Stefan Brunnhuber graduated medical school and studied socioeconomics in Germany. He specialized in strategies for sustainable development and financial engineering for the Sustainable Development Goals (SDGs). He is the author of several books, the most recent being Financing Our Future. Unveiling a Parallel Digital Currency System to Fund the SDGs and the Common Good (Macmillan, 2021). He is also a member of the Club of Rome, the World Academy of Arts and Science, and the German Council for Sustainable Development.

In his presentation for the Global Goals Forum 2022, he will address the history and future of the Rio 1992 Conference, the current biophysical and social realities, and the need to readjust the monetary and financial system.

Brunnhuber talks about the 30-year timeline since the 1992 Rio Summit, which served as a starting point for the international sustainability agenda, up to the current Rio+30. “Thirty years before Rio ‘92 was the time when Silent Spring (1962, by Rachel Carson) and the Club of Rome report ‘Limits to Growth’ (1972) were published,” he points out.

On the ’92 Rio Summit, he says, “We would have had the chance to use the money which was blocked in the Cold War to create a better world. But we actually missed that opportunity. In the last 30 years, we have had a very ambitious (sustainability) agenda, but we are actually not performing,” he argues.

Biophysical and social realities

According to the Living Planet Index, one species is lost every 10 minutes. Incidences of zoonosis, which is one of the causal links of the current pandemic, has increased exponential since the 1970s. Every four months another incidence of zoonosis is recorded, thereby creating the possibility for another pandemic.

The income gap is increasing, but besides the negative stories, child labor has decreased, women’s rights have substantially increased, and smallpox has been eradicated. “There’s still a lot of work in front of us. But it’s better than in the past,” Brunnhuber believes. CO₂ emissions in the Americas and the Eurozone seem to have reached a plateau. OECD countries are decoupling, but at too high a level. “Transformation from fossil fuels to a greener marketplace doesn’t come for free. It comes with potential instabilities in the political system, and with massive losses in welfare. And we haven’t paid the bill yet,” he warns.

The need for a new financial system

In his speech for the Global Goals Forum, Brunnhuber will also highlight the necessity for a transformation of the current monetary and fiscal system: “The volume of subsidies to the fossil fuel industry is 8 to 10 times higher than for renewables,” he says. “Fossil fuel dependency in the entire global value chain is still 79 percent. So 79 percent of all goods and services we are producing are dependent on oil and gas. And this value chain is growing by 2 to 3 percent every year on average.”

Financial markets could make the change, he says. “Central Banks have started initiatives, first in an experimental way, and now in a more public way, with what are technically called CBDCs: central bank digital currencies.”

If we had additional regulated liquidity to generate the $5 trillion necessary to fund the SDGs – in parallel with blockchain technology, distributed ledger technology, and a smart contract to enable those SDG or Green Deal scenarios – we would enter a new and upgraded monetary system, Brunnhuber believes. By doing so, “we would start to ride a bike with two wheels: the fossil and the green. And of course they interact with each other. The given value chain is pro-cyclical and unstable. By introducing two wheels in the financial system, it will balance out and become anti-cyclical. Anytime there is a crash in the fossil value chain, agents will swap over to the green sector to balance things out,” he explains.

The author of Financing Our Future concludes: “If you start changing your mindset, unlimited new forms of financial engineering will appear. By readjusting our monetary system, we can create carbon default swaps or new forms of funding WHO (World Health Organization) to be prepared for the next pandemic.”

“We can start funding our natural reserves, which have a return on investment of 1 to 10 to 1 to 15,” he explains. “And we can create very sophisticated credit default swaps that hedge costs for developing countries to install windmills. We can design new forms of state guarantees that enable startups to be involved in R&D. And we can create direct cash transfer systems through mobile phones and the ledger technology blockchain for the affected populations to overcome poverty and hunger.”