In Focus - In Theory - ‘The global financial crisis and its impact on sustainability’
2008 Issue No. 4
By Clare Kelly
Leading economic analyst and Nobel Prize winner, Joseph Stiglitz, recently reviewed the situation at the UN Global Economic Crisis meeting. Stiglitz remarked that “…unregulated markets do not act in society’s interest. America’s financial managers (in their) unbridled pursuit of self interest (it might be called greed) have imposed a high cost on everyone in the global economy.”
According to Stiglitz, four principles are needed to guide the crisis response. The first requires a response consistent with values of social justice, solidarity and fairness. The second is to acknowledge that the bounds of national solidarity go across national boundaries and that the west can not take actions that will help them at the expense of those in developing countries. Third, we must reflect an understanding of the necessary balance between government and markets. And finally, the response must respect the principles of democratic due process thus incorporating full transparency.
Present economic pressure has essentially come about through unregulated and poorly thought through behaviours, organisations acting for the now instead of strategically thinking for the future and steadfast pursuits for immediate gains with blatant disregard for the possibility of dire consequences. Such behaviours resulting in a crisis sounds awfully familiar; similarities with the world’s environmental crisis maybe?
As the business world faces the challenges accompanying the collapse of the U.S sub-prime mortgage market it simultaneously faces the environmental crisis of climate change and the need for immediate sustainability solutions.
Leading climate change expert and former British treasury economist Nicholas Stern recently remarked that: "The risk consequences of ignoring climate change will be very much bigger than the consequences of ignoring risks in the financial system."
At a climate and carbon conference in Hong Kong, Stern spoke of drawing out a lesson from this recession and boosting economic demand in the best possible way. Nicholas believes economies should focus on future, low carbon growth and commit a greater public spend to mass public transport, energy and green technologies.
Promising signs from abroad have surfaced, indicating that sustainability is faring relatively well in the wake of the financial downfall. Results in the U.S have showed that despite the world’s stricken economy, sustainability executives insist green spending and company investment in sustainability will continue to increase in 2009/2010, this according to Panel Intelligence’s Quarterly Sustainability Tracking Study.
So, amidst all of the economic theory and forecasting, we pose a question: After years of Australian businesses proclaiming their prioritisation of sustainability, how are they holding up and have their sustainability practices and attitudes been affected by the financial crisis?