The search for sustainability in financial markets: carbon bubbles, shifting tectonic paradigms, and natural capital coalitions

Abstract

This article analyses the issues in the search for greater sustainability in financial markets. Presently one of the greatest challenges facing financial markets are the consequences of climate change. The impact of climate change is direct in financial markets with regard to the trillions of dollars of carbon assets that are now stranded in the ground, yet continue to appear as assets of resources companies. This carbon is stranded because of the commitment to reducing emissions in the Paris 2015 agreement. The approach to fossil fuels is undergoing a tectonic shift whereby investment is switching rapidly to renewable energy. Coalitions are forming around the need to maintain and support natural capital as the context for all wealth generation.

Notes

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2 Ibid, iv.

3 Ibid, 23.

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7 Ibid, at 21.

8 Ibid.

9 See generally Centre for Climate Change and Energy Solutions, “Key Issues in Completing the Paris Climate Architecture, Centre for Climate Change and Energy Solutions”, 2016, http://www.c2es.org/docUploads/key-issues-completing-paris-climate-archetecture.pdf (accessed 26 October 2016).

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14 Carney, supra n 11, 6.

15 Ibid.

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18 Ibid, 10.

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20 Ibid, 237.

21 Ibid, 255.

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26 ABA, supra, 2.

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34 Ibid.

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37 Ibid, 6.

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40 Sukhdev et al, supra n 39, 3.

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44 Barker, supra n 17, 13.

45 Ibid.

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48 Ibid, 13.

49 AK Bjorklund, “Assessing the Effectiveness of Soft Law Instruments in International Investment Law”, in AK Bjorklund and A Reinisch (eds), International Investment Law and Soft Law (Cheltenham, Edward Elgar, 2012), 51–81, 51.

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52 See Roe v Arch Coal Inc et al, Case: 4:15-cv-00910-NAB, United States District Court, Eastern District of Missouri, 9 June 2015 and Lynn v Peabody Energy Corporation et al, Case: 4:15-cv-00916-AGF, United States District Court, Eastern District of Missouri, 11 June 2015.

53 Carney, supra n 11, 9–10.

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55 Barker, supra n 17, 4.

56 Carney, supra n 11, 11.

57 Ibid.

58 T Houser, S Hsiang, R Kopp and K Larsen, Economic Risks of Climate Change: An American Prospectus (New York, Columbia University Press, 2015).

59 Risky Business, “A Climate Risk Assessment for the United States” (June 2014), 5. http://riskybusiness.org/site/assets/uploads/2015/09/RiskyBusiness_Report_WEB_09_08_14.pdf.

60 HM Paulson Jr, “The Coming Climate Crash: Lessons for Climate Change in the 2008 Recession”, New York Times, 21 June 2014, http://www.nytimes.com/2014/06/22/opinion/sunday/lessons-for-climate-change-in-the-2008-recession.html? (accessed 26 October 2016).

61 Ibid.

62 UN Global Compact, “Guide for General Council on Corporate Sustainability” (2015), 10, https://www.unglobalcompact.org/library/1351 (accessed 26 October 2016).

Additional information

Notes on contributors

Thomas Clarke

Thomas Clarke, Professor of Corporate Governance, UTS Business, University of Technology Sydney. Email: [email protected]