Where are we on the SDGs?

Recently, I attended the opening of a European conference with civil society on how best to contribute to more progress towards the Global Goals for Sustainability, the SDGs. The starting point was discouraging, but I was greatly encouraged by the commitment and hope of my fellow debater, a young woman from Slovenia who is one of the UN’s powerful youth ambassadors.

We agreed that without a strong civil society, nothing will succeed. If indeed, we hope to slow down global warming and avert the resulting many new and even greater disasters, we must rely on civil society to constantly highlight the urgency.

Some believe that setbacks make the SDGs irrelevant, and others want to talk only about climate. But regardless of the fact that we are  – much too – far from realizing the 2030 goals, they constitute a revolutionary new narrative that must be kept alive – moreover, a narrative that only became so powerful because global civil society participated more than ever before in the process of formulating them at the UN.

The global goals are a head-on confrontation with the neo liberal misconception that resources are unlimited, that the old growth model can just continue forever and that distribution doesn’t matter, because when the rich get richer, it will inevitably trickle down to the poor.

The SDGs state that the world’s resources are limited and that growth as we know it cannot continue. We must move away from fossil fuels, the economy must become circular, forests must be preserved and expanded, and nature must be protected much better in order to save vital biodiversity.

Right now the SDGs of poverty and inequality are headed in the wrong direction

Poverty can only be eradicated while at the same time purposefully fighting the extreme and growing inequality in the world.

All the SDGs are each other’s prerequisite. Progress in one means progress on all of them. But obviously, stronger climate action is a necessary prerequisite for popular understanding and financial resources to generate future progress on the other SDGs.

If climate change continues, as it has so far, it will trigger devastation, mass migration and conflicts on a scale beyond all else. Ultimately, it is about whether we have a globe to save.

Political agency remains weak if voters do not understand the urgency and self-interest. Civil society remains the politicians’ inevitable partner in disseminating knowledge and understanding that sustainable societies constitute an inevitable revolution that comes at a cost and is incredibly urgent.

But if we continue as before, the cost will be much higher for our children and grandchildren. Therefore, we must mobilize an unprecedented will to change, in record time, our patterns of consumption and production.

And are we to maintain social stability as we must, it is adamant that we – far more purposefully than ever before – exempt economically weak groups from footing the bill. They have not contributed anyway nearly as much to the problem as the wealthy.

A year of encouragement

2015 was an encouraging year due to the fact that no UN member state actively argued against the adoption of the SDGs, and that in Paris, we were able to enter into the most far-reaching and binding climate agreement to date. Europe was at the forefront with high ambitions, and the negotiating process was headed expertly by the French presidency.

Even more crucial, however, was that the world’s two biggest emitters of greenhouse gases, China and the US, actually cooperated beautifully in Paris to convince and nudge all doubters and naysayers into agreement. It created hope.

Six months later, Europe’s attention was diverted by the Brexit vote and the year-long negotiations on Britain’s exit from the EU.

One year on, the United States disastrously elected Donald Trump, a ferocious climate denier, for president. He withdrew the US from the Paris Climate Agreement while initiating a systematically escalated confrontation with China (as well as made the Middle East more insecure by terminating the Iran nuclear deal).

The Covid pandemic meant an even more selfish and introverted West. Promises to help the poor global south to adapt to climate change were not kept, and vaccines were not delivered on the necessary massive scale.

On top of that came Russia’s horrific war of aggression against Ukraine, which not only destroys people’s lives in one of Europe’s most populous countries, it also carries the risk of escalating into nuclear war.

The war affects the global economy with inflation that has knocked many hundreds of millions into more extreme poverty and hunger. The prices of food, fertiliser and energy have risen the most by far.

Ultimately, it is about whether we have a globe to save 

Moreover, the alarming increase in global inequality has continued at an even faster pace during the crises. The huge corporations in IT, e-commerce, energy, food and armaments pocket most of the growth in the global economy, and ownership of these giants is mostly concentrated in the hands of a few multi-dollar billionaires.

In short: Right now it is clearly going the wrong way in relation to the SDGs of poverty and inequality.

We have not progressed nearly enough with the climate goal either, but Russia’s war of aggression and the resulting energy crisis might just accelerate the pace of sustainability. Because climate’s urgent needs has now become urgent security policy as well.

We must create renewable and CO2-free energy supply at record speed. This will – permanently and violently – erode the profits of Putin and the despots in the Gulf states, who sit on the largest reserves of fossil fuels.

Again, Europe was the fastest react – first with ‘Fit for 55’ a few years ago, which sets the course to a 55 percent reduction in greenhouse gas emissions in the EU in 2030, and further with bold plans from the Commission to transition away from Russian oil and gas after the invasion of Ukraine.

But Biden’s so-called ‘Inflation Reduction Act’ will accelerate America’s energy transition (and constitutes major competitive challenges for Europe).

Crucially, the international business community is seizing the opportunities, in the realisation that long-term earnings require sustainable solutions.

In a conversation I attended last autumn, Al Gore stated that history shows that political responses to crises often drag on, but that once the political decisions are made, the technological responses, on the other hand, are developed at surprising pace.

This is where hope is kindled for serious climate action.

During the past two and a half years, as chairman of Energinet, Denmark, I have experienced a virtual explosion in demand for green power, because the direct electrification via electric cars and heat pumps etc. is now being accompanied by large and hugely energy-demanding projects, which must transform cheap green electricity into hydrogen as a raw material in green fuels for heavy vehicles, ships and aircraft.

Therefore, the development of energy islands and giant offshore wind turbines must be carried out as quickly as possible. Furthermore, CO2-free biogas has become good business, and project ideas for storing CO2 in caves underground and below sea level are teeming.

This is a translation from Danish. My original op-ed was published at Altinget on the 1st of January, 2023.

You can find more articles by me in English here

Post Corona: Countries Must Invest Heavily in the Future

By Mogens Lykketoft, fm MP, Finance Minister, Foreign Minister and President of the UN General Assembly

Forget all about household logics. Countries needs to incur debt now, lots of debt …

Governments must incur debt to invest in climate, health, jobs and welfare. Anything else would be deeply irresponsible. We must secure the economy after the corona crisis, and we must not let the climate down.

The Corona pandemic is a shock treatment.

Fortunately, in Denmark our government is at the forefront taking action to save both lives and jobs. Other countries are joining. We will manage this crisis. It will be hugely painful and expensive. But doing nothing would be even more costly. 

By no means is it too early to think about how we move forward when the pandemic and panic have subsided.

Already, voices claim that “one cannot spend the same money twice” – i.e. we must hold back our efforts to save the climate and our welfare, as the Treasury has already invested heavily to mitigate the corona crisis.

Before the current crisis, too, we heard similar arguments from conservative circles: Investing more in climate action must necessarily mean cutting down on welfare.

These are dangerous thoughts. If they prevail, the latest shock to the world economy could lock us in the deepest crisis of a hundred years. It risks undermining our democracy and preventing us from doing what we agreed just a short while ago was absolutely necessary for the climate.

We Must Save Health, Jobs and Climate

As far as I am concerned, not incurring larger government debt to save our health, jobs and climate, would be nothing short of irresponsible. It would be disastrous.

Viewing a country’s finances as one does a private household economy makes no sense. Nevertheless, for the last 10 years this kind of matter-of-fact ‘sensibility’ has been key to the EU’s member states’ mistaken austerity response in the face of the financial crisis.

The bill for the irresponsible financial speculation, which closed millions of jobs in the wake of the 2008 financial crisis, was paid by massive cuts in benefits for the poor and needy. And this while cutting taxes for the who are most well off.  

Inequality increased, and employment less so. Thus, many people lost confidence in the co-called responsible politicians. 

In his latest massive work ‘Capital and Ideology’, French economist Thomas Piketty provides a compelling analysis to prove that cost savings in welfare spending and an increasingly unfair distribution of wealth have paved the way for nationalists and populists, excelling in xenophobia as well.

This is a rebellion against the traditional political elites, which many people feel have let them down. In particular, it has been costly for Social Democratic parties to lend their name and support to a common policy in the EU, which has pressured wage-earners, eroded welfare schemes and tax systems, and thus contributed to significantly increased inequality.

The wealthiest companies and individuals have hoarded a hugely disproportionate share of the growth in prosperity. Worst in the US, but in Europe too.

Austerity Measures are Outdated

Right now, austerity measures are put on hold. All countries are accepting massive extraordinary government expenses to avoid huge losses of jobs and companies while combatting the Corona pandemic.

But EU countries still have tight budget laws that soon after this crisis will require spending cuts to cover public sector deficits, while still facing problems of unemployment.

According to prominent Danish economists, this makes no sense at all. On the contrary, it is more important for a country to be in control of its balance of payments than it is for a government to avoid increasing debt.

Denmark should join ongoing efforts to ditch the EU’s stringent budgetary requirements. In its entirety, Europe will be in dire need of an expansionary fiscal policy. Otherwise, not only will employment be undermined, we will also be unable to meet our long-term social and climate responsibility. Without help from the fiscal policies, central banks will not be able to put the economy back on track.

During my eight years as Finance Minister in Denmark in the 1990s, we did not need budgetary laws in order to conduct responsible economic policy. Improvement in employment and public finances was much better than was average in Europe – with 12 percent unemployment in the outset, and reducing it to 4 percent.

Back then, we Social Democrats and our coalition partners, had a common definition of accountability: Bringing down deficits was not put ahead of combatting unemployment and inequality. On the contrary. We gave priority to welfare growth and successfully targeted a policy that brought many more people to work and eventually eliminated the state deficit without socially painful cuts: 

Deficits arise when many are unemployed and need community assistance rather than being tax payers. Deficits disappear when businesses and citizens get in the mood to invest and consume; then many more people get employment, and rather than having to rely on social benefits they contribute to increased tax payment.

States Need Deficits

More than ever, it is common sense that states have deficits. This gives them the freedom of action to invest in climate, health and social welfare: currently, loans can be obtained in the private sector at an interest rate of zero percent or less. 

Even before the corona crisis, private savings were more than ample for states to borrow. Also, we have to expect that private savings will further increase now, as the crisis has sparked new fears for the future, more unemployment and even more fear of future unemployment. At the same time stock market and property market developments cause severe cuts in the value of people’s pension savings. People will hold back spending even more in order to rectify that. Furthermore, companies need time to regain sufficient investment momentum.

If both the private and the public sectors increase savings simultaneously, we will incur lasting losses in revenue and employment. This is why governments must spend more when private individuals and businesses spend less.

Fortunately, this logic matches perfectly the urgency of investing very massively in climate stabilisation. We only have a short time left to actually curb global warming. If we hesitate too long, the task – at best – becomes both more difficult and more expensive.

In the 1930s British economist Maynard Keynes articulated the necessity for the state to accelerate spending until purchase power and optimism are restored in the private sector. This was the prescription used by President Franklin D. Roosevelt to bring the US out of its deepest depression.

Keynes’ prescription is by no means outdated, even if the younger generation of economists have been trained to believe in the brilliance of private market forces, and to doubt the ability of states to bring momentum and order to the economy.

History has proven, time and again that states must pull the economy back out of whatever catastrophe unleashed by waves of speculation and/or natural disasters.

This will necessarily be the case this time around as well. But once the private sector is back in shape and able to deliver high employment and sustainable growth, the burden of reducing government debt will not be that heavy.

In Denmark, this is particularly easy because – compared to other EU countries – the Danish state has a disproportionately large pool of deferred tax revenue tied up in huge pension funds that are to be released in coming decades. Over the past thirty years, the building up of our labour market pensions makes it perfectly justifiable to run larger government deficits in the current decade.

Current Health Crisis Must not Lead to Less Climate Action                                                     

Over the past year, we have seen a highly positive leap in the general awareness of the urgency in contributing immediately and massively to curb climate change.

In Denmark, this urgency came top of the agenda during last year’s parliamentary election campaign and thus in the new government’s programme as well. 

It is adamant that combatting the current health crisis does not result in less or belated climate action. 

Here and now, it is about ensuring that the health systems have the capacity to curb the spread of infection, in order to save the lives of us elderly. As a 74-year old, I am most grateful for this.

But an even bigger and more important task is to avoid subjecting our children and grandchildren to much greater global disasters ensuing from climate change, than the one currently affecting us. Let’s not be paralysed by the sum of challenges. Knowledgeable people have told us what to do:

It is urgent as ever to heed the most climate-smart economists who urge a high CO2-tax.

Naturally, first we must get business going again. But if we are to have the least chance of achieving our highly ambitious goal of CO2 reduction in 10 years, we need a firm plan for a steadily rising CO2-tax towards 2030.

The instant companies and citizens realise that the CO2-tax will be gradually much increased in 10 years’ time, they will promptly increase investment in sustainable solutions to meet the challenge.

Ambitious Goals lead to Sustainable Solutions

We must achieve our ambitious goals. In Denmark it is a political promise. Barely six million Danes, our footprint on the climate equals that of one hundred million Africans.

Another important reason to strive for our goal is that it will encourage and help our businesses to take the lead in many more areas of sustainable solutions, which the world will demand and need.

In Denmark, our generally high standards has proven a solid experience in creating jobs and earnings in sustainably sound solutions. These high domestic demands from various industries became the starting point for Denmark’s considerable export successes in e.g. the pharmaceutical industry and wind energy.

We must not fear that companies die, or that people will not understand the necessity for action, nor that the social profile will become too skewed. On the contrary, with a steady hand we must introduce the large-scale social engineering to prevent such consequences.

We must prevent the most CO2-emitting companies from simply relocating out of our country and continuing their pollution elsewhere. They and their employees must have the support and encouragement to transform jobs from black to green. This requires special transitional arrangements, which all EU-countries will need; thus these arrangements must not be confused with illegal state subsidies or the like.

In order for these measures not to feed increased inequality, we must spend a considerable part of the CO2-tax revenue to ease taxation for people with lower incomes. We simply won’t be able to maintain a majority of citizens in favour of an ambitious climate action plan through the upcoming parliamentary elections before 2030, unless this transition goes hand in hand with a trend towards greater equality and social justice.

As, ideally, there should soon be less CO2 to tax, we must overcome the fear that tax revenue will dwindle too fast. Of course, we must welcome such a scenario.

All experience teaches us that increased prevalence of climate-friendly solutions, e.g. solar energy, quickly makes them affordable. This opens for the introduction of new forms of taxation without imposing heavy burdens on citizens. We must design a new transportation tax where charges vary according to the type of fuel, location and time of day. We need more electric cars quickly. Therefor it is still too early to put a charge on buying and driving them. But in a few years, once they have taken over the entire new car market, they will – because of technological advances and economies-of-scale – become much cheaper to acquire, and thus be able to carry a charge.

No Limits to Growth in Quality

Countries around the North Sea need also overcome their fear of losing state revenue in order to stop issuing new licenses to drill for oil and gas at sea. Drilling until 2060 simply cannot be reconciled with credible climate ambitions when we know that the precondition for a sustainable world is that we stop using fossil fuels by 2050! Incidentally, we have every reason to believe that long before then, oil and gas will become increasingly poor business.

Many fear that a consistent climate solution means giving up the good life and putting a halt to growth. There are limits to growth in quantity, but no limits exist to growth in quality. This we Danish Social Democrats already pointed out in our programme in 1977. In todays’ context this means:

We cannot possibly continue with growth as we have known it; but growth will easily continue if we meet three basic requirements well before 2050: 1/ Replace all fossil fuels with renewable energy sources; 2/ Create systems and methods to recycle virtually all waste; and 3/ Plant a lot more trees than we cut down.

With regard to sustainability, we can easily sustain growth in health, education and care for children and the elderly; but this will eventually mean that we must be prepared to increase taxation somewhat. Come to think of it, I expect most people would prefer to invest more in health to be better equipped for another corona crisis and the inevitable evolution of bacteria developing resistance to e.g. antibiotics. To this end new answers need to be researched and developed.

As we go along, all over Europe we will see new opportunities to improve tax revenue from giant multinationals and multibillionaires who have been allowed to pocket most of the increase in national income and wealth in recent decades.

In order to reduce debt and address inequality we need to do both. So, the most urgent common tasks in the EU are to put an end to the super rich’s escape to tax havens, to set a common minimum in corporate tax, and to tax the turnover of the big financial houses and tech-companies.

I hope Denmark will be at the forefront in this endeavour in the EU; and most likely the total sum of challenges will encourage other countries to join forces with us. In Denmark, and I would assume in other counties, we can raise significant revenue by fixing our broken tax system so that we will again be able to effectively combat fraud, evasion and arrears.

MOGENS LYKKETOFT from Denmark, economist, MP for 38 years, fm Minister for Finance and Foreign Affairs, leader of the Social Democratic Party, Speaker of Parliament. President of the United Nations General Assembly 2015-2016, when the Global Goals for Sustainable Development were approved and we had the Paris Climate Agreement.

Photo: © Hasse Ferrold