By Katharina Pistor
Instead of tackling such questions, governments and regulators have once again succumbed to the siren song of market-friendly mechanisms. The new consensus focuses on financial disclosure because that path promises change without having to deliver it. (It also happens to generate employment for entire industries of accountants, lawyers, and business consultants with powerful lobbying arms of their own.)
Greenwashing instead of decarbonizing
Not surprisingly, the result has been a wave of greenwashing. The financial industry has happily poured trillions of dollars into green-labeled assets that turned out not to be green at all. According to a recent study , 71% of ESG-themed funds (supposedly reflecting environmental, social, or governance criteria) are negatively aligned with the goals of the Paris climate agreement.
We are running out of time for such experiments. If greening the economy was really the goal, the first step would be to eliminate all direct subsidies and tax subsidies for brown capitalism and mandate a halt to carbon “ proliferation .” Governments should also place a moratorium on shielding polluters, their owners, and investors from liability for environmental damages. Incidentally, these moves would also remove some of the worst market distortions around.
Katharina Pistor, professor of Comparative Law at Columbia Law School, is the author of “The Code of Capital: How the Law Creates Wealth and Inequality. “
This commentary was published with permission of Project Syndicate — The Myth of Green Capitalism
More on the economics of climate change
Diane Coyle: It’s about time that economists gave nature its due
William Nordhaus: Preventing pollution and climate change pays for itself