simon zadek

When HSBC’s Climate Change Centre for Excellence ” published Climate for Recovery“, there was real hope that our global hangover could be eased by spending on green rather than returning to our old ways. US$430 billion had been pumped by concerned governments at that time into Keynesian-style, demand-pumping to kick start near-dead economies. What an opportunity, the optimistic paper argued, for large-scale investment in green infrastructure.

Optimism has given way to awe-struck concern as the world’s richest economies totter on the brink of an emblematic ‘double dip’ recession. Green routes to recovery have been all but forgotten as Greece and Portugal renege on their pre-bail out commitments, Spain enters the target zone of bond-profiteering with the UK waiting in the wings for their unwelcomed turn in the spotlight. And now the US itself faces the embarrassing prospect of its very own Wall Street wanting to make yet more margins on its continued economic woes. As for US$430 billion, well it seemed such a huge number less than two years ago, but seems such a piffling amount in our new reality.

Green may well be the ‘new gold”, as best selling ‘wow’ books proclaim, but there is little sign that we are translating this message into practice. Quite the reverse, with growing desperation, policy-makers are seeking to promote any kind of economic demand that might pull their economies and political prospects away from the brink. The latest global carbon emissions report highlights the end of the recession induced carbon-honeymoon in signalling the highest levels of emissions ever recorded. The opportunity of leveraging the business cycle to detach emissions from GDP growth is more or less past. Effectively zero real rates of interest are not designed to focus on carbon-lite products, but anything that might generate a buck, or better still a job. And the banks – well, suffice to paraphrase one leading investor’s comments to me, “they are back at work as if they have slept through the recession and its causes, they feel no guilt, consider themselves politically invulnerable, and yet still have no real interest in investing in the green economy at scale”.

And whilst we are on this topic, there is the tantalising potential, still more or less on the table, of leveraging the financial market reforms in pursuit of sustainability, a point i have highlighted in my report on the Bretton Woods event in April. This second unintended opportunity arising from the financial meltdown remains, in my view, the best deal in town for those with an appetite for major change and a will to struggle with the back-dragging political currents amply resourced by the financial services sector. The policy research and engagement emerging in the context of my work at the Centre for International Governance Innovation, along with the Institute for New Economic Thinking, will hopefully help us to take advantage of this opportunity going forward.

Greening the roots to recovery has so far turned out to be less of a route pursued than one wished for. The potential for leveraging the Keynesian-style demand management involving now trillions of tax dollars, has been all but lost, sadly and to our cost. However, the financial market reforms, although losing traction all too quickly, remains out there to be seduced and bullied into the realm of sustainability.