Financing our Anthropocene: How Wall Street, Main Street and Central Banks Can Manage, Fund and Hedge Our Global Commons

125 Pages·2023·3.195 MB·English

by  Stefan Brunnhuber

Sustainable Finance
Stefan Brunnhuber
Financing our
Anthropocene
How Wall Street, Main Street and
Central Banks Can Manage, Fund and
Hedge Our Global Commons
Sustainable Finance
SeriesEditors
KarenWendt,CEO.EccosImpactGmbH,PresidentofSwissFinTechLadies,Pres-
identSustainable-Finance,Cham,Zug,Switzerland
MargaretheRammerstorfer,ProfessorforEnergyFinanceandInvestments,Institute
forFinance,BankingandInsuranceWUVienna,Vienna,Austria
SustainableFinanceisaconciseandauthoritativereferenceserieslinkingresearch
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Stefan Brunnhuber
Financing our Anthropocene
How Wall Street, Main Street and Central
Banks Can Manage, Fund and Hedge Our
Global Commons
StefanBrunnhuber
FullMemberClubofRome
UniversityofappliedScienceMittweida
Mittweida,Sachsen,Germany
ISSN2522-8285 ISSN2522-8293 (electronic)
SustainableFinance
ISBN978-3-031-23284-8 ISBN978-3-031-23285-5 (eBook)
https://doi.org/10.1007/978-3-031-23285-5
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We know that our common future
depends on the next generations
and their ability to make
their own choices about their own lives.
I dedicate this book to
Anne-Sophie and Samuel-Alexander,
who have to bear the
consequences of the decisions
we are making today –
both good and bad.
Foreword
Fiftyyearsago,theauthorsoftheseminalreporttotheClubofRome‘TheLimitsto
Growth’ (footnote) concluded that if humanity kept pursuing material growth and
exponentialconsumptionwithoutregardforfinitenaturalresourcesorenvironmen-
tal costs, global society would overshoot Earth’s physical limits and experience
sharpdeclinesinavailablefoodandstandardsofliving,withanensuingdeclinein
thehumanpopulation,withinthefirsthalfofthetwenty-firstcentury.Today,weare
inafullworldof7.8billionpeopleandnotintheemptyworldof3.8billionof1972,
andweareexperiencingsocialandenvironmentaltippingpointsresultingfromthe
dysfunctionality of our neoliberal economic, financial and political systems as
predictedintheLimitstoGrowthscenarios.
Sincethe1970s,thefinancialsystemhaschangedsignificantly.Thegoalforthe
financialsystembecamethecreationofshareholderorfinancialvalue;thepractices
gearedtowardstradingandcapitalmarketsratherthanrelationshipswithclients;and
investment chains have become long and complicated. These trends led to an
endogenous growth of the financial system shifting beyond its original function of
financing governments, business and households (ref. Rethinking Finance Impact
Hub–Changefinancepaper, ClubofRome2022). Theendogenousgrowthofthe
financial system was created on the back of an extractive economy and the exter-
nalisationofecologicalandsocialcosts,thusmaximisingprivatefinancialgainsfor
a few actors rather than society at large. Needless to say, the current neoliberal
economicmodelwhichincludestheover-financialisationofoureconomynolonger
reflectstheneedsofpeopleandplanetnordoesitensureprosperityorwell-beingfor
all.Onthecontrary,humanandplanetaryhealthonlycontinuestodegrade.
This50thanniversaryyearofthepublicationofTheLimitstoGrowthforcesusto
reflectonwhysomedecision-makersnotonlydisregardedbutcontinuetopublicly
discreditthemessagesinthebook,aswellasagrowingbodyofliteratureandpleas
forsystemschangeoverthelast5decades.Understandingthedepthofthesystemic
changes we need to the current financial system and the neoliberal ‘growth’ para-
digm is paramount as it is the root cause of continued poverty, inequality and
planetarydistress.Fiftyyearson,theEarthforAllinitiative,anetworkofscientists,
ix
x Foreword
economists and thought leaders exploring the collective future of humanity this
century, has acknowledged that ‘Civilization is at a unique moment, a juncture’
whichwecategoricallydefineasaplanetaryemergency,requiringnothingshortof
fiveextraordinaryturnaroundswithinthecomingdecades.However,wealsoclaim
that it is the social tipping points that now create the greatest existential risk to
humanity and that net zero carbon goals will only be met ifthey are matched with
targetsfornetzeropoverty,inequalityandbiodiversityloss.
Designinganewfinancialsystemstartswithadeepunderstandingthat‘financing
a sustainable future’ does not equate to ‘sustainable finance’. Financing the
Anthropocene unpacks the difference and enables us to better understand possible
avenues towards addressing the stability and long-term prospects of the financial
andmonetarysector’smodusoperandi,assessingitsintrinsiccontributionsoasto
achieveabetterresultforplanet,people,profits,prosperityandacommonpurpose,
inessenceapplyinga‘changefinance’agendathatensuresweachieve‘sustainable
finance’ataglobalscale.
Wenowhavelimitedtimetotranslateourknowledgeofafunctioning‘sustain-
able finance’ system and ensure that we truly do change the financial system to
reflecttwenty-first-centuryneedsandbuildresiliencetofutureshocksandstresses.
Oneimportantunderlyingandreinforcingdynamic,acknowledgedinEarthforAll:
A Survival Guide for Humanity, is the systems-level consequence of the growth
paradigmwhichcatalysedanoverlyfinancialisedeconomicsystemandhasledtoa
degreeofpathdependencyandlock-inofanunsustainableregime.Suchdependen-
ciesrequireustoshort-circuittoday’saddictionwithgrowthandshort-termprofits
and understand that we need deeper joined-up system changes rather than siloed
silver bullets. For example, focusing on technology fixes to climate change unfor-
tunately creates a distraction from deeper net zero levers that address poverty and
inequality at the same time. Core to this paradigm shift is the recognition that
sustainable finance cannot be achieved through the traditional lenses of financial
risk and return alone: integration of environmental and social outcomes must be
bakedintothecorepurposeoffinanceandfinancialregulationnotjustperceivedasa
climatemitigationtool.
Today, we need a body of collective strategic analysis that shows possible
pathways across our economic and financial systems to match the above more
holisticnetzeroobjectives.Thisanalysismustgohandinglovewithanoptimisation
plan for the translation of both Sustainable Development Goals (SDGs) across all
national development plans while underpinning the realisation of regional policy
objectivesthatarevisionaryinscopeyetcurrentlynotfullyimplementedinpractice
suchastheEuropeanGreenDeal(EGD).Thisbookisanimportantcontributionto
the growing body of knowledge in this area. It offers thinking and levers that
differentiatebetween‘financingchange’and‘changingfinance’.
Wemustlearnfromthepastnotonlytoensureabrighterfuturebuttoputinplace
thecatalyticshort-termleverstodaythatwillenablethelong-termfinancialsystems
shiftswerequire.Thiscallsuponustoputinplaceamultifacetedagendathathitsa
seriesofsystemshiftsatthesametimefrompolicycontroloverfinancialmarketsto
movingbeyondGDPandneoliberaleconomictheorytoreducingshort-termprofit-
Foreword xi
makingand decision-making that currently onlyservicescorporationsand wealthy
elites.Itcallsuponustofundamentallyembracetwenty-firstcenturyconceptsnow
ripe foradoption aswe face thecompoundeffectsfrom the3C’s:COVID,climate
changeandconflict.
FinancingtheAnthropoceneprovidesmoreconcreteexamplesandbestpractices
that unpack possible financial solutions and a risk-adjusted monetary system that
addresses the 3C’s above including the relationship between war and peace; over-
comingthe‘resourcecurse’;andtoday’sgrowingeconomicchallengesofimported
inflation. In all three cases, we see a direct relevance totoday’schallenges andthe
need to better navigate short-term decision-making with long-term systems levers
ratherthanknee-jerkreactionsthatwillnotenabletheresiliencetofutureshocksand
stresses.
NotonlydoesFinancingtheAnthropoceneshowustheperversitiesofafinancial
and economic system driven by a neoliberal growth model and short-term profits,
but it shows us possible pathways towards achieving a new sustainable finance
architecturethatcouldtransformtheimplementationoftheSDGsandtheEGDinto
realityatatimewhenitismostneeded.BoththeSDGsandEGDofferavisionto
Europeandtheworldofanewsystemsconstructthatunderpinsachievingsocialand
environmental well-being within the planetary boundaries. If we could indeed
finance the Anthropocene without costing us the earth and the extinction of all
species we will have won the battle against the limits to growth. This book offers
keyinsightsintopossiblepathwaystomakethisareality.
ClubofRome SandrineDixson-Declève
Zurich,Switzerland