For example, governments might use the tax code to discourage firms from using certain materials. The magnitude of government assistance packages does not match firms’ requirements, and the conditions are not always legally binding: for example, the Air France emissions policy applies only to short domestic flights.įar more is needed to achieve a green and sustainable recovery. These conditions are a start, but are not ambitious enough, either from a climate perspective or in economic terms. Likewise, US corporations receiving government loans through the Coronavirus Aid, Relief, and Economic Security (CARES) Act were prohibited from using the funds for share buybacks. France, Belgium, Denmark, and Poland denied state aid to any company domiciled in a European Union-designated tax haven, and barred large recipients from paying dividends or buying back their own shares until 2021. In the current crisis, for example, the French government conditioned its bailouts for Renault and Air France-KLM on emission-reduction commitments. This means attaching strict conditions to any corporate bailouts to ensure that taxpayer money is put to productive use and generates long-term public value, not short-term private profits. Likewise, government assistance to business must be less about subsidies, guarantees, and bailouts, and more about building partnerships. This means firms need to listen to trade unions and workers’ collectives, community groups, consumer advocates, and others. Building an inclusive, sustainable economy depends on productive cooperation among the public and private sectors and civil society. To achieve this, three obstacles must be removed: business that is shareholder-driven instead of stakeholder-driven, finance that is used in inadequate and inappropriate ways, and government that is based on outdated economic thinking and faulty assumptions.Ĭorporate governance must now reflect stakeholders’ needs instead of shareholders’ whims. According to some projections, 3.5 billion people globally will live in unbearable heat by 2070.Īddressing this triple crisis requires reorienting corporate governance, finance, policy, and energy systems toward a green economic transformation. Global warming will cause drinking water to degrade and enable pollution-linked respiratory diseases to thrive. The climate crisis is also a public-health crisis. Without fundamental change, climate change will worsen such problems. For example, we demand the most from “essential workers” (including nurses, supermarket workers, and delivery drivers) while paying them the least. These shortcomings reflect the distorted values underlying our priorities. These include governments’ diminishing capacity to address public-health crises, the private sector’s limited ability to withstand sustained economic disruption, and pervasive social inequality. But the three crises – and their solutions – are interconnected.ĬOVID-19 is itself a consequence of environmental degradation: one recent study dubbed it “ the disease of the Anthropocene.” Moreover, climate change will exacerbate the social and economic problems highlighted by the pandemic. Many think of the climate crisis as distinct from the health and economic crises caused by the pandemic. To avoid such a scenario, we must overhaul our economic structures and do capitalism differently. Under a “climate lockdown,” governments would limit private-vehicle use, ban consumption of red meat, and impose extreme energy-saving measures, while fossil-fuel companies would have to stop drilling. Shifting Arctic ice, raging wildfires in western US states and elsewhere, and methane leaks in the North Sea are all warning signs that we are approaching a tipping point on climate change, when protecting the future of civilization will require dramatic interventions. In the near future, the world may need to resort to lockdowns again – this time to tackle a climate emergency. Private Sector Myths, and, most recently, Mission Economy: A Moonshot Guide to Changing Capitalism.Īs COVID-19 spread earlier this year, governments introduced lockdowns in order to prevent a public-health emergency from spinning out of control. Mariana Mazzucato, Professor in the Economics of Innovation and Public Value at University College London, is Founding Director of the UCL Institute for Innovation and Public Purpose. She is the author of The Value of Everything: Making and Taking in the Global Economy, The Entrepreneurial State: Debunking Public vs. This article was originally published by Project Syndicate and reposted by WBCSD Transition Roadmap for Product Use Area.Sustainable Plastics & Packaging Value chains.Policy and Global Treaty on Plastic Pollution.Policy Advocacy and Member Mobilization (PAMM).
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