We all want 2021 to be a year defined by hope.
We hope the vaccines will help tame the pandemic. We hope that on-going racial reckoning will—this time—lead to concerted and sustained advances in social justice. We hope that the unprecedented wildfires, floods and storms around the world will finally fuel the urgent global action needed on climate change.
But to truly achieve any of these hopes we need first to recognize that the unprecedented challenges of 2020 were not a coincidental cascade of calamities. They represent a confluence of crises that are deeply interconnected. To tackle them effectively, we cannot do so in silos–we must understand their connections and address these challenges holistically. In short; it’s time to focus on pandemics, climate change and social injustice through one lens.
Over the past few months, we have seen painful evidence that the pandemic and social injustice are closely intertwined. According to the Center for Disease Control, low-income communities and communities of color are far more vulnerable to infection, hospitalization and deaths from the coronavirus. Among the causes are that low income communities of color are more likely to include a disproportionate number of essential workers, live in more crowded housing conditions, and be uninsured or underinsured, reducing their access to affordable, quality health care. In addition, low-income occupations predominantly require a high degree of personal exposure and therefore infection risk. Higher paid knowledge worker professions, by contrast, are far more able to work remotely (see chart below).
Meanwhile, climate disasters have continued to break records this year—both in terms of economic damage and lives lost. Global economic losses from natural disasters amounted to $175 billion this year, while thousands have died and tens of millions more have been displaced.
Scientists and experts have long warned us that ignoring climate change is a great way to aid and abet the rise of pandemics, because a warming planet is increasingly hospitable to the spread of infectious diseases globally. Under the business-as-usual scenario, the Earth’s temperature is on track to rise more than 4.5°C. According to Morgan Stanley Research, that could mean up to one billion people (predominantly in Europe and North America) becoming newly exposed to infectious diseases, like malaria, yellow-fever, dengue and other diseases by 2080. (see map below) Even if we achieve the goals of the Paris Accords and limit the temperature rise to 1.5°C, we may be able to lower that danger to only 500 million additional people at risk.
And like the pandemic, climate change has shown that it too, disproportionately affects those communities that have historically faced injustice and exclusion. Recent studies show that low-income communities of color in the U.S. are on average five degrees hotter in the summer—and in some cases as much as 12 degrees hotter—than nearby wealthier, predominantly white neighborhoods that have more trees, sidewalks, green spaces, and open areas. Scientific American puts it bluntly: “Air pollution and extreme heat are killing inner-city residents at a higher rate than almost all other causes.”
Climate change, social injustice, and disease have converged, and together, they are taking an outsized toll on the same vulnerable groups. To truly address any one of this unholy trinity, we must seize the moment for a new type of systems thinking that takes a holistic approach to these challenges.
This may sound insurmountable, but it is not. The innovations we need might come from a stroke of genius in a lab. But they might also come from approaches that think about the challenges through a holistic lens.
Here’s one small example that gives me hope: The Bronx Hot Sauce is an artisanal hot sauce now broadly available through major retailers like Whole Foods. This hot sauce emerged, in part, because investors, developers and a community came together to do more than just fix broken buildings. At Morgan Stanley, we sought to rescue distressed properties as part of our community development financing efforts, instead of focusing solely on the physical rehab of buildings, we directed investment to affordable housing developers also committed to the well-being of the residents. For one project in the Bronx, community gardens replaced empty backlots of rehabbed buildings, and the gardens were accompanied by nutritional programming and lessons on how to best garden in the city. Throw in a pepper ideally suited for growth in New York and an entrepreneurial chef with a good recipe, The Bronx Hot Sauce was born. These urban gardens, and their peppers, now provide a new source of income for the residents and also enable them to feed fresh, healthy produce to their families, who now live in attractive renovated apartments. This all came about because rather than looking at the problem in silos—distressed properties; low-income tenants; social isolation; poor nutrition, and bad health outcomes—it was viewed as a holistic challenge. Addressing only one silo and ignoring the rest can often be like pouring water on sand. But tending the whole system is what can lead to lasting transformation.
It is that kind of thinking, on a micro as well as a global scale that we need now more than ever. As one small step to try to catalyze and accelerate this kind of transformation, Morgan Stanley has launched its Sustainable Solutions Accelerator that will seek out breakthrough, systemic thinkers focusing on global sustainability issues such as climate change, social justice and plastic waste at a systems level. We believe this represents the next frontier in sustainable thinking, and our commitment to help scale the solutions that drive positive, sustainable and systemic change.
The good news is that consumers and investors alike are increasingly focusing on sustainability. Sustainable investing—once regarded as a niche—is now fully mainstream, accounting for $1 out of every $3 under professional management globally. And our analysis has shown that sustainable investing does not mean trading away profits. In fact in 2019 and 2020, sustainable investing outperformed traditional investing by 2.8 to 6.3% across bull markets, bear markets, and extraordinarily volatile markets.
But even this great momentum is just a start. To unravel the complex tangle of structural, systemic challenges we currently face, we need to look for new coalitions and new collaborations, focusing on climate change, pandemics, and social justice. Now is not the time for rose colored glasses. Nor is it the time for siloed microscopes. It is time to focus on our major challenges through a 360° lens. Together.
Audrey Choi is chief sustainability officer and chief marketing officer at Morgan Stanley.