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Jun 02

A social contract on the mend

  • June 2, 2017

Theoretical provenance is naturally advancing sustainability into the mainstream and it is reassuring to sense the growing sociological momentum towards this.

Sustainable investment has worked hard to gain a foothold in mainstream finance. The last few years have seen significant progress: the Montreal Pledge, the Paris Climate Agreement, the Financial Stability Board’s taskforce on climate change, the Portfolio Decarbonisation Coalition. Yet glance across to America and you could be forgiven for thinking momentum has been lost. The United States, the world’s second largest pollutant, has elected a party which misinterprets rudimentary economic theory and a president hell bent on fighting science. President Trump pulled the US out of the Paris Agreement. Rick Perry, Secretary of Energy, wants to boost fossil fuel production. Scott Pruitt, Administrator of the EPA, is dismantling the agency and Lamar Smith, Chair of the House Science Committee, thinks climate scientists are alarmist and anti-American.

But all is not lost. Take a step back and the very thing Republicans champion could actually be the invisible hand pushing towards greater sustainability. Capitalism, or rather our interpretation of it, has been the cause of spiralling inequality and all-consuming greed over the last 200 years, is now an unseen subtle force nudging us back to a more societal world. The ‘economy’ used to be at the heart of society, but successive and evermore technical crises, responded to by ever more esoteric fixes, drove a theoretical wedge between ‘society’ and the ‘economy’. The market-correcting capacity of capitalism steadily diminished from crisis to crisis, pushing economic theory further away from public discourse. In short, capitalism has run out of technical fixes and in a bid for survival is turning back to its roots.

This is great news for sustainability, which is at the heart of social capitalism and highlights the folly of the current American administration. To be clear, I have no issue with the Republican premise of ‘Making America Great Again’. But I do have an issue with the interpretation of sustainability as anti-business, anti-growth and anti-American.

There is no doubt globalisation and digitisation have torn up the traditional capitalist economy and unwittingly depowered the counterbalance of societal controls. However, Republicans insistence on favouring one side of the capitalist equation, demonising sustainability as an obstruction to growth, is naïve and ill conceived. Economic perception within society is changing. No longer is it blindly accepted that the rational pursuit of individual interests should be the sole driver of wealth creation. Society is becoming increasingly intolerant of the massive imbalance this has created. Sustainable investment can bridge the gap between the capitalist past and the capitalist future.

This is not to advocate complacency. Positive change will not happen without effort. Theoretical provenance is naturally advancing sustainability into the mainstream and it is reassuring to sense the growing sociological momentum towards this.

So next time you read an incendiary Trump tweet or see Congressman Smith pander to the Heartland Foundation, draw breath and smile smugly. The capitalist theory they are striving to protect is already morphing and reverting to its sociological roots. For all its flaws, capitalism is reflective of the society it supposedly creates and for that we must be grudgingly thankful.

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