The Role of Finance Leaders in Managing Climate Change
“Follow the money” was the famous advice of Deep Throat – the whistle-blower who helped the journalists Bernstein and Woodward to unravel the Watergate scandal and end the Nixon presidency. “Follow the money”, or at least “engage the money”, would also be good advice for advocates of corporate sustainability and sustainable development. Thanks to the efforts of NGOs such as CDP, Carbon Tracker and ShareAction, there is greater awareness of how environmental pressures will impact global finance. Mark Carney, the governor of the Bank of England, has ordered environmental stress tests for UK financial institutions.
Writing in the Wall Street Journal, the veteran Wall Street banker and former US Treasury Secretary, Hank Paulson declared: “When the credit bubble burst in 2008, the damage was devastating. Millions of people suffered. Many still do…..We’re making the same mistake today with climate change. We’re staring down a climate bubble that poses enormous risks to both our environment and economy. The warning signs are clear and growing more urgent as the risks go unchecked.”
Aviva Investors has produced a “Roadmap” to more sustainable financial markets. The UN Economic Programme Finance Initiative is almost three-quarters of the way through a 2-year inquiry into a more sustainable financial system. Movement is happening. This brief Hot Topic from a full-time MBA student examines some of the issues involved.