It’s been a long time coming, but Joe Public, and the companies that serve him, are finally wising up to the risks and challenges posed by global warming. This week saw the publication of no less than three separate reports - by Lehman Brothers, UBS and
the Financial Services Authority - highlighting the perils posed by human-induced climate change (
FSA warms to climate change risk).
Unsurprisingly, the documents deal primarily with the impact of global warming on the investment climate - the FSA spotlighting the risks and UBS and Lehman scanning for opportunities. They offer little comment on the scientific or political debate on planetary
overheating. For the full unexpurgated horror, head for today's report from the UN's
Intergovernmental Panel on Climate Change.
Merely by re-directing investors in the direction of companies, industries and innovations that encourage sustainability, the financial sector can make a significant contribution to the environmental push for reduced carbon emissions.
As radical rap poet Gil Scott-Heron observed in B-Movie, his biting polemic on Regan-era politics: “Where Wall Street goes, so goes the nation…”
Market forces and capitalism may have contributed to the acceleration of global warming in the first place. But in the absence of a political will to deal with the fall-out, we may have to rely on Adam Smith’s hidden hand to work its magic in reverse.