Markets hold the key to climate solutions
One of the odder elements of our climate debate is the unwillingness of any political party to champion the green progress Britain has made recently.
After all, last year more than half of the UK’s energy came from nuclear or renewables — a remarkable achievement. Yet politicians, for once, seem strangely reticent to shout about it.
So if not politicians, where might the credit lie? Though Extinction Rebellion’s protestors would no doubt gasp at the prospect, the answer might well lie in market forces and that deeply unfashionable system: capitalism.
Yesterday, the Financial Reporting Council’s (FRC) in-house think tank The Lab joined the debate. Investors, they said, are becoming increasingly frustrated by companies failing to be as transparent or as clued-up on environmental issues as they want them to be.
“Those companies and investors that are addressing and considering climate-related issues,” the report said, “recognise the benefit that comes from a robust consideration of the future challenges facing the company.”
They argued boards should take more interest in what firms are doing with regards to the environment, mapping of future scenarios and metrics on which investors can judge firms’ readiness for a changing world.
So could it be that suits, not Swampies, are the real frontline warriors against climate change? Yes, probably. And if they aren’t yet, they will be soon. As Mark Carney has argued, capital moves to where the rewards are, not where the risks are.
Investors will move — indeed already have moved — towards low-carbon technologies and mitigation solutions, nudged along by government policymaking. “The [capitalist] system is very much part of the solution,” he argued. He’s right. Firms should take heed of the FRC’s call, and respond before they’re mandated to by regulation.
There are many who believe that addressing climate change is impossible to do without tearing down the economic system that has been the driving force behind just about every green energy innovation of the past fifty years.
In truth, it will be the very market they blame for our current quandary that is most likely to offer a way forward. Environmentalism cannot resist capitalism. Indeed, it must embrace it.