Financial Markets Do Impact the Environment

The relation of financial flows and the environment has received much less attention than the impacts of trade, energy programs, sprawl, or pollution creating projects. Perhaps that is not surprising since activities in each of those areas are known to have direct and usually detrimental impacts on environment through changes in land use, soil degradation, pollution emissions, and contributions to global warming, etc. In contrast, both international and domestic financial markets appear relatively clean and detached from environmental impacts -- dealing in paper or electronic transactions, consuming few resources, creating little waste.

A welcome break from this tradition was the first project on Environment and the International Environment undertaken by the New America Foundation in 2000-01.1 That project covered a range of topics relating financial markets to sustainable development. The environment was identified as a critical pillar to achieving sustainable development and a number of recommendations were proposed. This program will look in more detail at how much progress has been made in a number of areas identified in that earlier project. Most of the issues are well known. The questions are how much has been achieved, what are the obstacles to further progress, and what can be done.

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