Financial History 142 Summer 2022 - Page 25

Greta Thunberg , a high school student from Sweden , became the face of a global movement of young people addressing climate change through their use of social media . Thunberg and the millions of people who have attended her rallies represent a trend influencing the flow of capital : evolving social norms .
and investors that commit to climate solutions provide cover for government officials to accelerate policy support . In this way , politicians and business leaders have learned that by working in concert , it becomes possible to enact policies that materially reduce greenhouse gas emissions , even in the absence of binding international agreements .
Government action to address climate change has been highly uneven and unstable since the first international agreement was negotiated in Rio de Janeiro in 1992 . Despite that rocky path , the overall trend is clear , with government policies to tackle climate change increasingly ambitious at the national , state and local levels . Governments are offering ever-greater financial and regulatory incentives for companies and projects that reduce greenhouse gas emissions and ever-greater penalties for those that do not .
A Confluence of Trends , Influencing Investors
Climate change is a global tragedy of the commons that in a more perfect world would be addressed with a binding international agreement to eliminate greenhouse gas emissions . But that has not happened to date and may never happen quickly enough to address the climate challenge . Instead , a confluence of trends is driving capital away from fossil fuels and other polluting industries and toward companies and projects implementing climate solutions .
These trends are accelerating , providing the best and perhaps only remaining opportunity to avoid catastrophic climate change . Investors have a responsibility to understand the impact of these trends , both for their own financial benefit and for the greater good that comes from financing climate solutions . Like climate change , these trends have been slow to develop and poorly understood , but the momentum among investors is increasingly visible . As Hemingway famously wrote , wealth will be won and lost “ gradually and then suddenly .”
Bruce Usher is professor of professional practice and the Elizabeth B . Strickler ’ 86 and Mark T . Gallogly ’ 86 Faculty Director of the Tamer Center for Social Enterprise at Columbia Business School , where he teaches on the intersection of financial , social and environmental issues .
This article was excerpted from Investing in the Era of Climate Change by Bruce Usher , published by Columbia Business School Publishing . Copyright © 2022 Bruce Usher . Used by arrangement with the Publisher . All rights reserved .
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