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climate change & sustainabilit y
Saving the
largest global
capital market
Peter Bakker, President,
World Business Council for
Sustainable Development
climate change & sustainabilit y
Even the most hardcore
capitalist believes there
is a role for government
in times of market failure.
And when global markets
fail, such as during the
global financial crisis that
began five years ago,
national governments set
their differences aside
and work together to
achieve a global recovery.
So why haven’t governments set
their attention on the greatest
market failure on Earth?
The largest capital market on Earth isn’t
the New York Stock Exchange, Euronext
or even all the stock markets of the
world combined. Neither is it the global
debt market, which is much bigger than
the world’s equity markets.
Rather, the biggest capital market on
Earth is the Earth itself. We have been
trading its assets for longer than we
have understood the concept of money
but we have still to learn how to value it
consistently. Nonetheless, we recognise
it is worth much more than the US$225
trillion in assets on all of the world’s
financial markets combined.
Our natural capital
assets are shrinking
before our eyes
Our natural capital assets are shrinking
before our eyes. The rate of species
extinction is 100 to 1,000 times the
normal background rate - a level not
seen since the last major extinction
event 66 million years ago. Over 40%
of people in 2050 will be living in river
basins under severe water stress. There
are an estimated 400 dead zones in our
oceans, where we have depleted the
oxygen necessary to support marine life,
and we are overfishing roughly 80% of
marine fisheries.
The ongoing degradation of critical
ecosystems and the resulting loss of the
Earth’s biodiversity are compromising
this natural capital market. Much more
than just an accounting entry, nature
provides essential benefits and services
- and not just in the resources that we
extract and consume, such as minerals,
water and air. River beds and marshes
filter and clean water; unimaginable
numbers of bacteria convert nitrogen
from the air into nitrogen that feeds
plants, and then bees provide life-giving
pollination services so we can grow our
food. We degrade these services at our
own cost - forcing ourselves to turn to
substitutes such as water treatment
works and fertilisers.
Where ecosystem degradation reaches
global scale there are no substitutes
to be found. Indeed, what is now
evident is that we are pus