Inequality, Climate Change Major Risks To Financial Markets - IEFA
(Kitco News) - Although financial markets are awash in short-termuncertainty, investors and companies need to pay more attention to long-termissues like climate change and growing social and economic inequality.
In a panel discussion at the 24th annual International Economic Forum of theAmericas in Montreal, Canada, Glenn Hutchins, co-founder of North Island andco-founder of Silver Lake, two significant technology investment firms saidthat financial markets are currently discounting the recent bout of uncertaintybecause there is a low probability of the turmoil escalating into realproblems.
“Geopoliticsis being discounted by the markets fairly quickly he said. “Just because thereare risks doesn’t mean you can’t manage your way through it.”
However,Philippe Zaouati, CEO of Mirova, said that the world is facing an event with a“high probability and catastrophic consequences: climate change.”
Alongwith the environment, Lynn Forester de Rothschild, chair of E.L. Rothschild andfounder and CEO of the Coalition for Inclusive Capitalism, said that inequalityis creating a rise in populism around the world, destabilizing importantfoundations and markets.
Rothschildadded that the rise in populism isn’t surprising as many people are upset andfeel left behind in an ever-evolving global economy.
“Thesystem we have believed in hasn’t worked for all people,” she said. “Thisrising populism sentiment is totally understandable. People are willing tothrow a Molotov cocktail on the system because they want change.”
VijayAdvani, CEO of Nuveen, said that financial markets are starting to shift andcompanies are being recognized for their effort to address environment, socialand corporate governance issues (ESG).
Ina changing social environment, Advani said that companies are being rewardedwith investor capital by addressing issues of climate change, employeeretention and supply chain protection.
Headded that in a few years, the idea of highlighting ESG policies will beredundant as companies will automatically incorporate these ideas. Companiesthat fail to embrace these important issues will ultimately fail, he said.
“Theidea of maximizing profits for shareholders is not sustainable anymore,” saidRothschild.
By Neils ChristensenFor Kitco News
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