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Financing Environmentally Friendly Growth

by Paolo di Gaeta
Huge, never-ending fires, devastating recurring storms, all encompassing floods, accelerated
melting of polar ice caps and glaciers: 2023, the hottest year on record, was just one in a long series
of events demonstrating the undeniable reality of global warming and its dramatic consequences.

is now unanimous on this point - there is only Very long-term borrowing for targeted
one possible counter-measure: to decarbonise investments
activity on a massive scale, and relatively If growth is to be maintained it must be
quickly, in order to preserve the atmosphere made compatible with the imperative of
and lower the temperature. decarbonising economic life.
Technically, this is possible but expensive, This is a challenge that can only be met if huge
very expensive. To speed up the ecological investments are made in developing renewable
transition, the sums of money to be energy resources and adapting them to the
mobilised appear enormous. They even seem needs of the various sectors of activity.
unattainable to a whole school of thought that But how can governments generate new
Paolo di Gaeta
believes that the only way to save the planet financial muscle when most of them, with
For the most part, this phenomenon is is to halt growth, or even reduce production rare exceptions, are already dangerously
generated by the release of carbon dioxide and consummation. in debt in relation to their gross domestic
into the atmosphere. This CO is caused by Paolo Di Gaeta, a graduate in political science product?
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the still massive use of fossil fuels - coal and and a specialist in international finance, does “I'm one of those who believe that it's perfectly
oil - for industrial production, heating and not subscribe to this demoralising perspective possible if we put the necessary political
transport. In short, it is linked to all aspects in any way. commitment into it,” explains Paolo Di
of human activity today. “We need to be clear-headed”, he comments. Gaeta. “Firstly, by going through the financial
In the face of this lethal threat to humanity - and “It would be monstrous to bring about global institutions that regulate them (European
the entire international scientific community economic shrinkage in the face of the hundreds Central Bank, World Bank, IMF). Governments
of millions of human need to agree that the rules of international
beings still living accounting need to be changed and that,
below the poverty from now on, public loans intended for the
line in Africa, the preservation of the environment should no
Indian subcontinent longer be included in the amount of state
and South America. debt. This is essential if governments are not
How can we make to remain inert for fear of downgrading the
them tolerate the credit rating of their countries.
idea that they have In order to create new financial capacities
too much food, too governments must issue bonds whose
much housing, too repayment schedule does not stifle them,
much clothing? and this by spreading repayment over the very
Only widespread long term: 90 years, a century.
economic growth can Lenders will not be put off by the length of
bring them a better time because these bonds can of course
future. Moreover, in be exchanged for cash on the stock market
developed countries at any time. What's more, to increase the
a do w n t u rn in motivation of potential subscribers, the
economic activity use of the proceeds of these loans, namely
would inevitably lead investments in the direction of decarbonisation
to job losses and the and environmental protection in general, must
consequent decline be guaranteed by the issuing states as well as
in living standards the central banks overseeing them. In terms
as people plunge into of financial technique this type of bond is
unemployment. This known as ‘covered’ bonds. It is apparent that
too is an unbearable the means exist. It’s up to the leaders to agree
© FreePik vision of the future”. to use them”.

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