Judah Taub is Managing Partner at Hetz Ventures, a top seed stage VC based in Tel Aviv. He lectures on time-management & creative thinking.
Robert F. Kennedy once said that GDP “measures everything, except that which is worthwhile.” In our rapidly changing world, traditional measurements of economic growth—like GDP—are increasingly seen as outdated. These metrics, which focus on the production and consumption of goods and services, don’t consider the broader picture of socioeconomic well-being. They overlook factors like income inequality, the value of leisure or unpaid work and, critically, the impacts of environmental sustainability.
The climate crisis has far-reaching economic impacts across sectors, manifesting through property damage, lost productivity, mass migration and security threats. For instance, the cost of climate disasters in the United States alone during 2022 has been assessed at $165.1 billion in damages. Traditional economic metrics, with their narrow focus on market transactions, typically fail to adequately capture these costs.
Recognizing the limitations of GDP, some countries have started experimenting with alternative metrics. Notably, Bhutan’s Gross National Happiness (GNH) index measures prosperity through a mix of economic, social and environmental factors. While such alternatives are welcome, I believe we still need a universally accepted measure that directly integrates the impact of climate change.
Proposing a new metric—perhaps we would call it gross climate impact (GCI)—could be a step in this direction. In a similar way to how economists modified the traditional GDP formula to account for exports and imports, GCI would retain the core components of GDP: government spend, investment, consumption and net exports.
However, one more important data point would be added to the equation: climate impact. This adjustment could be based on a country’s carbon emissions, environmental degradation and resilience to climate change.
Potential Impact Of Climate-Focused Economic Measurement
Including climate considerations in our standard economic measures could bring about changes in three key areas.
1. Policy And Business Priorities
By making the climate impact a central component of economic measurement, GCI could incentivize businesses and governments to prioritize climate-friendly policies. A high GCI score could impact overall GDP value, encouraging countries to invest in renewable energy, sustainable agriculture and green infrastructure as part of their GDP equation. Having an internationally accepted metric could also encourage businesses to adopt sustainable practices.
2. Transparency And Efficiency
A universally accepted GCI equation could add transparency and efficiency to the process of assessing the impact of economic actions on the climate, especially by providing a means to compare the practical value of different approaches. This might allow governments and corporations to make more clear-eyed decisions about issues, allowing them to better identify which actions bring tangible climate benefits and which are simply badges of honor or inadvertent “greenwashing.”
3. Public Awareness
Though it may sound like a cliché, raising awareness and elevating the public discourse on a topic is one of the first and most effective steps in achieving meaningful solutions. Raise public awareness about the urgency of the climate crisis. By linking economic growth and climate impact, private citizens and businesses might be more motivated to support climate-friendly policies and practices. Financial market news would likely have to start adding more weight to environmental developments when reporting on the events of the day.
To Be More Climate-Focused, Businesses Must Start With Data
In the meantime, to ensure their organizations are heading in the right direction, business leaders should look at their data. We all know that what is measured is managed—and we won’t get very far with incorporating climate and sustainability goals into our overall corporate strategies without tracking climate-oriented activity.
From meeting and investing in data and AI companies over the years, I see an opportunity to marry technological innovation with climate-focused corporate sustainability. Data and AI have the transformative power to make sustainability efforts quantifiable, actionable and transparent, which can eliminate the smokescreen of greenwashing.
For instance, we see many startups developing AI algorithms that optimize energy consumption in real time, while others leverage data analytics to provide granular insights into a company’s carbon footprint. Others help with ethical sourcing by tracing the environmental impact of every step in the supply chain. There are many more examples that show the tech startup ecosystem and corporate sustainability are not just parallel tracks but actually intertwined ingredients to a more measured and optimized sustainable business future.
Exactly how to quantify something like GCI is another much more complex issue. Nevertheless, as we grapple with the existential threat of climate change, I believe it’s high time to rethink our definitions of economic success. Climate considerations should be an integral part of how we measure and think about economic growth, not an afterthought. A new business focus on the climate—and a metric like GCI—could help align economic growth with environmental sustainability, paving the way for a climate-conscious world.
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