The Guardian has reported as part of its Polluters series that:
Companies and industries that are not moving towards zero-carbon emissions will be punished by investors and go bankrupt, the governor of the Bank of England has warned.
Mark Carney also told the Guardian it was possible that the global transition needed to tackle the climate crisis could result in an abrupt financial collapse. He said the longer action to reverse emissions was delayed, the more the risk of collapse would grow.
The Bank of England has said up to $20tn (£16tn) of assets could be wiped out if the climate emergency is not addressed effectively. But Carney also said great fortunes could be made by those working to end greenhouse gas emissions with a big potential upside for the UK economy in particular.
The warning comes after Mark Carney gave a speech last week in Japan to mark the second anniversary of the launch of the Task Force on Climate-related Financial Disclosures (TCFD). As Chair of the Financial Stability Board of the Bank for International Settlements Mark Carney is intimately associated with these proposals.
There is, however, a fundamental problem with that initiative. What it proposes is voluntary and light touch reporting that will take place outside the framework of the financial accounts of major companies. In other words, and by definition, the TCFD proposals view climate change is a peripheral issue, external to the companies in question, and of secondary concern to their primary objective of making profit.
I do not agree. That is why I am promoting Sustainable Cost Accounting instead. Sustainable cost accounting would make every large company account for its cost of becoming a net-zero carbon emitter in its accounts by 2022. I suggest that the plan should be to achieve that goal by 2030. And if the cost of being net-zero carbon was more than the company could afford, or if it could see no way of achieving this goal, then it should be declared 'carbon insolvent'; and have its affairs wound up in an orderly fashion as it could not be a part of the future world of commercial activity that we need if life is to continue here on earth.
What sustainable cost accounting will do is identify precisely where that £16trn of cost will fall, and name those who have imposed the burden, which is exactly what it will prove to be.
I am aware that the implications are radical, but so too is the issue, and soo too then must be the response. Mark Carney's TCFD misses the point my treating caron emission as a sideshow to main profit. The reality is that making profit is now secondary to carbon emission targets.
Business has to be radically transformed to deliver zero net carbon. Sustainable Cost Accounting is a route to delivering that radical transformation.
I should add that I have already written to Mark Carney on this issue.
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Sustainable Cost Accounting and MMT are the sorts of things that should be earning economists the Laureate in Economic Sciences today!
So, abolish capitalism, then? Do I understand that correctly. Something I andany others can get behind.
I am not saying there should be no private sector
I am suggesting radical change
Richard
Capitalism is not synonymous with private enterprise. We had private enterprises under both slavery and feudalism. We also have private enterprises that are non-Capitalist. The defining feature of Capitalism is its property relationship. The people who do the work have no say in how the fruits of their labour are distributed, and those that so decide do not do any of the work. The fruits of labour belong to the whole of society and the whole of society should have a voice. Nothing wrong with SME’s BTW but we have to solve the problem of competition with its destruction of enterprise and its morphing into monopoly.
John Adams says:
“Capitalism is not synonymous with private enterprise….”
Furthermore given that we are not constrained by Gold-Standard economics which regards money as a resource commodity and therefore capable of being in short supply, capitalism is not really the way we operate any longer. Capitalism brought financial resources (in limited and scattered quantities) together to make large scale industrial investment possible. Some of it still goes on, but it is not the dominant mechanism any longer.
People of the US believe they live in a capitalist society, but in reality they live in a rentier financialised society. The UK and European Union operate on the same basis but with (perhaps) less dogmatism.
Few people observed the slippage. Few people recognise, even now, that the shift has taken place.
Most professional politicians and even many renowned economists haven’t noticed either and that is truly shameful, wilful ignorance.
Maybe I should have posted this on the MMT ‘Fantasy Economics’ thread. ?
Your comments are spot on considering we have less than 10 years to make the drastic economic and political changes that are vital to prevent climate disaster. Good luck with your correspondence with Mark Carney = at last an “establishment” figure is engaging with this issue.
Are you sure we want to reduce CO2 in the atmosphere?
We are near absolute minimums for the history of the world. We are at one third of the optimum for vegetable life and until the 20th C were heading towards 159/175ppm which would kill vegetable life without which we go poufff!
We are at 410ppm
Jayne County says:
“Are you sure we want to reduce CO2 in the atmosphere?”
Were is this nonsense coming from? Second time I’ve seen it in recent weeks.
It’s on a par with the fantasy ‘science’ that maintained that crude oil is produced one molecule at a time in the deep oceans because if the right conditions prevail some hydrocarbon molecules can be created naturally this way.
It’ll be from a US American source almost certainly, and promoted by an idiot pretending to have some academic background. It’s climate denialist hogwash. Funded by the oil industry (?) which is paranoid, but far from threatened in reality.
[…] By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics. He is a member of the Progressive Economy Forum. Originally published at Tax Research UK […]
[…] By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics. He is a member of the Progressive Economy Forum. Originally published at Tax Research UK […]
[…] By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics. He is a member of the Progressive Economy Forum. Originally published at Tax Research UK […]
Can I just check what you’re saying about ‘carbon insolvent’ companies?
If Tesco fail to meet the criteria are you saying that it should be wound up & the 450,000 employees have to find something else – or…?
Yes
But do you really think Tesco would be carbon insolvent if given enough notice?
Or do you think it might really change how it trades?
What do you think?
There will be some companies that will be in trouble unless there is macro intervention
And there will of course be lots of new Green New Deal jobs – which we should not ignore
But the reality is that carbon insolvency will promote the change we need
[…] By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics. He is a member of the Progressive Economy Forum. Originally published at Tax Research UK […]
Andy. You say “Capitalism is not really the way we operate any longer”. Andy the defining feature of Capitalism is its property relationship. It is not whether or not Enterprises are publically or privately owned. The invariance is who does the work, who decides how the fruits of their labour are distributed. In our present society we have no say. Only the owners of capital decide. That incidentally was the case in the Soviet Union and in present day China. Although both those systems in terms of economic development have never been equalled.
[…] have already published one blog recently on sustainable cost accounting. The issue appears to be attracting […]