Finance firms want to do the right thing, as shown by today’s announcement from Mark Carney and Rishi Sunak on the trillions available to help the climate. But the private sector needs a little help from politicians.
Bankers and investors want global leaders to agree on a system for putting a price on carbon dioxide - the toxic gas slowly suffocating our planet. A tax, a cap and trade system - it doesn’t matter. Just as long as there’s a number on it.
For finance folk, the climate catastrophe is a failure of economics. Prices reflect the cost of putting something together and getting it to you. But they haven’t reflected the cost to the planet of doing all that. Putting a price on carbon would fix that.
In the short run that would make a lot of things more expensive. But that’s the point. Economists don’t agree on a lot of things but the one thing they do agree is that if you make something pricier, people will use less of it.
A carbon price would also spur innovation. Products wouldn’t disappear - the private sector would find an alternative. The success of the sugar tax in the UK is a good example. Fizzy drinks haven’t disappeared but sweeteners have displaced a lot of the refined stuff.
Unfortunately, a price on carbon is almost certainly going to remain a hope rather than reality. World leaders are struggling to agree on anything of substance at COP and the absence of China - by far the world’s biggest carbon dioxide - means that even if an agreement was reached it would be toothless.