The environment and high finance are strange bedfellows – but a new movement is raising billions to fight climate change. A breakthrough – or green hogwash?
A MID-LIFE crisis brought Sean Kidney his epiphany. “My father died and I had a stroke,” he says. “It was a wake-up call about what I was doing to create a world my kids could survive in.” Kidney had been a consultant on top Australian pension funds, but now he vowed to put his skills to use in a new way: combatting climate change.
Finance and the environment are traditionally uneasy bedfellows, but they have been getting cosier of late. Buoyant returns from green investments, plus the ever clearer financial repercussions of climate inaction, have drawn vast flows of money into projects to combat and mitigate global warming. It’s also spawning alternative types of investment designed to help save the planet. Could capitalism succeed where governments have largely failed – or is this all green hogwash?
The fixation on fast returns makes finance seemingly ill-equipped to cope with a long-term problem like climate change. Traders’ algorithms make money over timespans of milliseconds; CEOs can be hired and fired based on quarterly returns; even central banks tend to work on two or three-year cycles when setting monetary policy. Mark Carney, governor of the Bank of England, acknowledged as much in a speech in 2015. Climate change is a “tragedy of the horizon”, he said at Lloyd’s, the London-based insurer. “Once climate change becomes a defining issue for financial stability, it may already be too late.”
Since then, however, a new wind has begun blowing. Low-carbon technologies have continued to mature, with solar energy in particular graduating from high-cost niche to financial superstardom, thanks …