Cognitive dissonance in climate policies

Cognitive dissonance in climate policies
Cognitive dissonance in climate policies
©iStock
Share post:

Cognitive dissonance is a state in which two “cognitions” (perceptions, thoughts, attitudes) are incompatible. Such a contradiction is perceived as unpleasant by people. It creates inner tensions that need to be overcome. Man has to do something to “get back into balance”. Basically there are two ways to solve this contradiction. On the one hand, one can actually solve the problem, on the other hand, one can suppress it so far, one can banish it from his consciousness so radically, to the point that the contradiction dissolves itself.

The most important global decision-makers currently regard ESG (Environmental, Social and Governance) risks, above all environmental risks, as the greatest risks. At least measured by the probability of occurrence and the potential impact on humanity. At the same time, we, as humanity, are well on the way to once again failing to meet the 1.5% target set in Paris. Looking at global greenhouse gas emissions, there are only a handful of countries that are on track to meet their targets. This should actually lead to a classic case of cognitive dissonance. On the one hand, one recognizes a problem as serious, on the other hand, one does nothing to solve it, although, at the levers of power, one is responsible for it.

2 topics are particularly important

  • On the one hand, global warming is the ultimate example of the fact that global problems can only be solved if we cooperate internationally and pull together. If an important actor dissolves his cognitive dissonance by not only repressing the problem, but simply denying it, then this also has global consequences.
  • On the other hand, it is important to bear in mind that a great deal is happening at the moment in order to solve the problem of cognitive dissonances through a genuine approach to the problem itself. In the EU, the High Level Group 2018 set up by the European Commission has published its recommendations for a sustainable financial economy. Legislative material is now being drafted, discussed and soon put into effect that has the potential to change Europe’s financial economy “sustainably”, both literally and figuratively. According to the first drafts, asset managers will have to integrate sustainable risks into all their processes. Fund and portfolio managers have to integrate ESG risks into their investment processes, risk management has to monitor compliance with sustainable risk limits, reporting has to show these limits, etc. Sustainability has thus finally arrived in the mainstream.

To get back to cognitive dissonance, it is still too early to say whether this approach can finally and permanently resolve the contradiction between problem perception and action. But I am optimistic that the journey will be in this direction. And I am pretty sure that the other possibility, denying the problems, will not turn out to be a permanent solution.

 

Disclaimer:
Forecasts are not a reliable indicator for future developments.

DOSSIER

RESPOND TO THE ARTICLE

Legal disclaimer

This document is an advertisement. All data is sourced from Erste Asset Management GmbH and ERSTE Immobilien Kapitalanlagegesellschaft m.b.H. unless indicated otherwise. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in Amtsblatt zur Wiener Zeitung in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH and for ERSTE Immobilien Kapitalanlagegesellschaft m.b.H. pursuant to the provisions of the AIFMG in connection with the InvFG 2011 and regarding ERSTE Immobilien Kapitalanlagegesellschaft m.b.H. published in Amtsblatt zur Wiener Zeitung or at the web site www.erste-am.com or www.ersteimmobilien.at.

The fund prospectus, Information for Investors pursuant to § 21 AIFMG and the key investor document/KID can be viewed in their latest versions at the web site www.erste-am.com or www.ersteimmobilien.at or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the key investor document/KID is available, and any additional locations where the documents can be obtained can be viewed on the web site www.erste-am.com or www.ersteimmobilien.at.

This document serves as additional information for our investors and is based on the knowledge of the staff responsible for preparing it at the time of preparation. Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation and risk appetite. Past performance is not a reliable indicator of the future performance of a fund.