The Place of The Capital Markets in Addressing Climate Change Issues

9 Pages Posted: 8 Jul 2020

Date Written: June 13, 2020

Abstract

There is an abundance of literature on the increasing negative effects of climate change. The empirical evidence is simply overwhelming and, unless you are Donald Trump, there is absolutely no reason to undermine the issue of Climate Change. Global warming is occurring beyond any reasonable doubt and the reasons are not unknown. They include increased presence of greenhouse gases (GHG) in the atmosphere, such as carbon dioxide (CO2), methane and nitrous oxide. Atmospheric concentration of these gases has increased markedly as a result of human activities since the beginning of the industrial revolution and now far exceeds pre-industrial levels.

The effects of climate change are potentially at a point where we can no longer exhibit a carefree attitude. A foremost author on climate change, Lord Nicholas Stern, former Chief Economist of the World Bank, predicts that climate change may reduce global economic output by up to 3% and displace as many as 200 million people in the 21st century. A report released by Trucost (“Carbon Counts USA”) states that a failure to cut GHG emissions could lead to up to a 20% reduction in GDP. Unarguably, the consequence of climate change will not only be felt by the environment, but also the entire human population and their activities – and it is only a matter of time before climate change significantly starts to affect investments, transactions, and all form of human endeavours.

Keywords: Climate Change, Capital Markets, Investment, Sustainability

JEL Classification: Q01

Suggested Citation

Asudemade, Habeeb, The Place of The Capital Markets in Addressing Climate Change Issues (June 13, 2020). Available at SSRN: https://ssrn.com/abstract=3626154 or http://dx.doi.org/10.2139/ssrn.3626154

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