Al Gore interview: “Markets are the key to climate change”

It’s the key to the change we need. Governments, of course, must establish the rules of the road and enact new policies. But the market allocates more money in a single day than all of the governments of the world put together allocate in a year.

I believe that markets will find more efficiency and superior performance by fully integrating sustainability values. That leads you to the conclusion that, even in the absence of new government policies, a movement towards rationality and a full, holistic integration of sustainability by the markets, by firms in the markets, will bring about significant change in the environment.

There’s so many examples I could use. Here’s one. I was in Toronto recently and I met with leading figures in the real estate industry there as well as the mayor. They told me how every sizeable new office building constructed in the last two years has been a green building, with low CO₂ emissions, and the reason has little or nothing to do with politics or policy, but all to do with changes in the market.

Now, the extent to which these sustainability features are reflected in the resale value of green buildings accelerates the adoption of these new practices. But you could use this example across all sectors. In almost every case, an intelligent integration of these sustainability values leads to more efficient, more productive, more profitable business practices. And as more and more business leaders, and more and more investors, recognize that it’s not just ideological, but it’s actually the truth, then this is going to be a growing wave. We’ve just barely seen the beginning of it.

Here’s another quick example. Western democratic society reached a point not too many decades ago where the commitment to diversity and the integration of minority ethnic groups became of much higher value. Those companies that demonstrated a commitment to that new appreciation for inclusiveness and diversity were often richly rewarded in the marketplace, and found new market opportunities.

I think that corporate CEOs are ahead of most of the investment community. They have long since begun to understand these new opportunities. Some of them have openly said that they would appreciate it if their large shareholders, including institutional shareholders, were themselves more understanding of corporate strategies that might require sensible investments that would bring returns over a slightly longer time horizon, which is often necessary to integrate these sustainability values into corporate strategy.

You’re now seeing it among some of the larger banking institutions. In some cases the commitment of larger banking institutions has run ahead of the expertise and knowledge that currently exists. And that’s OK. It’s right to try to understand the best ways to maximize the opportunities. It’s a massive shift, and it’s going to pick up speed and be one of the largest movements in the history of business.

Finance is a people business. If you don’t get the best and the brightest then you’re going to fall behind. So when the brightest say: "We won’t come unless you have a serious commitment and a sensible strategy on climate", then they’re going to go back to the executive suite and say: "Hey, we need a serious commitment and a sensible strategy".

It definitely does, and there’s more of that to come. 
                                                                                                 TXU: Environmentalists at the gates

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