Green Investment: Combining Performance and Positive Environmental Impact
Green Investment Explained: Understand the rise of sustainable investing and how you can participate for both financial and environmental gains.
To address climate change and its associated costs, governments must implement carbon pricing mechanisms like carbon taxes and emissions trading schemes to hold polluters accountable for their emissions and fund future climate solutions; this promotes responsible investing and incentivizes a transition to green finance and renewable energy. Without carbon pricing, society bears the burden of pollution's heavy price tag.
If governments fail to implement effective carbon pricing, there is nobody to pay for the cost of pollution. Instead, they are left for future generations to handle.
Global warming causes harm in countless ways, and the damages we must address come in many forms and sizes:
Addressing the climate crisis is not only about compensating for past mistakes but also about securing funds for the future. The Institute for Climate Economics estimates that there is a €813 billion climate funding gap to fill between 2024 and 2030. This gap is the difference in the financial resources needed to meet climate goals and the amounts that are actually invested to fight global warming.
Since carbon emissions are a negative externality, if there is no governmental intervention, polluters will keep polluting, leaving society to deal with the resulting damages. In a free market, there is no economic incentive for CO2 emitters to compensate for their actions. To fix this, we need a carbon pricing system based on the 'polluter pays' principle, where those who release carbon emissions cover the costs of their actions.
Carbon pricing mechanisms can take various forms, each with its own structure, size, and effectiveness:
Without a price on CO₂ introduced by regulators, we will continue to see our homes flooded and our infrastructure destroyed; polluters must be held accountable for their actions.
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