Lisa Sachs speaks with the speed and urgency of someone accustomed to working on problems that cannot wait. As director of the Columbia Center on Sustainable Investment (CCSI) at the Columbia Climate School, she works across research, policy, law and finance to confront some of the toughest questions of the climate emergency. Sachs travels frequently for the center’s global advisory work. At Columbia, she also teaches a seminar on mitigation to some 200 students. Recently, she took time to speak with State of the Planet about why analyzing climate solutions from a “systems-thinking perspective” is one of the best ways to solve complex real-world problems.
Sachs teaches her students that net zero has a precise meaning: the global balance between emissions and removals. The atomization of that “global atmospheric concept” into countries’ Nationally Determined Contributions (NDCs) under the Paris Agreement, and further into corporate net-zero targets, cannot and will not transform complex systems, she says.
Sachs discussed this topic at a recent New York Climate Week panel: “Making COP32 Deliver.” She was joined by economics professor and director of the Center for Sustainable Development, Jeffrey D. Sachs; executive secretary of the United Nations Framework Convention on Climate Change, Simon Stiell; and Climate School dean Alexis Abramson.
Jeffrey Sachs—Lisa Sachs’ father—recalled climate scientist James Hansen’s reaction at the signing of the Paris Agreement, saying that the NDCs would be “disastrous.” Jeffrey Sachs continued with a forceful call for countries to stop treating the transition as a collection of individual projects or emissions targets and instead to develop long-term, cross-border, cross-sector pathways to net zero.
Lisa Sachs makes a similar argument in a recent paper she wrote with two of her students from the Columbia Climate School’s Master of Science in Climate Finance program. In it, Sachs says that the field is conflating objectives, responsibilities and institutional mandates, and that the resulting ecosystem of targets, disclosures and frameworks is not serving any of those objectives well. Most importantly, the confusion means that many climate-finance frameworks are “playing on the wrong ballfield” when building or transforming systems requires coordinated approaches in the real economy. The paper describes the error of “paper decarbonization,” or conflating the decarbonization of a corporate ledger or fund portfolio with real emissions reductions.
So how can heavy industry decarbonize? How can power systems become cleaner, more resilient and more interconnected? And how can governments, financial institutions and companies coordinate to turn technically viable climate solutions into financeable projects?
Sachs’ answer begins not with a technology, a net-zero pledge or a carbon tax, but with a system.
“We start with systems diagnosis before systems design,” Sachs says, describing the throughline in CCSI’s work. Before proposing a solution, Sachs argues, practitioners need a clear, rigorous picture of what the optimized system looks like and how to make it compelling to the actors in the system. Flexible clean energy systems, for instance, can create value, resilience and efficiencies; they also have to keep functioning through heat, storms and floods, and to be accessible and affordable to all. Sachs believes these systems are “eminently buildable with the right enabling architecture, and my urgency is to try to help people understand what we’re trying to build, and the coordination and structuring that requires.”
Rather than treating a steel plant, a data center, a transmission line or a renewable-energy project as an isolated asset, Sachs asks how the larger system around it works. Who controls key decisions? Where do costs, revenues, authority and risk sit? Which market rules or infrastructure constraints shape investment? What is the actual barrier preventing a desirable outcome?
The answer is often not a shortage of capital in the abstract. Sachs emphasizes that finance does not build the systems it then finances; it finances systems that are structured in such a way that returns outweigh risks. Too often, Sachs argues, climate finance conversations convene finance professionals around metrics, definitions and taxonomies, rather than working with the actors in the economy who shape the system itself: utilities, planners, governments, industrial buyers and demand-side participants.
This is why CCSI’s work focuses on finding the chokepoint where an otherwise viable idea fails to become investable, then determining which policy, guarantee, currency swap or other intervention can change the underlying economics. In recent work on decarbonizing China’s steel sector—steel is among the hardest-to-abate industries—CCSI and its collaborators have explored whether lower-emissions iron could be supplied to Chinese steelmakers from the places where it can be produced most cheaply and cleanly. “The question is whether new procurement and financial structures could reduce or reallocate risk and make lower-carbon steel production feasible at scale,” Sachs says. “We only considered proposals that could change the fundamental economics of producing low-emissions steel.”
Sachs focuses much of her time on work in developing economies, where the need for reliable, accessible and affordable infrastructure is greatest. She adds that “climate outcomes for the world will live or die depending on whether and how those systems get built.” In emerging economies, she argues, the barriers are mostly structural: constrained fiscal space and caps on borrowing; high costs of borrowing influenced by sovereign credit ratings; debt denominated in hard currency against local-currency revenues; and donor-driven priorities rather than support for long-term, integrated plans showing what must be built and in what sequence.
Sachs doesn’t shy away from hard-to-solve problems, and that mentality is one she particularly wants to instill in students. Sachs wants graduates who can recognize when a project-level answer is being mistaken for systems work; distinguish a financial problem from a planning, regulatory or infrastructure problem; and work across policy, technology and finance without losing the connections among them. Real progress, in her view, begins by understanding the system in front of you and then building the coalition, institutional architecture and financial conditions that can change it. Sachs’ thinking offers a renewed sense of optimism: no problem is too difficult to solve with the architecture that makes change possible.
