by Maia Broadley
In March we tuned in to Mark Carney, world renowned economist and former Governor of The Bank of Canada and The Bank of England, discussing his new book with The Times investigative journalist, Manveen Rana.
Mark is passionate about re-structuring financial markets to better support climate action (he’s written a whole book on it!) so we’ve summarised a few key take-aways on the subject of value.
The first one perfectly sums up a goal that motivates all of us at Global Parlez.
Turning grappa back into wine
During a visit to the Vatican, Carney attended a dinner where Pope Francis shared his thoughts on the relationship between people and business.
“Our meal will be accompanied by wine. Now, wine is many things. It has a bouquet, colour and richness of taste that all complement the food. It has alcohol that can enliven the mind. Wine enriches all our senses. At the end of the feast, we will have grappa. Grappa is one thing: alcohol. Grappa is wine distilled.
“Humanity is many things – passionate, curious, rational, altruistic, creative, self-interested.
“But the market is one thing: self-interested.
The market is humanity distilled.“Your job is to turn the grappa back into wine,
to turn the market back into humanity.”
Value(s): Building a Better World For All
Couldn’t have put it better ourselves.
So what is Mark Carney suggesting can be done to turn the market back into humanity?
Lots of the themes mentioned come under the umbrella of sustainable development as the catalyst for further ethical growth. Carney believes we’re all part of a bigger system; we are all responsible and the COVID-19 pandemic has only strengthened this idea.
Although we face tough challenges in the aftermath of the global pandemic, 2020 has brought about some positive changes: our society is clearer about its values. Collectively, people are placing a higher value on the health of the population and development of a sustainable environment.
Financial markets can be part of the sustainable solution and help with the recovery of the planet – if markets undergo a fundamental restructure.
Flexing our virtue muscles
Through his roles as Governor of the Bank of Canada and Governor of the Bank of England, Carney worked on bringing discipline back to the markets, believing that financial players held a unique but misplaced invincibility of being ‘too big to fail’.
Essentially, banks have been allowed to reap the benefits of high-risk investment payoffs, safe in the knowledge that they will probably be bailed out by the taxpayer as and when needed.
Carney attempted to bring discipline back through market regulation, but also through the practice of virtue or ‘self’ regulation.
“Virtue is like a muscle that grows with exercise – it grows with us, and that takes time, repetition and examples. Those examples can be contagious.”
A smile is contagious – let’s make good business deeds and consumer choices contagious too, for the benefit of the planet.
Climate change has started speaking the language of the market
For Central Bankers and Environmental Economists, the most pressing question is how to place a specific value on climate change.
It had been one of the key issues for governments and global policymakers pre-financial crisis of 2007/8. But climate action took a backseat after the crash. And yet, the issue is more prominent than ever before.
We have little time left to take world-changing action but governments and markets can no longer ignore climate change because it has visible economic consequences.
All of a sudden, it is speaking their language. Climate change costs money.
Vast sums of it.
Covid-19 will probably be the overriding theme at this year’s COP 26 summit (United Nations Climate Change Conference) in November. But Carney anticipates widely varying opinions on how this can best be tackled and how these efforts will impact our planet.
The main caveat to Mark’s ‘virtue muscle’ optimism is that climate change is a global issue, requiring global intervention and with it, relentless focus.
Like dropping a stone in a pond
Like the contagious smile we were talking about earlier, Carney describes how actions from individual governments can set off signals around the world for the future of markets:
- The UK government’s announcement that internal combustion engine cars will not be available to buy from new, from 2030.
- This is a clear message to the private sector that we’re quickly heading towards a zero-emission economy, and they need to adapt products accordingly.
This process captures the value of predictability, allowing investors, markets and entrepreneurs to apply their energy to tackling such problems.
The pandemic has presented us with an opportunity to completely reconstruct our economy and way of life. If channelled correctly, this will be a critical stage to slow down the threat of climate change. It’s a ‘race to the top’ in terms of country ambition.
So which country will win the race to become the most audacious goal-setter around climate change? We’re looking forward to talking more about this at The Good Business Festival this summer.
See you there?