Finance:Green economy

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Short description: Economy based on ecological economics
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A green economy is an economy that aims at reducing environmental risks and ecological scarcities, and that aims for sustainable development without degrading the environment.[1][2][3] It is closely related with ecological economics, but has a more politically applied focus.[4][5] The 2011 UNEP Green Economy Report argues "that to be green, an economy must not only be efficient, but also fair. Fairness implies recognizing global and country level equity dimensions, particularly in assuring a Just Transition to an economy that is low-carbon, resource efficient, and socially inclusive."[6]

A feature distinguishing it from prior economic regimes is the direct valuation of natural capital and ecological services as having economic value (see The Economics of Ecosystems and Biodiversity and Bank of Natural Capital) and a full cost accounting regime in which costs externalized onto society via ecosystems are reliably traced back to, and accounted for as liabilities of, the entity that does the harm or neglects an asset.[7]

Green sticker and ecolabel practices have emerged as consumer facing indicators of friendliness to the environment and sustainable development. Many industries are starting to adopt these standards as a way to promote their greening practices in a globalizing economy. Also known as sustainability standards, these standards are special rules to make sure the products bought did not hurt the environment and the people that make them. The number of these standards has increased in recent years, and they now contribute to building a new, greener economy. However, their effectiveness is often limited by inconsistent enforcement, lack of global alignment, and insufficient incentives for compliance. They focus on economic sectors like forestry, farming, mining or fishing, among others; concentrate on environmental factors like protecting water sources and biodiversity, or reducing greenhouse gas emissions; support social protections and workers' rights; and home in on specific parts of production processes.[8]

Green economists and economics

According to Büscher, the increasing liberalisation of politics since the 1990s has meant that biodiversity must 'legitimise itself' in economic terms. Many non-governmental organisations, governments, banks, companies and so forth have started to claim the right to Define and defend biodiversity and in a distinctly neoliberal manner that subjects the concept's social, political, and ecological dimensions to their value as determined by capitalist markets.[9]


An increasing commitment by the UNEP (and national governments such as the UK) to the ideas of natural capital and full cost accounting under the banner 'green economy' could blur distinctions between the schools and redefine them all as variations of "green economics". As of 2010 the Bretton Woods institutions (notably the World Bank[10] and International Monetary Fund (via its "Green Fund" initiative) responsible for global monetary policy have stated a clear intention to move towards biodiversity valuation and a more official and universal biodiversity finance.[11]

The UNEP 2011 Green Economy Report informs that "based on existing studies, the annual financing demand to green the global economy was estimated to be in the range US$1.05 to US$2.59 trillion. To place this demand in perspective, it is about one-tenth of total global investment per year, as measured by global Gross Capital Formation."[6]

At COP26, the European Investment Bank announced a set of just transition common principles agreed upon with multilateral development banks, which also align with the Paris Agreement. The principles refer to focusing financing on the transition to net zero carbon economies, while keeping socioeconomic effects in mind, along with policy engagement and plans for inclusion and gender equality, all aiming to deliver long-term economic transformation.[12][13]

The African Development Bank, Asian Development Bank, Islamic Development Bank, Council of Europe Development Bank, Asian Infrastructure Investment Bank, European Bank for Reconstruction and Development, New Development Bank, and Inter-American Development Bank are among the multilateral development banks that have vowed to uphold the principles of climate change mitigation and a Just Transition. The World Bank Group also contributed.[12][14][15]

Definition

Karl Burkart defined a green economy as based on six main sectors:[16]

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The International Chamber of Commerce (ICC), representing global business, defines the green economy as "an economy in which economic growth and environmental responsibility work together in a mutually reinforcing fashion while supporting progress on social development".[17][18]

In 2012, the ICC published the Green Economy Roadmap, containing contributions from international experts consulted bi-yearly. The Roadmap represents a comprehensive and multidisciplinary effort to clarify and frame the concept of "green economy". It highlights the role of business in bringing solutions to global challenges. It sets out the following 10 conditions which relate to business/intra-industry and collaborative action for a transition towards a green economy:

  • Open and competitive markets
  • Metrics, accounting, and reporting
  • Finance and investment
  • Awareness
  • Life cycle approach
  • Resource efficiency and decoupling
  • Employment
  • Education and skills
  • Governance and partnership
  • Integrated policy and decision-making

Finance and investing

This section is an excerpt from Eco-investing[ edit ]

Green growth

This section is an excerpt from green growth[ edit ]

Approximately 57% of businesses responding to a survey are investing in energy efficiency, 64% in reducing and recycling trash, and 32% in new, less polluting industries and technologies. Roughly 40% of businesses made investments in energy efficiency in 2021.[19][20]

Ecological measurements

Measuring economic output and progress is done through the use of economic index indicators. Green indices emerged from the need to measure human ecological impact, efficiency sectors like transport, energy, buildings and tourism, as well as the investment flows targeted to areas like renewable energy and cleantech innovation.

  1. 2016 - 2022 Green Score City Index[21] is an ongoing study measuring the anthropogenic impact human activity has on nature.
  2. 2010 - 2018 Global Green Economy Index™ (GGEI),[22] published by consultancy Dual Citizen LLC is in its 6th edition. It measures the green economic performance and perceptions of it in 130 countries along four main dimensions of leadership & climate change, efficiency sectors, markets & investment and the environment.
  3. 2009 - 2013 Circles of Sustainability project scored 5 cities in 5 separate countries.
  4. 2009 - 2012 Green City Index [23] A global study commissioned by Siemens

Ecological footprint measurements are a way to gauge anthropogenic impact and are another standard used by municipal governments.[24]

Green energy issues

Green economies require a transition to green energy generation based on renewable energy to replace fossil fuels as well as energy conservation and efficient energy use.[25] Renewables, like solar energy and wind energy, may eliminate the use of fossil fuels for electricity by 2035 and replace fossil fuel usage altogether by 2050.[26]

The market failure to respond to environmental protection and climate protection needs can be attributed to high external costs and high initial costs for research, development, and marketing of green energy sources and green products.[27] The green economy may need government subsidies as market incentives to motivate firms to invest and produce green products and services. The German Renewable Energy Act, legislations of many other member states of the European Union and the American Recovery and Reinvestment Act of 2009, all provide such market incentives. However, other experts[28] argue that green strategies can be highly profitable for corporations that understand the business case for sustainability and can market green products and services beyond the traditional green consumer.

In the United States, it seemed as though the nuclear industry was coming to an end by the mid-1990s. Until 2013, there had been no new nuclear power facilities built since 1977. One reason was due to the economic reliance on fossil fuel-based energy sources. Additionally, there was a public fear of nuclear energy due to the Three Mile Island accident and the Chernobyl disaster.[29] The Bush administration passed the 2005 Energy Bill that granted the nuclear industry around 10 million dollars to encourage research and development efforts.[30] With the increasing threat of climate change, nuclear energy has been highlighted as an option to work to decarbonize the atmosphere and reverse climate change.[31] Nuclear power forces environmentalists and citizens around the world to weigh the pro and cons of using nuclear power as a renewable energy source. The controversial nature of nuclear power has the potential to split the green economy movement into two branches— anti-nuclear and pro-nuclear.

According to a European climate survey, 63% of EU residents, 59% of Britons, 50% of Americans and 60% of Chinese respondents are in favor of switching to renewable energy. As of 2021, 18% of Americans are in favor of natural gas as a source of energy. For Britons and EU citizens nuclear energy is a more popular energy alternative.[32]

After the COVID-19 pandemic, Eastern European and Central Asian businesses fall behind their Southern European counterparts in terms of the average quality of their green management practices, notably in terms of specified energy consumption and emissions objectives.[33][34]

External variables, such as consumer pressure and energy taxes, are more relevant than firm-level features, such as size and age, in influencing the quality of green management practices.[33][34] Firms with less financial limitations and stronger green management practices are more likely to invest in a bigger variety of green initiatives. Energy efficiency investments are good to both the bottom line and the environment.[33][34]

The shift to greener energy and the adoption of more climate regulations are expected to have a 30% positive impact on businesses, mostly through new business prospects, and a 30% negative impact, according to businesses that took part in a survey in 2022. A little over 40% of the same businesses do not anticipate the transition to greener alternatives to alter their operations.[35][36][37]

Criticism

A number of organisations and individuals have criticised aspects of the 'Green Economy', particularly the mainstream conceptions of it based on using price mechanisms to protect nature, arguing that this will extend corporate control into new areas from forestry to water. Venezuelan professor Edgardo Lander says that the UNEP's report, Towards a Green Economy,[38] while well-intentioned, "ignores the fact that the capacity of existing political systems to establish regulations and restrictions to the free operation of the markets – even when a large majority of the population call for them – is seriously limited by the political and financial power of the corporations".[39]

Ulrich Hoffmann, in a paper for UNCTAD, also says that the focus on Green Economy, and "green growth" in particular, "based on an evolutionary (and often reductionist) approach will not be sufficient to cope with the complexities of climate change" and "may rather give much false hope and excuses to do nothing really fundamental that can bring about a U-turn of global greenhouse gas emissions".[40] Clive Spash, an ecological economist, has criticised the use of economic growth to address environmental losses,[41] and argued that the Green Economy, as advocated by the UN, is not a new approach at all and is actually a diversion from the real drivers of environmental crisis.[42] He has also criticised the UN's project on the economics of ecosystems and biodiversity (TEEB),[43] and the basis for valuing ecosystems services in monetary terms.[44]

See also

References

  1. ↑ Loiseau, Eleonore; Saikku, Laura; Antikainen, Riina; Droste, Nils; Hansjürgens, Bernd; Pitkänen, Kati; Leskinen, Pekka; Kuikman, Peter et al. (2016). "Green economy and related concepts: An overview". Journal of Cleaner Production 139: 361–371. doi:10.1016/j.jclepro.2016.08.024. Bibcode: 2016JCPro.139..361L. https://hal.inrae.fr/hal-02604567/file/pub00050563.pdf. 
  2. ↑ Georgeson, Lucien; Maslin, Mark; Poessinouw, Martyn (2017). "The global green economy: a review of concepts, definitions, measurement methodologies and their interactions". Geo: Geography and Environment 4 (1). doi:10.1002/geo2.36. Bibcode: 2017GeoGE...4E..36G. 
  3. ↑ Telukdarie, Arnesh; Katsumbe, Tatenda; Mahure, Hlobisile; Murulane, Khuliso (2024). "Exploring the green economy – A systems thinking modelling approach". Journal of Cleaner Production 436. doi:10.1016/j.jclepro.2024.140611. Bibcode: 2024JCPro.43640611T. 
  4. ↑ "United Nations Environment Programme (UNEP)". http://www.unep.org/greeneconomy/AboutGEI/WhatisGEI/tabid/29784/Default.aspx. 
  5. ↑ Lynn R. Kahle, Eda Gurel-Atay, Eds (2014). Communicating Sustainability for the Green Economy. New York: M.E. Sharpe. ISBN 978-0-7656-3680-5. 
  6. ↑ 6.0 6.1 UNEP, 2011, Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication, www.unep.org/greeneconomy
  7. ↑ Runnals, D. (2011) "Environment and economy: joined at the hip or just strange bedfellows?". S.A.P.I.EN.S. 4 (1)
  8. ↑ "About UNFSS" (in en-US). https://unfss.org/home/about-unfss/. 
  9. ↑ Death, C. (2013). Critical Environmental Politics. Interventions. Taylor & Francis. pp. 17–19. ISBN 978-1-134-68406-9. https://books.google.com/books?id=pttJAgAAQBAJ&pg=PA18. Retrieved 29 May 2023. 
  10. ↑ "World Bank to lead economic push on nature protection". BBC News. 28 October 2010. https://www.bbc.co.uk/news/science-environment-11642538. 
  11. ↑ "World Bank Group and International Monetary Fund" (in en). 14 March 2019. https://www.cbd.int/financial/wb.shtml. 
  12. ↑ 12.0 12.1 Bank, European Investment (2022-07-06) (in en). EIB Group Sustainability Report 2021. European Investment Bank. ISBN 978-92-861-5237-5. https://www.eib.org/en/publications/sustainability-report-2021. 
  13. ↑ "ENER - Item". https://ec.europa.eu/newsroom/ener/items/730934/en. 
  14. ↑ "Multilateral Development Banks" (in en). 2019-04-12. https://www.afdb.org/en/topics-and-sectors-partnerships-partners/multilateral-development-banks. 
  15. ↑ "Collective Climate Ambition — A Joint Statement at COP26 by the Multilateral Development Banks" (in en). 2021-11-05. https://www.adb.org/news/collective-climate-ambition-joint-statement-cop26-multilateral-development-banks. 
  16. ↑ "What is Green Economy? Here's a Simple Explanation" (in en-gb). 2020-06-30. https://www.sociologygroup.com/green-economy/. 
  17. ↑ "Green Economy Roadmap". International Chamber of Commerce. 2012. p. 10. https://iccwbo.org/content/uploads/sites/3/2012/08/Green-Economy-Roadmap-a-guide-for-business_-policy-makers-and-society.pdf. 
  18. ↑ UNDESA, (2012). A guidebook to the Green Economy.
  19. ↑ Bank, European Investment (2022-11-08) (in en). EIB Investment Survey 2022 - EU overview. European Investment Bank. ISBN 978-92-861-5397-6. https://www.eib.org/en/publications/20220219-econ-eibis-2022-eu. 
  20. ↑ "Press corner" (in en). https://ec.europa.eu/commission/presscorner/home/en. 
  21. ↑ "City index scoreboard - Canada". https://greenscore.eco/city-index-scoreboard.html. 
  22. ↑ "2016 Global Green Economy Index". Dual Citizen LLC. 19 September 2016. http://dualcitizeninc.com/GGEI-2016.pdf. 
  23. ↑ "Home - English - Siemens Global Website". http://www.siemens.com/entry/cc/en/greencityindex.htm. 
  24. ↑ "Ecological Footprints of Canadian Municipalities and Regions". January 2005. https://data.fcm.ca/documents/reports/Ecological_Footprints_of_Canadian_Municipalities_and_Regions_EN.pdf. 
  25. ↑ Aswathanarayana, U.; Harikrishnan, T.; Kadher-Mohien, T.S. (2010). Green Energy: Technology, Economics and Policy. A Balkema book. CRC Press. pp. 1–2. ISBN 978-0-203-84146-4. https://books.google.com/books?id=P0_LBQAAQBAJ. Retrieved 29 May 2023. 
  26. ↑ Vetter, David. "How Renewables Could Kill Off Fossil Fuel Electricity By 2035: New Report" (in en). https://www.forbes.com/sites/davidrvetter/2021/04/26/how-renewables-could-kill-off-fossil-fuel-electricity-by-2035-new-report/. 
  27. ↑ (Reinhardt, 1999; King and Lenox, 2002; Wagner, 203; Wagner, et al., 2005)
  28. ↑ Amory Lovins, Hunter Lovins, and Paul Hawken, authors of Natural Capitalism: Creating the Next Industrial Revolution, and Jay Conrad Levinson and Shel Horowitz, authors of Guerrilla Marketing Goes Green
  29. ↑ "Nuclear Power in the USA - World Nuclear Association". https://www.world-nuclear.org/information-library/country-profiles/countries-t-z/usa-nuclear-power.aspx. 
  30. ↑ Kessler, Günter (2012), "The Development of Nuclear Energy in the World", Sustainable and Safe Nuclear Fission Energy, Power Systems (Berlin, Heidelberg: Springer Berlin Heidelberg): pp. 1–13, doi:10.1007/978-3-642-11990-3_1, ISBN 978-3-642-11989-7 
  31. ↑ "Which Technology Will Most Impact The Future Of Energy? 18 Experts Share Their Insights" (in en-US). 2019-06-29. https://www.disruptordaily.com/energy-technology-trends/. 
  32. ↑ "2021-2022 EIB Climate Survey, part 1 of 3: Europeans sceptical about successfully reducing carbon emissions by 2050, American and Chinese respondents more confident" (in en). https://www.eib.org/en/surveys/climate-survey/4th-climate-survey/skepticism-reduced-carbon-emission-targets.htm. 
  33. ↑ 33.0 33.1 33.2 Bank, European Investment (2022-05-18) (in en). Business resilience in the pandemic and beyond: Adaptation, innovation, financing and climate action from Eastern Europe to Central Asia. European Investment Bank. ISBN 978-92-861-5086-9. https://www.eib.org/en/publications/business-resilience-in-the-pandemic-and-beyond. 
  34. ↑ 34.0 34.1 34.2 "Pathways to Sustainable Energy". https://unece.org/DAM/energy/se/pdfs/CSE/Publications/Final_Report_PathwaysToSE.pdf. 
  35. ↑ European Investment Bank.; Ipsos Public Affairs. (2022-11-08) (in en). EIB Investment Survey 2022 - EU overview. European Investment Bank. doi:10.2867/488028. ISBN 978-92-861-5397-6. https://www.eib.org/en/publications/20220219-econ-eibis-2022-eu. 
  36. ↑ Kuik, Friderike; Morris, Richard; Sun, Yiqiao (2022-06-22) (in en). The impact of climate change on activity and prices – insights from a survey of leading firms. https://www.ecb.europa.eu/pub/economic-bulletin/focus/2022/html/ecb.ebbox202204_04~1d4c34022a.en.html. 
  37. ↑ "Green business opportunities and net zero | McKinsey". https://www.mckinsey.com/capabilities/sustainability/our-insights/accelerating-toward-net-zero-the-green-business-building-opportunity. 
  38. ↑ "Green Economy - Green Economy Report". UNEP. 2011-11-16. http://www.unep.org/greeneconomy/greeneconomyreport/tabid/29846/default.aspx. 
  39. ↑ "The Green Economy: the Wolf in Sheep's clothing". Transnational Institute. http://www.tni.org/report/green-economy-wolf-sheeps-clothing. 
  40. ↑ Hoffmann, U. (2011), "Some reflections on climate change, green growth illusions and development space"
  41. ↑ Spash, C.L. 2007. Fallacies of economic growth in addressing environmental losses: Human induced climatic change. Newsletter of the Australia New Zealand Society for Ecological Economics (ANZSEE), no. May, 2-4
  42. ↑ "EconPapers: Green Economy, Red Herring". http://econpapers.repec.org/article/envjournl/ev21_3aeditev212.htm. 
  43. ↑ Spash, Clive L. (2011). "Terrible Economics, Ecosystems and Banking" (in en). Environmental Values 20 (2): 141–145. doi:10.3197/096327111X12997574391562. ISSN 0963-2719. https://journals.sagepub.com/doi/10.3197/096327111X12997574391562. 
  44. ↑ Spash, C.L. 2008. How much is that ecosystem in the window? The one with the bio-diverse trail. Environmental Values, vol. 17, no. 2, 259-284



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