The real credit crisis

Posted by: Paul Donovan

08 Feb 2019
  • Over the long term, a growth-destroying credit crisis is a very real risk. This is not a financial credit crisis. This is an environmental credit crisis. Today's living standards depend on using things in an unsustainable way. We borrow from tomorrow's environment to get today's standard of living. If the environmental credit stops (a credit crunch), today's standard of living drops.
  • Sustainability problems already hurt the world economy. The economic havoc of extreme cold weather in the US mid-west today may be the result of climate change. In late 2018, the economic cost of the river Rhine having too little water was significant.
  • This should give private capital an incentive to invest in the United Nations' sustainable development goals (SDGs). Private sector pain could be offset by private sector investment. Sadly the UN goals are not well-known. The global information age does not prevent ignorance. Multiple ways of measuring sustainability confuses private investors about how best to tackle the environmental credit crunch. A company can be highly rated on one sustainability measure, and be at the bottom of the list on another. These problems need to be tackled, to get the vast power of private money to tackle the environmental credit crunch.

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