How can financial literacy contribute to global climate change goals?
Photo by Marcus Spiske
The Paris Agreement, the international treaty on climate change, adopted in 2015 by 196 countries, seeks to limit global warming to well below 2 degrees Celsius above pre-industrial levels, aiming for 1.5 degrees Celsius.
Each country sets its own emissions reduction targets and pledges to regularly report progress. Canada plans to reach an emissions reduction target of 40 percent below 2005 levels by 2030 and net-zero emissions by 2050. The U.S. plans on reducing its greenhouse gas emissions 50-52% below 2005 levels in 2030. Reaching 100% carbon pollution-free electricity by 2035. Achieving a net-zero emissions economy by 2050.
Failure to reach these goals, scientists tell us, means we all will need to contend with higher sea levels, fiercer storms, animal and plant extinctions, melting ice, wildfires and more people dying from heat, smog and infectious diseases. We need to use every tool in the global arsenal to combat, some are describing as, a looming climate catastrophe.
Financial literacy is one often-overlooked tool. The link between financial literacy and climate change isn’t immediately obvious, but a closer look shows some important connections and correlations that, when leveraged, could help us all.
Conscious consumption
Financial decisions, like purchases, greatly affect the environment, impacting greenhouse gas emissions and pollution. Financial literacy guides conscious consumption, fostering sustainable practices. Studies indicate that those with higher financial literacy make eco-conscious choices, like buying energy-efficient products. Lack of financial literacy hinders understanding of environmental decisions' financial implications, limiting informed choices.
Sustainable living
Financial literacy is crucial for promoting sustainable living. The OECD reports that low financial literacy correlates with a lack of insurance or emergency savings, heightening vulnerability to climate change's financial impacts. Education in personal finance, insurance and budgeting empowers informed decisions, encouraging sustainable choices such as using public transportation and reducing energy consumption.
Green investments
Green investments are integral to investment and financial planning, but a strong grasp of financial literacy is essential for making informed investment decisions. Understanding return calculations, risk assessment and portfolio diversification guides decisions in green investments, which offer financial benefits while advancing environmental goals. These investments encompass renewable energy, green infrastructure, eco-friendly technologies and sustainable agriculture, contributing to carbon reduction and sustainability.
Financial wellbeing
Financial literacy is vital for building financial resilience and security, enabling individuals to focus on long-term environmental goals. Those facing financial difficulty may prioritize immediate concerns over environmental choices. Improving financial literacy enhances decision-making, fostering a sense of financial security conducive to environmentally conscious choices.
Financial literacy is crucial for conscious consumption, sustainable living and green investments, promoting financial wellbeing. Recognizing its link to climate change empowers individuals to address both effectively, understanding the impact of financial decisions on the environment. Empowering people with tools and knowledge for informed decisions is simple yet immensely beneficial for achieving climate goals.
It’s grown into a sophisticated economy. Students get paid twice a week in a currency called Lattimore Bucks. Additionally, there are expenses. Lattimore charges her students “rent” for their desks and chairs, which costs $7 per month. There are also fines for things such as late homework or talking in class.
If you're interested in a financial literacy program for your credit union, check out It’s a Money Thing, a digital library of professionally developed financial topics. And together, let's make a positive impact and maybe, just maybe, we can help save our planet!
Tim McAlpine is the Founder & CEO of Currency Marketing. He is best known for developing the It's a Money Thing Financial Education Program that credit unions from around North America are using to connect with new young adult members. He is also a driving force behind CUES Emerge, an emerging leader program that combines online learning, peer collaboration and an exciting competition component.
