Summarized by Nobel Prize winning economist William Nordhaus in a simple metaphor fromClimate Change: The Ultimate Challenge for Economics, “Climate change is like a vast casino...we are rolling the climate dice, the outcome will produce surprises, and some of them are likely to be perilous” (Nordhaus, 2019). Within the 21st century, similar statements of the vitality of climate change action have increased dramatically around the world, backed by the increasing environmental havoc and following societal adaptation. Take, for example, the steps being taken by the Tofina tribe, displayed within “How to Build a Resilient Future Using Ancient Wisdom” by Julia Watson. Developing the largest lake city within Africa, the houses are constructed upon stilts, and neighborhoods are navigated by canoes. However, these efforts will merely not be strong enough to escape Nordhaus’s treacherous and high-cost “climate change casino” over time. As society grapples with the overwhelming task of fighting climate change, it becomes clear that mankind currently stands unprepared and incapable. Only one industry contains the firepower to lead to mitigation and adaptation to climate change; the private sector. Yet, this group often lacks involvement. With many experts in the field raising awareness about this discrepancy, the question becomes: To what extent could promoting greater private sector investment into environmental initiatives impact global resilience against climate change? With greater analysis, it becomes clear that promoting greater private sector investment into environmental initiatives would do a great deal in strengthening global resilience against climate change.

The private sector can be defined as the segment of an economy run by individuals and corporations aimed at making profits, rather than under the control of governmental agencies. Controlling an estimated $143 trillion of wealth held within private banks alone (Goldstein et al., 2019) the private sector combined is among the most powerful and influential entities within modern society. For the purpose of this research, the term “private sector” will be used interchangeably to describe large for-profit corporations possessing significant influence over the general public, excluding the smaller businesses and companies with a lesser ability to make an impact.

Among the biggest complications within current climate change initiatives is the lack of funding and access to capital. According to International Monetary Fund data, current global investment to address climate change sits at $630 billion (Public Sector Must Play Major Role in Catalyzing Private Climate Finance, 2022). While an impressive sum, the issue becomes discernible as the estimated overall monetary amount required to meet current international initiatives are presented. Within the same study and analysis presented by the IMF, approximated costs in order to properly strengthen global climate change resilience are found to be within $3 trillion to $6 trillion per year until 2050. In comparison, data from The U.S Currency Education Program lists the current amount of U.S. currency in circulation at $2.2 trillion (U.S. Currency in Circulation, n.d.). Accounting for all physical capital flowing within the United States, this aggregate appears as an unfathomable sum from an individual viewpoint. However, this perspective changes dramatically considering the much larger amount required yearly for proper climate change adaptation and mitigation. With the current below-par capital sums, it becomes clear that investment from external sources is minimal. Data from The World Economic Forum’s “Climate adaptation: the $2 trillion market the private sector cannot ignore” displays just this. According to the research, only 1.6% of climate adaptation investment funding is provided by the private sector, leaving large gaps public funding is left to fill (Climate Adaptation: The $2 Trillion Market the Private Sector Cannot Ignore, 2022). It is therefore apparent that a main cause for the financial difficulties surrounding the evolving industry is the lack of private sector investment, and becomes even clearer when put in context with the journalistic article “The private sector’s climate change risk and adaptation blind spots.” Written by Ph.D-awarded climate change adaptation economists, statistics on private sector asset control and the ability to intermix with climate change initiatives are presented. Overall, the span of private sector banks alone were found to control $143 trillion in assets, clearly displaying an ability to become involved within the environmental disaster society currently faces (Goldstein et al., 2019). Considering the magnitude of capital required for climate change initiatives, it is reasonable that greater private sector involvement would be a step in the right direction towards global resilience, providing vital funding into this investment-deprived sector. However, one limitation that may arise is that it will take time for corporations to understand that their investments will not only benefit society, but their pockets as well.

An additional support for the argument that private sector involvement and investment into climate change initiatives would beneficially impact worldwide resistance and resilience against climate change ties into modern technology and innovation. Throughout history, it is evident that society has the capability to adapt and overcome the environmental challenges it faces. Looking once more at “How to Build a Resilient Future Using Ancient Wisdom” by Julia Watson, root bridges constructed by the Khasi hill tribe serve as vital infrastructure to allow for travel between villages. Requiring decades of work and running through multiple generations, man-made technologies like these have allowed us to prosper over time. With proper ability, further technological advancements can serve as solutions to climate change.

Nowhere else is the potential for climate change innovation made clearer than through the studies displayed within “Urban Evolution: How Species Adapt to Survive in Cities” presented by Eric Bender. Research shows different examples of fascinating and innovative findings upon animal evolution within cities and the involvement of climate change. One specific showcase of the technological abilities society contains to combat environmental difficulties is the study discussing Daphnia microbes. The program enabled fleas to consume cyanobacteria, an organism that can severely overrun ponds. Data on this subject is also presented within the University of New Hampshire article “Researching Healthy Lakes,” led by a research team from UNH, Dartmouth, and the Cary Institute of Ecosystem Studies. The project consisted of a three year, $1.47 million grant, allowing researchers to explore how human population growth, altered land use, and lake specific factors have impacted water quality within the states of New York, Vermont, New Hampshire, and Maine (Potier, 2017). With an end result containing state-of-the-art water quality technology, it is small yet vital projects like these that society needs in order to build global climate change resilience.

In order for this to occur, however, a limitation must be noted. With an increased amount of technological innovation, the failure rate of projects is likely to increase, as only the best will succeed. Also, understanding the crucial role the private sector must play in developing these technologies is necessary. In a case study conducted on London and Copenhagen private-sector sustainable engagement, information on the private sector’s crucial contribution to closing the climate investment and leadership discrepancy in climate innovation is presented. Written by Roudaina Alkhani, a senior lecturer in Planning and Urban Design at the University of Westminster, the commitment and involvement of the private sector is proven to be critical. From 1990-2020, the United Kingdom triumphed in reducing greenhouse gas emissions by 40% (Alkhani, 2020). Within the research, the private sector is proven to be a large contributor to this success, specifically citing public-private partnerships formed over the three decades as key components.

A final benefit to promoting greater private sector investment into climate change initiatives is the encouragement of collaboration between the private and public sectors, a step indicative of project success over time. In the study led by Tina Schneider of the World Resources Institute, data is presented on the private sector connection into public sector climate action, focusing specifically on Germany. A large part of this connection involves basic facilities, with the study listing that within the country, “80% of critical infrastructures are now privately owned” (Schneider, 2014). With this large amount of control of vital frameworks now resting in the hands of the private sector, it becomes clear that collaboration between the private and public sectors is essential. This teamwork may prove to be very favorable to both parties, in consideration of the information presented from the World Bank Private Participation in Infrastructure Database (The World Bank, n.d.). The Public Private Partnerships project failure rate is below four percent, with only 292 out of the 8295 projects between 1990-2020 failing. In investment statistics, the corresponding failed amounts were only $71 billion out of the $1.99 trillion in the 30 year span. However, a possible limitation to this association would be the well-known and often tense relationship between the public sector and the private sector in several countries. More difficulties may arise within these countries. On the contrary, an implication of tying the private and public sectors together within these countries is the potential to assist in rebuilding the severed relationships between the two entities.

Some individuals counter the argument towards private sector investment, stating that private sector involvement in climate change initiatives will create serious risks for corporations, putting large amounts of capital in jeopardy. Republican Congressman Byron Donalds argues in favor of this statement within the article “We must abandon ESG policies in America and around the globe.” According to his statement, the current actions being taken towards combating climate change, specifically within factors such as carbon emissions, energy consumption, and investment is unreasonable and dangerous (Donalds, 2022). Donalds also states that the implications of these steps will result in future economic difficulties, but fails to provide any reasoning as to why this is the case. This argument of economic risk is also presented within the article “Maladaptation: When Adaptation to Climate Change Goes Very Wrong.” Written by Lisa Schipper, the perspective that the potential for maladaptation to climate change through failed initiatives endangers society, and therefore flaws must be addressed first (Schipper, 2020).

While the significant amounts of capital required may raise concerns about the riskiness of environmental initiatives, the statements above arguing fully against private sector investment are dismissible through the study presented within The Economist article “The cost of inaction: Recognising the value at risk from climate change.” Within the research, a discovery was made that up to 30% of the world's manageable assets face significant risk due to climate change impacts (Fisher, 2015). Tom Pfefferle of the University of Oxford shares similar findings within the article “At your own peril: Climate Change As Risky Business.” Looking into the true risks surrounding private sector involvement with climate change, Pfefferle finds that inaction to adapt to climate change is nearly guaranteed to result in investment losses within the portfolios of private sector institutions over time (Pfefferle, 2017). Between these two sources, the potential costs of climate change are highlighted as a major blind spot for companies and their investors, presenting a much larger financial risk than climate initiatives.

The future remains uncertain as society faces down an environmental catastrophe. With an empty canvas of numerous potential outcomes, taking action against climate change has never been more important. As risk and uncertainty grows, it becomes clear that society stands off guard for the challenges facing us. However, with research, it becomes clear that an intrinsic and influential player remains in the background: the private sector. As displayed within the previous paragraphs, vast amounts of benefits would occur from the involvement of the private sector. This incorporates the steps towards adaptation and mitigation, such as financial, technological, and collaborative aspects. It becomes clear that promoting greater private sector investment into environmental initiatives would strengthen global resilience against climate change. Beneficial to all parties involved, initiative can be taken today to secure a greener future for all.