Sergey Rybakov is Program Director of Ecumene, a global financial forum and discussion club, and CEO of the environmental “Nature and People” Foundation, having formerly served as an Advisor to the CEO of MDM Bank in Moscow.

There is a notable trend that has persisted over the last two decades: environmental factors in contemporary geopolitics have played, and will continue to play, a pivotal role in global markets due to the presence of environmentally conscious end-users and voters.

 Is the sun setting on the traditional energy sector?

The second half of this year will see several significant environmental events, including the 16th session of the Conference of the Parties to the Convention on Biological Diversity (Cali, Colombia), the 29th session of the Conference of the Parties to the UN Framework Convention on Climate Change (UNFCCC) (Baku, Azerbaijan), and the 16th session of the Conference of the Parties to the UN Convention to Combat Desertification in Those Countries Experiencing Serious Drought and/or Desertification, Particularly in Africa (Riyadh, Saudi Arabia). The Future Summit (New York, United States) will also be of significance.

It is these events that will determine the focus of global development beyond 2030.

The environmental issues that will be addressed are those that will affect future generations and thus require a considered and systematic approach. It is of the utmost importance that solutions are not pursued hastily for the sake of short-term political gain. Rather, a balanced assessment of the threats and opportunities must be conducted, enabling the adoption of a balanced long-term strategy for sustainable development. With appropriate planning, this approach could be considerably more effective and would result in the desired outcome for humanity more rapidly than many current statements, which are often driven by short-term political considerations.

The current geopolitical turbulence creates delays and pauses, which should not be feared. It is important to use them appropriately, as they can represent the optimal moments to assess one’s own forces and resources, determine further actions, set the right priorities, and move forward with a triple energy.

The end of the twentieth century was marked by two distinct, yet interrelated, developments. On the one hand, there was a notable acceleration in globalization, technological advancement, and digital evolution, accompanied by a proliferation of trade networks. On the other hand, there was a discernible shift in focus towards sustainable development, social responsibility, and environmental stewardship.

During this period, it became evident that socio-economic development should be pursued in a harmonious manner, with due consideration given to the natural resource potential of both the present and future generations. As a result, we now have a number of international environmental agreements, including the aforementioned UNFCCC, the Paris Agreement, the Convention on Biological Diversity, the Convention to Combat Desertification, and the Convention on Plastic Pollution, which is currently being drafted for adoption. Additionally, the Sustainable Development Goals until 2030 have been defined, and the next set of goals for the period until 2050 are being formulated.

It is evident that the generation now entering the workforce has been brought up with an emphasis on respecting the environment and the principles of sustainable development. It would be reasonable to suggest that these attitudes have been internalized from an early age and have become an integral part of humanity. A significant portion of the sustainable development paradigm is already being implemented through the policies and economies of nations. The contemporary perception is that green practices are beneficial and should be encouraged through investment. However, there is a caveat to this positive outlook. Greenwashing and greenhashing represent the other side of the coin. What measures might be taken with respect to the brown economy and the individuals engaged in it? What about double standards in pursuit of an expedient transition to a green economy? Does the transition to a green economy serve the common good, or is it merely one of the camouflage tools for economic dominance? Can geopolitics be separated from geo-economics? What strategies should businesses adopt in order to ensure their long-term viability and success? What will be the nature of global development? Will it occur within a clearly delineated framework, or will it unfold in a different environment? Moreover, it is pertinent to inquire whether there will be any development in principle, given the current disintegration phenomena. It would seem that economics, politics, sustainable development, and new generations have nothing to do with it.

The point is that, at first glance, the reference points are well-defined and clear, but in practice, good intentions may diverge significantly from reality.

The elites are the bearers of meaning, responsible for establishing the agenda and direction of development. However, if the social attitudes that have shaped people are fundamentally different from what is currently taking place in reality, there is a crisis of confidence in the elites, and a need to reconsider this reality, to view it from an external perspective.

Therefore, it seems reasonable to identify fundamental solutions, to ascertain points of contact between the economy, politics, social sphere, and nature.

 

Energy

The global economic system is undergoing changes. The energy sector will be among the first to feel the effects of this transformation, given its status as a primary driver of global economic activity. It is therefore pertinent to consider what this sector will be like, and which energy sources can facilitate the global goal of carbon neutrality. The question thus arises as to whether there will be a division into ‘clean,’ ‘dirty,’ and ‘transitional’ energy sources and how humanity will live with the ever-growing need for energy and fuel, without which the very existence of mankind is unrealistic.

We live in a material world, and energy serves as the foundation for development. It is challenging to envision a future in which high technology, and indeed any form of production or the comforts of our daily lives, can be sustained without the availability of affordable energy. At the same time, the energy sector makes a significant contribution to the total anthropogenic emissions of greenhouse gases. Consequently, one of the principal objectives in the battle against climate change is to alter the energy balance in favor of energy systems with minimal greenhouse gas emissions, for example, by increasing the share of renewable energy sources, eliminating coal, and reducing the share of hydrocarbon fuels. These approaches are reflected in the two most recent significant decisions of the UN climate summits: the Glasgow Climate Pact (1/CP/26) in 2020, and the Results of the First Global Stocktaking of the Paris Agreement (1/CMA.5) in 2023.

In particular, the climate conference held in 2023 reached a consensus on several key points. On the one hand, it was agreed to triple renewable energy capacity globally by 2030, to develop zero and low-emission technologies, including nuclear power and low-carbon hydrogen production, and to acknowledge the role of transition fuels. On the other hand, there was a commitment to phase out coal-fired power plants without carbon capture and storage technologies, as well as to eliminate inefficient fossil fuel subsidies. In this regard, the removal of such subsidies is to be considered in conjunction with the issue of energy poverty and the question of a just transition. This is a crucial point, as the current trajectory towards sustainable development encompasses 17 equally important sustainable development goals. Alongside the imperative of combating climate change, these include the promotion of decent work and economic growth, the provision of affordable and clean energy, the reduction of inequality, the preservation of ecosystems, the advancement of responsible consumption and production, and other objectives.

In light of population growth, the achievement of these goals on a relatively even basis will require the utilization of integrated synergistic solutions. In the pursuit of transforming the energy sector in the shortest possible time, costs are shifted to the end user, industry, and agriculture. Furthermore, these costs also have an impact on international trade. The primary instrument for achieving energy transition is the redistribution of financial flows, including subsidies for renewable energy, the imposition of CO2 taxes or quotas, and the establishment of investment guidelines for institutional investors. At the same time, the so-called ‘brown’ economy with its ‘dirty’ resources provides stable energy production, creates employment opportunities, and develops local infrastructure. Even diversification, a strategy of step-by-step transformation of companies in the dirty energy sector, is frequently presented by certain stakeholders in a negative way as ‘greenwashing.’

Are there clear, transparent, credible, internationally recognized greenwashing requirements that would eliminate the risk of ungrounded accusations of greenwashing? If this were the case, there would be no such thing as greenwashing in principle. In practice, instead of the possibility of reforms and transformations, companies from, figuratively speaking, ‘dirty’ energy become hostages of the current green policy and find themselves in a situation of zugzwang, where any action taken by these companies is likely to exacerbate their current position. It is, of course, possible to ignore this on the grounds that any transformation always requires sacrifice. But wouldn’t that constitute cowardice or temporary political opportunism?

In the context of renewable energy, it is pertinent to highlight the following points. It is insufficient to rely solely on renewable resources, such as solar, wind, water, and geothermal, to facilitate the transition to renewable energy. The construction of generating stations will require the input of a number of materials, including aluminum, copper, zinc, neodymium, lithium, and cobalt. It seems inevitable that the energy transition will occur, although it will not be forced and will only become apparent once the critical mass is reached. It is therefore important to ensure that this stage is passed smoothly. In order to achieve this, it is essential to develop new technologies for the extraction, processing, recycling, and creation of new materials and substances. Technological innovation is a major factor in ensuring successful long-term development.

 

Technology
Energy represents a pivotal resource for the advancement and development of emerging information technologies. Technological innovations are having a profound impact on our world. The most significant disruptive force has been the advent of artificial intelligence, machine learning, blockchain technology, robotics, cloud computing, and biotechnology.

It is imperative that special attention be paid to their development and adoption. With the help of these technological solutions, work specialties are changing, people are changing and developing, new complementary professions are emerging, and opportunities for work and professional growth are increasing.

The era of artificial intelligence will require further education not only in a certain professional field, but also in the field of computer science, knowledge of the possibilities and experience of applying new IT technologies. This may prove to be a significant challenge for the new generation of young, talented individuals, who have the potential to become the most educated, skilled, and productive workforce in the world.

Organizations with collective social intelligence are being created, where humans and machines work together as partners to address global problems that humanity has never encountered before.

The potential of developing new innovative technologies must be harnessed to enable people to work with more technologically advanced solutions and use their potential in order to create smarter organizations.

It is essential to identify and optimize the areas in which humans and computers are most effective, continuously enhancing this interaction, and to view human-computer interaction as an ever-evolving system that learns from experience, constantly improving over time. The new technological era opens up new possibilities: machines can increase human productivity when a task is done collaboratively.

The application of artificial intelligence facilitates the aggregation of information, thereby expediting the process of internal decisionmaking. Furthermore, it enables the analysis and critical evaluation of results, which in turn enhances the accuracy of the outcomes. It helps to align processes, use additional tools, maintain a broader vision, optimize data and documents, avoid errors, and create higher levels of automation. It encourages individuals to invest time, effort, and resources in order to maximize benefits for their organization and stakeholders by addressing global threats.

There is a need to integrate artificial intelligence with human intelligence to develop a long-term, value-driven, and focused strategy.

The ethical use of AI technologies must become a universal top priority that unites the world. The economy of the future will not be based on people, factories and plants, but on algorithms and artificial intelligence. Artificial intelligence is not magic; rather, it is mathematical laws, and thus our new reality.

Artificial intelligence, machine learning, NLP, blockchain technologies, cloud computing, and robotics form part of the solution to help humanity achieve the Sustainable Development Goals. There needs to be more reliance on artificial intelligence, as it can be very useful in responding to specific situations and unforeseen circumstances.

It is imperative to promote an ethical approach to the utilization of new technologies, to exercise caution regarding privacy and ownership, and to demonstrate the utmost responsibility with respect to information security.

The accelerated pace of development in information technology, robotics, biotechnology and other technological innovations is contributing to an increase in the pace of life and improvements in its quality and duration. The speed and transparency of financial transactions, the advent of decentralized finance, the emergence of online loan tools and the proliferation of mobile banking are all examples of fintech applications that facilitate daily convenience in financial transactions. The integration of information technology in the energy sector has facilitated the development of smart grids, while data analytics and artificial intelligence have enabled the forecasting of demand, the optimization of production processes and the prevention of accidents. Biotechnology has been instrumental in advancing healthcare and food security. In the past, creating a uterine replicator or producing synthetic meat/protein was unimaginable. However, synthetic products can significantly reduce food production costs and greenhouse gas emissions compared to conventional agriculture.

At the same time, such technological development will require even more energy resources, which, in light of the expanding population, may further increase the negative impact on nature and lead to increased exploitation of natural resources. And in social terms, robotization and automation of most technological works will result in the displacement of a considerable number of labor resources, raising the issue of employment and a decent standard of living. In addition, the widespread introduction of new bioengineering technologies without adequate testing may pose risks of negative impact on the population. This is the other side of the coin of technological progress, and these problems will affect all of us. It will be extremely challenging, if not impossible, to address these potential issues at the national level, given the existing disparity in socio-economic development between developed and developing countries, without proper international collaboration and interaction with global business structures.

Of course, there is a classical solution to the issue. As the Russian writer Fyodor Dostoevsky observed, money equalizes all inequalities. The appropriate management of financial flows can significantly mitigate, prevent, and eliminate potential imbalances and disparities in development.

 

Finance

Sustainable finance, ESG ratings, and the fight against greenwashing represent new global trends in the financial sector. However, before discussing the structure of the building, it is essential to ensure a solid foundation. The global financial system is changing, and there is still no consensus on its future trajectory.

The international system for organizing monetary relations and trade settlements, established by the 1944 Bretton Woods Conference, is undergoing major transformation. The question of whether this new financial system will be based on digital currencies, on real assets such as land, biological and water resources, or on additional, new instruments such as carbon credits, will require a response from humanity in the near future.

From an external perspective, this may initially appear to be a game of imagination. Nevertheless, I suggest that a number of options should be modeled. In the early stages of monetary history, money was expressed in its natural form as stones, shells and, later, precious metals. Later, paper money appeared, and now we are witnessing the transition to the digital format. Throughout the existence of money in any form, the key principle was that the state consistently exercised control over this sphere.

Currently, thanks to information technology, various decentralized financial instruments have emerged, including cryptocurrency and digital currencies, among others. Since this is a new area, approaches to regulation and control by the state over the turnover of such assets and their use in international settlements are still in the process of realization and development.

In my opinion, the state will not allow the unregulated and/or uncontrolled use of decentralized finance to a significant extent, and the extent of such regulation is yet to be fully determined. What are the attractions of new digital money? These include the high speed of transactions, lower commission costs, and the anonymity of settlements. However, questions remain regarding the definition of value, the relationship to the exchange rate, and the feasibility of withdrawal into fiat money. Nevertheless, the advent of novel forms of money presents a plethora of prospective opportunities, including the realization of the Sustainable Development Goals.

For example, a number of tokens based on carbon credits from carbon offset projects are already in civil commerce. In addition, a market for biodiversity credits can be formed by analogy with the voluntary market for carbon credits, thereby enabling the creation of tokens based on these credits. Why not? For those individuals or companies wishing to make a personal contribution to the promotion of a green agenda and sustainable development, the ability to make payments in the form of such financial instruments would be a welcome addition. It is evident that environmental protection is a task that cannot be accomplished by a single entity. The utilization of optimal and accessible mechanisms, including financial and technological ones, would undoubtedly be beneficial.

The new global development goals being drafted by the UN for the period after 2030 must be based on a clear understanding of the inviolability of the global financial system and the establishment of clear, understandable and transparent rules of the game. Without such understanding, it is impossible to discuss the financing of these goals or to determine the form it will take. It is unclear how states will be able to fulfil their obligations, what and how the world financial organizations will control and use, what people should strive for, and in what form they should accumulate and keep their savings, preparing a better world for future generations.

Moreover, it is important to note that money serves as a measure of value, and historically money used to be correlated to some degree with gold and then with oil. However, with population growth and the depletion of resources, there is a possibility that money may be linked to other strategic natural resources.

One of the most apparent indications of the need for a clear understanding of the future of global finance is the financing of reducing human impacts, otherwise known as climate finance. After all, given the losses from the negative consequences of climate change, financing for preventive measures helps reduce the associated costs without the necessity for expenditure.

 

Climate Finance and Accountability

The Conference of the Parties (COP) on the climate agenda is becoming a new format for the global economic forum. The conference brings together a considerable number of participants—up to 100,000 people—from heads of state and leaders of major transboundary organizations to prominent scientific and public figures, as well as a large number of young people. The agenda addresses the financing of not only climate change mitigation but adaptation as well, including allocation of financial resources by developed countries to developing countries, etc. All this should be based on the rules of the new global financial system that have already been established; otherwise, it will be a futile exercise in terms of time and resources.

The forthcoming UN climate conference in Baku will primarily address financial matters. The key issue is the formulation of a novel collective climate finance objective. It is important to recall that the previously established target of $100 billion per year has never been fully achieved. In general, climate finance is oriented towards mitigation and adaptation. At the 2022 conference in Egypt, it was observed that the transition to a low-carbon economy will necessitate a transformation of the financial system, its structures, and its processes, which will involve governments, central banks, commercial banks, institutional investors, and other financial sector participants. And the Dubai 2023 conference was somewhat more specific in its recommendations, in addition to emphasizing the importance of reforming the multilateral financial architecture, including the multilateral development banks. Firstly, it highlighted the desirability of improving the assessment and management of climate-related financial risks. Secondly, it called for the acceleration of the ongoing development of innovative new sources of finance, including taxation for climate action, which would allow for the reduction of harmful incentives. It would be prudent to maintain a close and balanced observation of the development of financial innovation, as previously mentioned.

It is also essential to provide a clear definition of the term ‘climate finance.’ The term is currently defined in multiple ways by both governmental and non-governmental entities. In light of the fact that this discussion pertains to financial matters, it is important to emphasize that precision and accuracy are the guiding principles within this field. This naturally gives rise to the question of the appropriate unit of measurement for the quantity in question. How to measure real climate finance while ensuring that all parties are speaking the same language? It may therefore be necessary to achieve global harmonization of approaches to climate finance.

The introduction of mandatory financial reporting by organizations will be a pivotal factor in addressing this issue. The role of audited and certified sustainability reporting (currently non-financial), various ratings and rankings play a significant and growing role in minimizing the environmental and social risks of leading financial and business organizations, both national and international. The use of non-financial reporting, ratings, and rankings to mitigate the risks of financial institutions is not characterized by fragmentation, and it is very likely that these approaches will remain unchanged even if the role of national currencies in global trade increases or a new global reserve currency emerges.

It seems likely that reporting on climate and biodiversity will soon become part of standard accounting practice, with these issues being treated as specific line items in the budgets of states and organizations. Uniform, common reporting rules must be developed in order to minimize costs and facilitate dialogue.

 

Biodiversity

Biodiversity is a fundamental component of planetary vitality, providing invaluable ecological, economic, and social resources. In order to achieve the global goals for the conservation and sustainable use of biodiversity, it is essential to realize a number of key objectives.

The United Nations Convention on Biological Diversity (1992) establishes strategic principles and mechanisms for cooperation among states in this area, encompassing the conservation and sustainable utilization of biodiversity elements, and the fair and equitable access to benefits arising from the use of genetic resources. The implementation of the provisions set forth in the Convention at all levels is a crucial step in the construction of our collective future. The Kunming-Montreal Global Biodiversity Framework, adopted in 2022, identifies key actions to ensure the wellbeing and survival of humankind in harmony with nature until 2050. It also sets out the future development of our world over the next 26 years.

The objective of protecting and restoring at least 30 percent of the land and sea within well-managed protected areas becomes an objective that contributes to the conservation of biodiversity, as well as the traditions of indigenous peoples and local communities.

The implementation of integrated strategies for the sustainable management of land and marine resources, forests, lands, and fisheries, coupled with the prevention of soil degradation and the restoration of degraded ecosystems and populations of vulnerable species, is of paramount importance for the conservation of global ecosystems and the maintenance of biodiversity on Earth.

Another significant challenge is to encourage businesses to reduce their negative impact on biodiversity and to promote sustainable production and consumption patterns. In this respect, the private sector has an important role to play, and its actions must be geared towards mitigating the environmental impacts of commercial activities.

Furthermore, increased financial resources for the conservation and sustainable utilization of biodiversity are vital to ensure the effective realization of all stated objectives. It is necessary to devote special attention to financial instruments in this area, including government subsidies and grants, foundations and trust funds (which can facilitate the creation of specialized financial mechanisms), the allocation of environmental subsidies, environmental taxes and fines, and efforts to attract private investment in biodiversity conservation projects.

The effective utilization of a diverse range of financial instruments, in conjunction with transparent management and expenditure control, will guarantee the long-term financing of biodiversity conservation, large-scale conservation initiatives and innovative approaches.

There is a question of whether the biodiversity agenda can attain the same level of prominence as the climate agenda, how they will interact with each other, and what their implications for desertification will be. At what point will non-financial reporting on biodiversity by organizations become a mandatory requirement for businesses? It remains to be seen whether the Kunming-Montreal Global Biodiversity Framework will serve as the foundation for revising all the UN Sustainable Development Goals beyond 2030.

Of equal importance will be the demonstration of increased transparency of data, access to scientific knowledge and technology on biodiversity, equitable sharing of benefits from the use of genetic resources, and the development of environmental education and awareness-raising. This will create favorable conditions for the effective management and sharing of natural wealth and show the way forward for other environmental conventions.

 

Human Resources

It is of particular importance to devote attention to the training and retraining of specialists. One of the primary concerns of the forthcoming decade is the issue of human resources and their development. On the one hand, there is a growing demand from young people for environmental protection and sustainability. On the other hand, there has been an exponential increase in technological innovation. Finally, there is a limited number of individuals who are able to prepare the necessary specialists for the economy, equipping them with the requisite knowledge and expertise.

It is also important to consider the mutual influence of geopolitics and geo-economics at the political level, in addition to the training of personnel and the development of future leaders. The situation of a lost generation, brought up in certain socio-cultural views and without access to decisionmaking in economic and political activities, carries the risk of fostering distrust in elites and authorities, and of contributing to societal destabilization. It is up to these younger generations to determine the future of our world, and facilitate a return to dialogue at the global level.

 

Trends

Apart from the major geopolitical players—such as the United States, the United Kingdom, the European Union, Canada, and Japan—new centers of power have emerged in the world: China, India, Russia, Africa, Brazil, Saudi Arabia, and Iran.

In addition to established alliances such as AUKUS, new alliances are flourishing, united by mutual interests. Examples of such cooperation include the Shanghai Cooperation Organization, the BRICS alliance, and cooperation between the countries of Central Asia and the Caspian region. New areas of economic and political influence are being formed, accompanied by the creation of new ideologies designed to disseminate these influences.

It is imperative to devote particular attention to this aspect of geopolitics and economics, as it is within such alliances that trends may emerge that will significantly influence the long-term economic and political aspects of our world’s sustainable development.

It is crucial to consider the reputational implications for individuals, institutions, and states in international relations. It is important to return mutual respect to international relations. The key link in the life of society and the future of global sustainable development should be the restoration of trust.

The world economy and the global financial system are contingent upon trust, the existence of a set of common, transparent, and agreed-upon rules of the game. It is this aspect that should become the primary focus of international relations in the near future.

The next 10 to 15 years will be a period of significant political and economic transformation, during which new models of governance and economic organization will emerge. Perhaps the only factor on which all parties concur is the issue of climate change and how critical it remains to respect nature. This is where collective efforts are required. In the context of international relations, it is crucial that the fundamental ecological principles are identified and agreed upon by all parties, as these will surely form the basis of the new global order. These principles will serve as the foundation for the creation of a new, sustainable future for our planet.

This is the means by which dialogue can be reinstituted in international relations, and cooperation continued, without which it is impossible to achieve the stated goals at the UN level for the next 25 to 50 years.

 

The Future

By 2030, countries will be required to update the Sustainable Development Goals for 2050. This necessitates an examination of the current Sustainable Development Goals and a comprehensive projection of the global future, with due consideration of the evolving landscape of innovative technologies, the emerging disparities between different economic regions of the world, population growth, and the persistently mounting anthropogenic impact on the environment.

It is crucial to establish a well-functioning discourse between the governmental, business, and scientific communities to enhance the efficacy of sustainable development initiatives. It is imperative that the international financial system works seamlessly. Attracting financing for sustainable development from the private sector and business entities should be straightforward, readily available, advantageous, and free from political constraints. In addition, it is important to make the best use of the potential of financial technologies to improve and develop legislative frameworks and innovative financial instruments.

The world of 2050 will be the result of our current collective and sustained efforts. The burden of modern leaders is to look honestly into the future, reduce the risks of potential threats, seek compromises, reinstate trust and dialogue in the international agenda, work in unison to solve existential problems facing all of humanity, and restore our faith in a bright future for our only planet.

 

 

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