Avoiding a Global Carbon Crisis: Learning from the Financial Crisis

• Date: 01 November 2013
• DOI: http://doi.org/10.1002/tie.21581
• Author: Paul Shrivastava,Timo Busch
• Published date: 01 November 2013

647

FEATURE ARTICLE

Published online in Wiley Online Library (wileyonlinelibrary.com)

© 2013 Wiley Periodicals, Inc. • DOI: 10.1002/tie.21581

Correspondence to: Timo Busch, School of Business, Economics and Social Science, University of Hamburg, Von-Melle-Park 9, 20146 Hamburg, Germany, 0049

40 42838-7509 (phone), timo.busch@wiso.uni-hamburg.de.

Avoiding a Global

Carbon Crisis: Learning

from the Financial

Crisis

Introduction

I

n November 2010, more than 250 global investors

representing assets of over US$15 trillion released a

statement calling on policy makers “to implement the

policies and tools needed to optimize private investments

in the low-carbon economy.”1 Why are financial mar-

kets concerned about the low-carbon economy? Achim

Steiner, executive director of the United Nations Envi-

ronment Program, answered, “In a time when climate

The global  nancial crisis originated in the subprime mortgage market in the United States in 2008

and its effects spread to all of the world’s major  nancial markets. Only governmental programs

and subsidies have prevented an outright crash of the world economy. What can the  nancial crisis

teach us about the impending carbon crisis? What is needed to move the global economy toward

sustainability, using renewable energy regimes, and low carbon consumption and production? This

paper provides a nontechnological response to these questions by highlighting six key sociocultural

lessons and suggesting two key recommendations in how to overcome the current carbon lock-in.

Firms should establish proactive climate strategies. Policymakers can facilitate this by developing

farsighted governance mechanisms and setting the right incentives and boundary conditions. We

conclude that a mix of both is required to prevent the global carbon crisis from becoming a reality.

©2013 Wiley Periodicals, Inc.

By

Paul Shrivastava

Timo Busch