Climate change and the cost-of-living crisis

Economic changes tend to impact decision-making – whether that’s at an individual, corporate, or government level. Right now, that means the cost-of-living crisis is impacting climate action – both by pushing climate action down the agenda, while simultaneously making it ever more urgent to find solutions that are both sustainable and cost-effective.

Climate change and the cost-of-living crisis are deeply intertwined

Our reliance on fossil fuels is both driving climate change and pushing living costs through the roof. As companies raise the cost of oil and gas, it’s not only the price of our household bills that go up. The rising costs of fuel affect the cost of transporting products, and increase manufacturing costs and overheads for businesses.

Alongside that, the cost of everyday groceries is soaring. Extreme weather, including droughts, floods, and wildfires, is impacting food supply chains, which in turn is driving up costs of everyday food products. According to the Climate Change Committee, if we continue like this, food prices globally could rise an average of 20% by 2050.

The cost-of-living crisis is pushing climate change down the agenda

Immediate worries around making ends meet are outweighing concerns about the environment. Respondents to a YouGov survey put climate change as the third top issue facing the UK in the near future (29%) – behind “cost of living” (69%) and “the economy” (58%). Almost three quarters (73%) say that the cost of living should be prioritised over the environment and climate change.

YouGov research last year also showed that 54% of people were in favour of increasing the use of high-carbon sources, such as coal, if it would keep costs down and avoid blackouts. 

On a global scale, the World Economic Forum highlights the tension between priorities in its Global Risks Report 2023. The report ranks the cost-of-living crisis as the greatest risk over the next two years, with ‘failure to mitigate climate change’ as the number one risk over a ten-year period.

Preventing people from making more sustainable choices…

On an individual level, the cost-of-living crisis is making it harder for people to make sustainable choices. People are having to prioritise cheaper options over greener products. For example, locally sourced vegetables, eco-friendly cleaning products and energy-efficient lightbulbs are being bypassed for cheaper, less planet-friendly options.

In fact, the Capgemini Research Institute found that only 41% of consumers were willing to pay more for a sustainable product (a drop from 57% in 2020), while Kantar found that 45% of consumers globally are finding it harder to make sustainable choices because of their financial situation.

Alongside that, for charities, the cost-of-living crisis is making it harder for people to donate and fundraise, resulting in a cost-of-giving crisis. (Though recent findings from Enthuse show that the cost-of-giving crisis is easing).   

…and driving them to make more sustainable choices

The flip side is that in some circumstances, the cost-of-living crisis is driving people to make more sustainable and environmentally-friendly choices. 

For example, the rise in fuel prices is forcing some people to reconsider how much they use their car, perhaps walking or taking public transport instead. Or finding ways to save on energy costs has resulted in a massive rise in the use of air fryers and slow cookers. While these small shifts have been motivated by a need to save money, the outcome reduces energy usage and benefits the environment. And the impact of small, repeated actions, can help to move humanity in the right direction.

Sustainability on an organisation’s agenda

The same tension can be said at an organisational level. Some charities and companies are deprioritising sustainability and environmental, social and governance policies during the current economic hardship. But there is also a strong argument for now being the time to push forward with sustainability. As Jonquil Hackenberg, writing for Forbes, comments: “In 20 years, do you expect that society will tolerate materials and processes that cook the planet, degrade environments, cause deforestation and water scarcity, or reduce biodiversity? How about in ten years? How about in five?”.

We don’t have to choose between the two

Moving to renewable energy will reduce carbon emissions as well as the cost of fuel. We don’t have to tackle one challenge or the other – they are interlinked. 

Take Nesta’s findings that if 10 million UK households with combi boilers reduced temperature settings, they would save £1 billion from energy bills. Not only that, this simple action would save 1.7 million tonnes of carbon emissions, the equivalent of almost six million transatlantic flights.

Shifting to electric cars, better insulating our homes, and changing to heat pumps might cost more initially. But with the right infrastructures and financial support from governments, can provide long-term solutions to the challenge of climate change, as well as the cost of living.