- New technology means that we can have both economic growth and a greener economy
- But in a world of higher interest rates, quality matters when it comes to green stocks
- How can investors navigate the transition to net zero?
It’s easy to be pessimistic about the idea of green growth. At the end of last year, a study from economists at the University of Barcelona and the London School of Economics and Political Science (LSE) argued that curbing global warming would only be possible if advanced economies moved to a ‘post growth’ era. By their reckoning, global warming could only be limited to 1.5C if world growth dropped below 2 per cent – a gloomy prospect given that it is only 3.1 per cent today.
Some even question whether economics is equipped to grapple with environmental problems at all. Last year, S&P Global chief economist Paul Gruenwald argued that “the traditional view of economic growth has largely ignored growth's environmental impact and how economic agents may value the environment”. He added that we need to fundamentally change the way we think about the ‘cost’ of producing goods and services by ensuring that environmental damage is priced in.