants. However, the conversation has significantly and I think positively progressed in that essentially, and as you mention, migration is disrupting the way businesses operate and ultimately their bottom line migration is all about people, and businesses are all about people, most notably their employees, as well as their customers.
And for business leaders, the potential size and complexity of future migration presents several opportunities, as well as challenges most directly, the location and composition of some of these workers and customers could dramatically change. And recently, actually early this year in March, Deloitte conducted a survey on Consumer Signals, where 10% of their sample predominantly North American, European and major Asian market players, responded that they had already or were planning to relocate to mitigate climate impacts. And actually the consumer responses were the highest or the highest percentage of respondents contemplating a climate related move were in countries with the lowest GDP per capita, notably countries like India, Brazil and Mexico, which are increasingly susceptible to climate impacts and migration, and most recently, the internal displacement and migration. The survey therefore then suggested numerous questions that businesses should be rightly contemplating. Say, for instance, how does climate influence migration impact the availability of skilled workers, and how does that impact the company’s geographic footprint or compensation plans or working arrangements that might need to shift. Equally, there are questions such as what the geographic distribution of a company’s customers entails given the climate vulnerabilities and what changes in production, distribution or marketing might need to occur in order to better reach their customers. In this shifting climate, see lots of things that the businesses can do. And I came across this quote, which I found very helpful, actually. See the quote. It’s from Hamdi Ulukaya, who’s the founder of Chobani, a yogurt company and also a refugee champion. And he describes businesses, responds by saying that the minute a refugee gets a job, that’s when they stop being a refugee. And actually businesses have such a pivotal role in supporting migrants and providing opportunities and this ongoing process, as the increase in, we see huge inflows and outflows of people globally.

Sarah Nelson:
So there’s both the risks to the business from the environmental change in the migration and also the transition risks as well as an opportunity for businesses to positively contribute to addressing some of the challenges.

Shilpita Matthews:
Absolutely. And I think it’s still early days and a lot that businesses can do even with frontrunners in this particular space, how businesses can see better on board or integrate migrants to say learning better about the impacts of trauma or implementing buddy systems to better build an inclusive workforce but equally a resilient workforce as sadly migration is expected to increase as we face more global disruptions, be it through climate or conflict or other threat multipliers.

Sarah Nelson:
Thank you, Shilpita. Ilana, now, the same question to you. I know that you’ve been doing some work with Oxford Economics on this, but why should businesses care and what can they kind of do about it in terms of analysis?

Ilana Gottlieb:
Yeah. In addition to all of the important reasons that Shilpita was discussing before, I think in the past few years we’ve been seeing an influx of reporting and due diligence regimes that pertain to social sustainability issues, including impacts on vulnerable communities. This we’ve seen globally, but particularly in the European Union. I think there are two notable regulatory regimes to mention. The first is the European Sustainability Reporting Standards. It’s the ESRS that provides for extensive disclosure requirements on social sustainability issues in its four dedicated social sustainability standards and in its third social sustainability standards. The ESRS S3 specifically relates to affected communities, and it requires companies to disclose material impacts on affected communities connected with not only the company’s own operations, but also through its broader value chain and its business relationships.
Now, in terms of the communities, the companies are required to consider and disclose their impacts on, that’s communities living or working around their operating sites or affected by activities at these sites. So downstream water pollution communities along the value chain. So those affected by operations, suppliers, facilities, communities at one or both endpoints of the value chains of communities and waste recycling sites. And it specifically references communities of Indigenous people. Now the standard requirements, an explanation of company’s approach to identifying and managing these impacts, both actual and potential impacts on these affected communities. This means that corporates are required to really be thinking about the approach they’re taking to what their operations are, not just directly their own operations, but within their upstream and downstream supply chain and tracking how those operations are impacting and the dependency of those operations on these affected communities. Now, before I jump to how can companies actually do this so try to understand their impact. I want to briefly mentioned the second regulatory regime, which is the Corporate Sustainability Due Diligence directive, which the European Union Council recently approved in March of this year. Now, this directive only applies to companies with 1000 employees who turn over 450 million euros. So it’s two large corporates, but it stands out from other sustainability regulatory regimes because it requires corporate trying to identify adverse human rights, environmental impacts, also to take measures to prevent or mitigate these impacts. So goes a step beyond other regimes which only pertain really to reporting and disclosure. Now, again, the CSDDD covers a broad range of human rights instruments and therefore multiple different groups are considered within it’s scope. But it specifically references Indigenous people’s right to land and resources under the UN Declaration on the Rights of Indigenous People. In addition to, a whole set of other considerations, including modern slavery, such as the prohibition of forced labour under the International Labour Organization, Forced Labour Convention. And there are two significant systems of control under the CSDDD, so there administrative supervision and fines, but also those possibilities for civil enforcement. So there’s actually civil liability. So there’s a really strong enforcement mechanism we’re seeing here, which means that companies are going to be required to map, understand their operations, their impacts on the environment and human rights in a way that they’ve never done before, which is not going to be an easy fit. It is challenging because it is a new set of work and scope of work that has not been done before. Because of this. Here at Oxford Economics, we’ve been looking into how we can take our economic models and our understanding of the interdependencies between economies in different countries and different sectors of economies to look at these impacts and importantly, not just within our clients direct operations but within their broader value chains, because that is what these regulatory instruments are requiring. So I just will briefly mention two kind of sets of modeling capabilities that we have been building out over the past number of months. The first is we’re currently building a capacity to assess the risk that a company’s supply chain is linked to agricultural production in Indigenous territories and more specifically linked to production in these territories where the World Wildlife Foundation has assessed that nature is imperiled. So we are actually going to be providing our clients with transparency into their impacts on Indigenous communities as is required by both of these regulatory instruments. Now our work is not limited only to impacts on Indigenous communities and lands. We’re also looking at other human rights issues. So we building a capacity to heatmap modern slavery risk where that includes forced labour, human trafficking and risk of child labour in order to estimate what percentage of a company’s supply chain is occurring in countries and sectors with a high risk of these issues occurring in addition to a whole other set of human rights and social variables. So excessive working time and working in the informal economy and the list goes on. We’re really hoping that this will, as I said, provide transparency and insight to companies that without these kind of models would find it very challenging to meet their regulatory requirements under these regimes.

Sarah Nelson:
And I suppose the regulatory requirements being one step and and the process of kind of reducing negative impacts and maximizing.

Ilana Gottlieb:
Impacts, we are seeing increasingly companies and corporates who really their role in society and their role as corporate citizens very seriously and want to improve their impact on society and their stakeholders, whether it’s investors or customers are calling on them and saying, this is important to us. And so this is hopefully the first step in them saying we now know where the pressure points in our supply chain and operations and that will allow us to actually take practical and tangible actions to resolve them.

Sarah Nelson:
Well, I look forward to seeing more of that in the future and perhaps we can check in in a future episode to see if we have any sort of really star performance as the ESRS and CSDDD comes into force. So with that, I think we’re going to have to wrap up. No time for a Greenomics Gamble today. So all that’s left to do is to say thank very much to Shilpita and Ilanna and for our phone and guest Bea for joining me today.

Shilpita Matthews:
Thanks Sarah.

Ilana Gottlieb:
Thanks, Sarah.

Sarah Nelson:
And thank you also to the listeners for tuning in to this episode. Next month and our final episode for this series of Greenomics, we’ll be discussing the importance of looking beyond climate change to consider wider nature related risks and impacts. To hear that episode, please subscribe on Spotify, Apple, SoundCloud or on our website and feel free to write to us at [email protected]. That’s it for today on Greenomics from Oxford Economics, where we know that money might make the world go round, but sustainability makes it a much nicer place to live. See you next time.

Our Panel
Sarah Nelson

Senior Economist, Economics & Sustainability

+44 (0)203 910 8000

Sarah Nelson

Senior Economist, Economics & Sustainability

London, United Kingdom

Sarah is a Senior Economist in the Economics & Sustainability team at Oxford Economics. She works with clients to understand their environmental impacts and dependencies, and helps them achieve their sustainability goals. She has professional and research experience in the economics of decarbonisation, energy policy and environmental and economic impact assessments.

Prior to joining Oxford Economics, Sarah worked in economic consulting in Sydney and London, where she worked on energy regulation, anti-trust, carbon forecasting and social welfare assessments. She holds Bachelor’ degree in economics and physics from the University of Auckland, and a Masters in Economics from the University of California, Santa Barbara, where she was a Fulbright Scholar. Sarah completed a PhD in climate economics and policy from the University of Cambridge in 2021.

Shilpita Mathews

Senior Economist, Economics & Sustainability

07443323669

Shilpita Mathews

Senior Economist, Economics & Sustainability

London, United Kingdom

Shilpita joined Oxford Economics’ Economics & Sustainability team, bringing valuable experience from roles at Deloitte, Vivid Economics and McKinsey & Company, with a focus on sustainable finance and climate and nature risk assessment. Her work has spanned public and private sector clients, with a focus on financial institutions.

Shilpita holds a First-Class BA (Hons) in Land Economy from the University of Cambridge and a MSc in Environmental Economics & Climate Change (Hons) from the London School of Economics and Political Science.

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Previous episodes

Greenomics – Ep. 10 | Out of the frying pan? Climate impacts and adaptation opportunities

How does extreme heat affect human health and the economy, and what is being done about it? Shilpita Mathews, Senior Economist at Oxford Economics, joins our host Sarah Nelson to discuss adaptation. Shilpita speaks to guests Jane Gilbert, Chief Heat Officer of Miami-Dade County and Emilie Mazzacurati the Co-founder and Managing Partner of Tailwind about the risks that extreme heat poses for our economy and the landscape of solutions available to help cities, communities and individuals adapt to a changing climate.

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Greenomics – Ep. 9 | The nature of Travel & Tourism

A discussion of the crucial role of climate-ready buildings in the global push towards a net-zero future. They delve into sustainable construction practices, the importance of regulations, retrofitting existing buildings, and behavioural changes to create environmentally friendly homes. The conversation also touches on the economic challenges and choices associated with transitioning to sustainable living.

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Greenomics – Ep. 8 | Hydrogen hype: a low-carbon climate solution?

A discussion of the crucial role of climate-ready buildings in the global push towards a net-zero future. They delve into sustainable construction practices, the importance of regulations, retrofitting existing buildings, and behavioural changes to create environmentally friendly homes. The conversation also touches on the economic challenges and choices associated with transitioning to sustainable living.

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Sustainability Trends to Watch for in 2024 | Greenomics – Ep. 7

Join Sarah Nelson for an insightful exploration of the sustainability landscape in 2024. In this episode, she engages with leading experts in politics, technology, and sustainable business to unravel the key trends poised to shape our journey towards a greener future.

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