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Category — Economics

Banks put a price on Earth’s life support

Paul Brown

Lake_and_forest_in_spring

Lake through the trees: Banks are hoping to protect such scenes, and the resources they contain. Image: JaneArt via Wikimedia Commons

Clean water, forests and other natural resources are being used unsustainably, so some of the world’s largest banks plan to cut credit for companies which rely on them but fail to value them.

It is not easy to put a value on a forest, a clean river, or unpolluted air, but that is what a group of the world’s biggest banks is attempting to do.

They have agreed that the way the present economic system uses and often destroys the environment without paying to do so is not sustainable.

The banks are also concerned that some companies are using up natural resources so fast, with no thought for their own future, let alone that of the planet, that they will collapse. They want a way of warning them and ultimately withdrawing their credit unless the companies mend their ways.

The 43 financial institutions, including the International Finance Corporation, the private sector arm of the World Bank, are setting up a working party as a consequence of the UN Conference on Sustainable Development in 2012, also known as the Rio+20 summit, when the initial 39 large banks signed a Natural Capital Declaration.

The declaration defined natural capital as “the Earth’s natural assets (soil, air, water, flora and fauna), and the ecosystem services resulting from them, which make human life possible.”

The document went on to say that the food, fibre, water, health, energy, climate security and other essential services provided by natural capital were worth trillions of dollars a year, but that they were not adequately valued. [Read more →]

August 31, 2013   No Comments

Perfect Storm Report

Tim Morgan

tpsi009_stormy_castle_ruinAs many readers will know, I’ve spent a long time researching a major report on the fundamentals of the economic outlook. This report is now available for download here.

The central theme is that we are at the confluence of no less than four critical economic trends. Whilst each is disturbing enough in itself, the combination of all four of these trends can indeed be described as a “perfect storm”.

First, still mired in the fall-out from the ‘credit super-cycle’, a bubble so vast that it makes Dutch tulips, British south sea stock, the 1840s railway boom and “the roaring twenties” look like “little local difficulties”.

Second, globalisation is now being exposed as a disaster which has driven a critical wedge between Western nations’ consumption and their production. Third, policymakers and the public do not even have access to data reliable enough for an accurate appraisal of the predicament.

Most important – given that the economy is an energy dynamic, not a monetary construct – the critical surplus energy component is now in rapid and seemingly-irreversible decline. Policymakers – blinded both by short-termism and by a focus on the monetary token rather than the energy reality – have yet to recognise the real problem.

The critical harbingers of the coming challenge are becoming ever clearer, in rising energy costs and in related pressures on energy-enabled resources as diverse as minerals, food and water. As the dysfunctional relationship between monetary claims and energy capabilities deteriorates, we can expect inflation to be stirred into a mix that is looking increasingly volatile.

July 17, 2013   No Comments