11 October 2018

The Urgenda verdict: A huge opportunity for the Dutch State

The chance of victory was nil. That was the general assessment of lawyers about the appeal that the Urgenda Foundation had filed against the Dutch state. On Tuesday, however, the Court of Appeal in The Hague confirmed the court ruling in 2015: the government is obliged to take climate measures and must limit the emission of greenhouse gases by 25 percent in 2020.

The recent victory of Urgenda is internationally called a ‘historic legal order’. And we applaud that. We admire the enormous dedication and perseverance of Urgenda. Thank you, on behalf of all of us.

The question is: What does it cost us if we do not take climate measures?

We wonder; Was this a lawsuit against the State or in the interests of the State? The State is Us. Households, companies, politics, government and our economy. And climate change is an immediate danger to our prosperity.

Meanwhile, the emphasis of the political discussion is on the expected high costs and who will bear these costs. Companies or citizens? That is a shame because that principle does not get us any further. It gives the impression that climate measures generate considerable costs. But they do not cost us anything. They are investments. The real question is what it will cost us if we do not make those investments.

Can we calculate that? Yes we can

Driven by the urgency, there are worldwide efforts to define standards that can express our environmental impact in costs. Already in 2013, scientists and economic experts from the U.N.-supported organization the Economics and Ecosystems of Biodiversity, have made a well-calculated estimate of environmental costs, published in the pioneering study Natural Capital at Risk – de Top 100 Externalities of Business.

In this research report, a firm impetus was made to quantify the extent to which the economy depends on goods and services from natural resources. The study found that primary manufacturing and processing industries (agriculture, forestry, fisheries, mining, oil and gas exploration, utilities, and the chemical industry) generate around $ 7.3 trillion of environmental damage worldwide; read the economic costs of environmental impacts such as greenhouse gas emissions, the loss of natural resources, and nature-related services such as forest carbon storage or air pollution. A long list. And let us not forget the related health costs.

The contribution of natural resources to our global economy is about 10 percent of the GWP (Gross World Product) of approximately $ 75 trillion. That makes our natural capital – including the sources that influence our climate – vital for our economy and our prosperity.

So let us, the Dutch State, be at the forefront of climate protection and set the starting point straight. This provides the right incentive for businesses to see sustainability measures for the investments they are; investments that not only determine the future prospects of businesses but also generate short-term profits. Our clients know all about this. Their sustainable products increasingly determine their growth in turnover and often cost less because sustainability implies resource- and thus cost-efficiency. In addition, our clients attract qualified people more easily and avoid last-minute expenses that are enforced by legislation. They are increasingly rewarded for their pioneering role. Companies that are still operating according to the mantra of old, linear business models all but benefit from the Dutch Government feeding their line of thought. The Urgenda judgment will further separate the frontrunners from the laggards. The companies that have anticipated on the sustainability trend are increasingly reaping the benefits.

Climate measures costly? Nonsense. We will get profitable companies, a healthy economy, clean air and a future in return.

By the way, Mr. Wiebes, we would love to help you with the corresponding cost & benefit analysis for the Dutch State.

- Robbert Jan Knoppers & Marieke Post