First published on LinkedIn Articles on Oct 9, 2023
The IMF and the World Bank tried to make Climate Finance the topic of the week. The issue is headlining multiple panels planned for their annual meeting happening in Marrakesh this week. But bombs and missiles, heavy artillery and weapons being deployed across the globe — from outright war to domestic conflicts propped up by illicit conglomerates — continue to steal the limelight.
My original plan for this post was to comment on the suggestions the Fund’s Global Financial Stability Report has for poor countries struggling to attract climate-related financing. Ideas to help nations be more attractive to capital, all based on studies and data, of course. The Fund’s economists work on the real world, and their recommendations are worthy of attention: develop a taxonomy, standardize your data — investors need to be able to measure and compare to decide where to put their money. Organize domestic capital markets so investors can figure out how to get their money into your projects/plans/needs. And many more sensible ideas and analysis, from ESG to credit ratings. Also, to be fair, they spell it out that the Fund itself can help countries achieve those goals.
Myself, I do not operate in the real world. My words have no applicable impact such as theirs, therefore, since I am free to think and write as I wish, I will question the premisse. Even with technical help, poor countries with feeble resources, dealing with floods and droughts, populations fleeing dire realities on dingy boats or on foot, even nations where money does pour in but only to extract natural resources by hand, just to start the list, how can governments facing these challenges direct efforts to standardize (or even collect) data or organize its capital markets?
Of course, the Fund and the World Bank are financial institutions. Their job is to look at financial markets, and operate within the realms of how money travels today. But what if instead of asking the poor and the developing (and sometimes the bombed and attacked, the overtaken by rentists and illicit organizations) nations to adapt to the global financial system, we figured out how to change the incentives that govern capital markets? What if we changed the carrots that make it so hard for those making decisions about money to choose what in fact protects us all— mitigation and adaptation and, hopefully, going carbon free a lot faster than today’s plans?
Capital flows aren’t laws of nature, we decide on incentives and act on them. We’re trying to adapt our current challenge to the mechanics of money flows that we created ourselves, as opposed to repairing those mechanics to suit our existential need to survive as a species.
Meanwhile, the wave of hatred being acted-upon with unspeakable violence thwarts any and all efforts to make the planet livable. I don’t want to be a pessimist, but it does feel like we’re expediting our demise.
We could try different incentives. The financing world is populated by people that make decisions, but they have mandates and rules to follow. Asking them to “do good” will never unleash the trillions that IMF economists are telling us we need right now. And maybe rethinking incentives to investments and capital could even impact the forces multiplying exponentially the impact of hatred and the reach of our violent instincts.
Utopia? As Brazil’s Environment Minister Marina Silva said, if no one had dreamed of using solar power, we wouldn’t have it today. So why not think outside the box? I suggest a new global currency. No, not bitcoin, the CO2Eqv. Instead of setting a dollar price on carbon emissions, let’s price things on CO2 Equivalents instead. How much for an oil barrel? 1,000 CO2Eqvs. A pair of jeans? 10 CO2Eqvs. A missile? 100million CO2Eqvs. In place of mining cryptos, let’s go out there and capture emissions before spending it.
Or we could put a price on peace. Make it tradable and profitable.
OK, mine are laughable. But there are many people out there with serious and applicable ideas. Let’s find them. Let’s try them. Let’s focus.
Cecilia Tornaghi 