Sustainable Finance: Five Stories to Watch in 2012

"An optimist stays up until midnight to see the new year in. A pessimist stays up to make sure the old year leaves." -- Bill Vaughn (1915-1977), columnist, Kansas City Star

Saint Paul is often misquoted as having said that money is the root of all evil. (He actually wrote, in the First Epistle to Timothy in the New Testament, "For the love of money is a root of all kinds of evil.") Certainly, a very good argument can be made. But perhaps that's also a bit of a pessimistic view. Over the past year, much of my focus on these pages has been to look at the very opposite: How the ethical use of money and transparent financial vehicles -- as well as the responsible application of the cooperative systems of capital markets and direct public action -- can be a root of all kinds of good.

And while the financial world took a lot of hits in 2011, it was also a year of many positive developments and commitments from both the public and private sectors to enact social change for the betterment of human livelihoods and the natural environment, whether through foreign aid, socially responsible investment, sustainable venture capital or providing the millions of "unbanked" people around the world access to basic financial services. To be sure, 2011 gave us a plethora of reasons for both optimism and pessimism for the coming year. Here are five developing stories that I'll definitely be keeping my eye on in 2012.


While the vast majority of climate-related capital flows have poured into climate change mitigation strategies such as renewable energy and energy efficiency, none of these initiatives are working quickly enough. Last month, the International Energy Agency (IEA) issued a grave warning: The world is on target for irreversible climate change in five years. "Without a bold change of policy direction, the world will lock itself into an insecure, inefficient and high-carbon energy system," the agency said in a statement.

"Perhaps it's time for those in the greentech industry to start betting that adaption will one day be a hot market," wrote Katie Fehrenbacher of Earth2Tech, GigaOM’s cleantech blog, in December 2010. That day is fast upon us. Earlier this month, the Global Carbon Project released a sobering statistic: Global emissions of carbon dioxide from fossil fuel rose 5.9 percent in 2010, the largest amount on record. Sadly, frustratingly and rapidly, we're going in the wrong direction. It's high time we move from mitigation to adaptation.

Climate entrepreneurs, SRI-oriented investors and governments must finally realize what British climatologist and "Gaia" theorist James Lovelock postulated in his 2006 book The Revenge of Gaia: Why the Earth is Fighting Back -- and How We Can Still Save Humanity: It's too late to stop most of the effects of global warming and several regions of the world will undoubtedly become inhospitable for human existence.

Writing in The Guardian earlier this month, sustainability adviser Tony Juniper sees a shift from sustainability to "resiliency." While that term strikes an optimistic tone, I prefer "adaptation." It’s more realistic. And a heavy dose of climate realism is sorely needed. Ultimately, as the South African president P.W. Botha astutely noted, "We must adapt or die." Though he said those words in a 1979 speech to parliament about instituting constitutional reform during apartheid, Darwin would surely have agreed that they ring even more true taken from a purely evolutionary standpoint.


According to a 2011 report by the Chicago Council of Global Affairs, investing in rural adolescent girls is key to solving the world's food crisis and driving economic growth in developing nations. The report points out that while rural women and girls make up nearly half of all agricultural workers in sub-Saharan Africa and South Asia, less than a tenth of development assistance for agriculture address gender issues.

That could change if more females were in policy-making and leadership roles, and we're heading in that direction: 2011 saw a record high of female CEOs at Fortune 500 companies. And October saw the launch of the latest Fellows Program of the International Women's Forum (IWF), a year-long leadership training program involving a select group of 35 women from 14 nations representing the corporate, government, academic and non-profit sectors, meant to promote female leadership around the world.

"We are entering the Participation Age, where every individual, regardless of gender or other characteristics, is poised to be a contributing and valued member of the global marketplace," said US Secretary of State Hillary Clinton, one of IWF's most prominent members, at the Asia-Pacific Economic Cooperation (APEC) Women and the Economy Summit in San Francisco, which she chaired in September.

Next year marks the 20th anniversary of the "Year of the Woman," a moniker attached to 1992 following the election of several women to the US Senate. And it's ramping up to be another banner year for women, not only in the political sphere, but in the global marketplace -- particularly in the developing world.


Last month, conservation biologist Murray Rudd of the University of York published a study that found that the world's leading conservation researchers believe that a major ecosystem collapse will happen in the coming years. This is extraordinarily troubling news, as biodiversity provides a wealth of services for the environment and humankind, such as climate regulation, crop pollination, pest control and ingredients for a host of life-saving pharmaceuticals. It will require strong political will and major financial investment on an international scale to prevent this looming catastrophe, or a least limit its most deleterious effects.

In September, BirdLife International, the European Environmental Bureau (EEB) and the World Wildlife Fund (WWF) released a paper that emphasized the importance of investing in biodiversity conservation as part of the European Union's Cohesion Policy. The World Bank has invested more than USD 6 billion on biodiversity services, but even its president Robert Zoellick said it wasn’t enough. This issue barely receives any press, but it's clear that biodiversity investments are critical to the global green economy.


By 2050, there will be 9.3 billion humans on the planet, seventy percent of whom will be living in cities. With 2.3 billion more people having to share a finite amount of natural resources than do today, it is imperative that sustainable investments are directed towards urban solutions. "Cities are critical to the planet's transition to a green economy that will increase opportunities, reduce poverty, and foster a more sustainable future," said the Sustainable Cities Working Group of the Rio+20 Earth Summit.

"If cities shrink from their obligations, it will put all of us at risk. The way we collectively address urbanization will define the fate of billions of people and the sustainability of human society."


Zucotti Park may have been cleared of its tents, its library and its constant thrum of protesters, but the Occupy Wall Street movement has gone global and its effects will continue into 2012 and beyond. As a result, the public is and will remain more attuned as to what's going on, from Washington to Wall Street, from the Berlaymont to the LSX. The calls for transparency and accountability will only get louder. Look for an increase in the usage of these terms by banks and other financial institutions in the new year.

In addition, the Occupy Movement, the Arab Spring and other grassroots public actions like the Keystone XL protests in Washington and the anti-fracking demonstrations around the world have demonstrated the power of direct public action. I'm a big believer in signing petitions and sending letters to businesses and elected representatives (I promote such "armchair activist" actions daily on my blog, 13.7 Billion Years), but it takes a lot more signatures to enact change than dedicated protesters physically taking their message to the streets. This year, we witnessed that principle in a way that hasn't been seen in a generation. In 2012, direct public action will continue to grow in size and effectiveness.



Harvey, Fiona. "World headed for irreversible climate change in five years, IEA warns," The Guardian, November 9, 2011.
International Energy Agency. "The world is locking itself into an unsustainable energy future which would have far-reaching consequences, IEA warns in its latest World Energy Outlook," November 9, 2011
Fehrenbacher, Katie. "The Hot New Sector in Greentech: Adaptation," Earth2Tech, Reuters, December 12, 2010.
Gillis, Justin. "Carbon Emissions Show Biggest Jump Ever Recorded," New York Times, December 4, 2011.
Juniper, Tony. "Will 2012 be the year of the R word?," The Guardian, December 14, 2011.
Lovelock, James. The Revenge of Gaia: Why the Earth is Fighting Back -- and How We Can Still Save Humanity. New York: Allen Lane, 2006.
Chicago Council on Global Affairs. Girls Grow: A Vital Force in Rural Economies, October 2011.
Petrecca, Laura. "Number of female 'Fortune' 500 CEOs at record high," USA Today, October 26, 2011.
U.S. Department of State. Secretary Clinton's Remarks at the Asia Pacific Economic Cooperation Women and the Economy Summit, September 16, 2011.
Rudd. Murray A. "Scientists’ Opinions on the Global Status and Management of Biological Diversity," Conservation Biology, November 9, 2011.
European Environment Bureau. Biodiversity investments under Cohesion Policy – a smart contribution to reach EU 2020 objectives, September 29, 2011.
National Resources Defense Council. Submission to the Secretariat for the United Nations Conference on Sustainable Development for the Zero Draft of the Rio+20 Outcome Document from the Rio+20 Earth Summit Sustainable Cities Working Group, November 1, 2011.

image: Wikimedia Commons