Business holds the key to tackling the climate crisis

Editorial: There is an increasing consciousness that business and finance has to play a part or else be forced to do so

Boris Johnson at the climate summit on Tuesday (Getty)

The prime minister, in typical soaring style, told the Cop26 summit that the “promethean power of human invention” will help solve the climate emergency. “We have a bomb disposal team on site and they are starting to snip some of the wires, some of the right wires I hope,” the prime minister said.

Sounding a little like a con man who has spied a vulnerable “mark”, he picked Bill Gates’s pocket of $400m (£294m) to help fund low carbon air transportation, as if to pre-empt the critics who have already got wind that he will be flying back to London from the summit. Impressive as the Gates pledge is, it’s no excuse for setting such a poor example to others. Then again, this is the man who nodded off at the opening ceremony of his own global summit. Mr Johnson’s breathtaking arrogance also has a certain promethean quality to it.

As the presence of Mr Gates and Jeff Bezos at the Cop26 indicates, hard cash will be needed to move the world from its carbon-based past to a renewable, sustainable future. Such progress as has been made in the three decades or so since the first Earth Summit has been achieved in the public sphere – governments and NGOs spending the money, taking the initiative, setting targets, changing rules, banning things, and passing legislation. Private business and finance have been absent from the scene. Beyond a few increasingly derided attempts at “greenwashing” and a generally complacent attitude to the climate emergency, the banks and businesses have been on the sidelines, watching and waiting to be told what to do.

That may now be changing. “We’ve been asking for action on coal, cars, cash and trees, and after just a couple of days we can certainly begin to tick three of those boxes,” said Johnson.

There is an increasing consciousness that business and finance has to play a part, or else be forced to do so. More to the point, the private sector seems more inclined to think of climate action not so much as an obstacle to making money for their investors, but as a new and lucrative opportunity to turn market mechanisms into a way of helping save humanity as a whole.

The ultimate market failure – over centuries – has been to take zero account of the effect of pollution and greenhouse gas emissions on the planet and all who live on it. Only recently have even the crudest forms of carbon trading been introduced, and they have had an effect on the behaviour of power generators and heavy industry. These now need to be turned into a comprehensive global system of carbon pricing, so that, at last, humanity manages to put a monetary value on its continued existence.

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Mark Carney, former governor of the central banks of Canada and the UK, speaks on Churchillian, and Johnsonian, terms of this moment being the “end of the beginning” for the global financial sector’s attitude to the climate crisis. If banks and investors – bond buyers, shareholders – are incentivised not to plough funds into coal production, through the proper accounting of carbon emissions, then it will indeed fall off. If financial institutions spy the opportunity to make money from the expansion of the new, promethean, green technologies, then trillions of dollars will indeed be diverted into new start-ups and adapting old fossil fuel giants alike. Green bonds and sustainable equity funds will find a ready, mainstream market, rather than being a niche product appealing only to a minority with a conscience.

It is, as Mr Carney says, only a beginning. Some 450 companies have signed up to the Glasgow Financial Alliance for Net Zero, which he set up. More will follow. Rishi Sunak will announce further initiatives. The sums involved are, like the climate emergency, of planetary scale. Many in the UK are overawed by the £1.4 trillion it will cost over the next few decades to transform the British economy and much of the way of life of the British people – their cars, the heating for their homes, the food they eat, the flights they take, what they make and what they farm. On a global scale the “cost” will run to hundreds of trillions of dollars. Yet that cost should be balanced by an equal sum of benefit to humanity as a whole, and the spending and investment needed to make the 21st century one of transition is where the profits are to be found. Just as private enterprise powered the first industrial revolution built on steam, and subsequent waves driven by the internal combustion engine, electricity and the new technologies, so it should be in a position to underwrite the green revolution.

The costs to consumers and businesses of going green will be substantial, but the funds will be better spent in a world where market forces are managed and properly adjusted to take account of the existential cost of running a carbon-based economy.

The world at least now realises that doing nothing about the climate crisis will cost humanity far more than any green new deal might. There are no profits to be had on a dead planet.

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