What will become of all the skilled professionals losing jobs in finance?
So asks Dror Etzion, an assistant professor of strategy and organization at McGill University in Montreal. Etzion has a short essay in the summer edition of the MIT Sloan Management Review(subscription required) proposing that the thousands upon thousands of people losing their jobs in the financial sector may find work as corporations and governments increase environmental sustainability initiatives.
Etzion argues economics can both address and allow companies to profit from our environmental challenges, meaning those casualties of a shrinking financial sector should be able to apply their skills in this field. Hes a little short on examples, but he mentions financing programs that make it affordable for customers to install solar panels, and carbon offset projects as areas where economics and the environment intersect. Carbon offsets and carbon trading could be particularly fruitful. Etzion specifically mentions one such offest project from Royal Dutch Shell that is helping to preserve antelope populations in Qatar in order to counteract the environmental impact of a new natural gas facility the company is building elsewhere in the country.
Of course, Shell also announced earlier this year it would no longer be investing in wind and solar energy, which could presumably do more toward solving the huge problem of climate change than helping antelope in Qatar. Similarly, BP is retrenching on renewable energyand focusing more intensely on fossil fuels. The point is that companies, especially in a recession, will focus on the bottom line first. Boosting environmental sustainability initiatives, which can be costly, may not be top of mind when some corporations are struggling to stay afloat and appease shareholders. That will change as the economy recovers, but then the financial sector will also recoverfirms will start hiring again, and for positions that are potentially more lucrative than those associated with the environment.
That makes Etzions proposition challenging, but government policy will continue to create opportunities in this area (carbon trading, for example), and he contends the belief that environmental initiatives must come with economic trade-offs is shifting. That could be great for both the economy and the environment. Lets just hope the financial wizards and speculators dont wreak subprime-mortgage-style havoc in the environmental realm.
According to Michael Wara, a professor at Stanford Law School, carbon offsets have provedimpossibly difficult to successfully implement without fraud. My work and the work of others who look critically at the existing markets for carbon offsets strongly suggest that in far too many cases it is impossible to separate fraudulent offsets from true reductions.
Etzion is aware of the potential for manipulation, too. As became abundantly clear in the financial meltdown in 2008, transparency, simplicity and a clear linkage between financial instruments and underlying assets are important safeguards for keeping financial systems in check, he writes. An equivalent, if not greater, degree of prudence must be applied to environment-related markets.
Blogs & Comment
Financial sector's loss is the environment's gain
By Joe Castaldo
What will become of all the skilled professionals losing jobs in finance?
So asks Dror Etzion, an assistant professor of strategy and organization at McGill University in Montreal. Etzion has a short essay in the summer edition of the MIT Sloan Management Review(subscription required) proposing that the thousands upon thousands of people losing their jobs in the financial sector may find work as corporations and governments increase environmental sustainability initiatives.
Etzion argues economics can both address and allow companies to profit from our environmental challenges, meaning those casualties of a shrinking financial sector should be able to apply their skills in this field. Hes a little short on examples, but he mentions financing programs that make it affordable for customers to install solar panels, and carbon offset projects as areas where economics and the environment intersect. Carbon offsets and carbon trading could be particularly fruitful. Etzion specifically mentions one such offest project from Royal Dutch Shell that is helping to preserve antelope populations in Qatar in order to counteract the environmental impact of a new natural gas facility the company is building elsewhere in the country.
Of course, Shell also announced earlier this year it would no longer be investing in wind and solar energy, which could presumably do more toward solving the huge problem of climate change than helping antelope in Qatar. Similarly, BP is retrenching on renewable energyand focusing more intensely on fossil fuels. The point is that companies, especially in a recession, will focus on the bottom line first. Boosting environmental sustainability initiatives, which can be costly, may not be top of mind when some corporations are struggling to stay afloat and appease shareholders. That will change as the economy recovers, but then the financial sector will also recoverfirms will start hiring again, and for positions that are potentially more lucrative than those associated with the environment.
That makes Etzions proposition challenging, but government policy will continue to create opportunities in this area (carbon trading, for example), and he contends the belief that environmental initiatives must come with economic trade-offs is shifting. That could be great for both the economy and the environment. Lets just hope the financial wizards and speculators dont wreak subprime-mortgage-style havoc in the environmental realm.
According to Michael Wara, a professor at Stanford Law School, carbon offsets have provedimpossibly difficult to successfully implement without fraud. My work and the work of others who look critically at the existing markets for carbon offsets strongly suggest that in far too many cases it is impossible to separate fraudulent offsets from true reductions.
Etzion is aware of the potential for manipulation, too. As became abundantly clear in the financial meltdown in 2008, transparency, simplicity and a clear linkage between financial instruments and underlying assets are important safeguards for keeping financial systems in check, he writes. An equivalent, if not greater, degree of prudence must be applied to environment-related markets.