For week 6 of TED2020, experts in the economy and climate put a future driven by sustainable transformation into focus. Below, a recap of insights shared throughout the week.
Mariana Mazzucato, economist
Big idea: Government can (and should) play a bold, dynamic and proactive role in shaping markets and sparking innovation — working together with the private sector to drive deep structural change.
How? In the face of three simultaneous crises — health, finance and climate — we need to address underlying structural problems instead of hopping from one crisis to the next, says Mariana Mazzucato. She calls for us to rethink how government and financial systems work, shifting towards a system in which the public sector creates value and take risks. (Learn more about value creation in Mazzucato’s talk from 2019.) “We need a different [economic] framing, one that’s much more about market cocreation and market-shaping, not market fixing,” she says. How do you shape a market? Actively invest in essential systems like health care and public education, instead of justing responding once the system is already broken. Mazzucato calls for businesses and government to work together around a new social contract — one that brings purpose and stakeholder value to the center of the ecosystem. To motivate this, she makes the case for a mission-oriented approach, whereby public entities, corporations and small businesses focus their various efforts on a big problem like climate change or COVID-19. It starts with an inspirational challenge, Mazzucato says, paving the way for projects that galvanize innovation and bottom-up experimentation.
Al Gore, climate advocate
Big idea: To continue lowering emissions, we must focus on transitioning manufacturing, transportation and agriculture to wind- and solar-powered electricity.
How? As coronavirus put much of the world on pause, carbon emissions dropped by five percent. But keeping those rates down to reach the Paris Climate Agreement goal of zero emissions by 2050 will require active change in our biggest industries, says climate advocate Al Gore. He discusses how the steadily declining cost of wind- and solar-generated electricity will transform transportation, manufacturing and agriculture, while creating millions of new jobs and offering a cleaner and cheaper alternative to fossil fuels and nuclear energy. He offers specific measures we can implement, such as retrofitting inefficient buildings, actively managing forests and oceans and adopting regenerative agriculture like sequestering carbon in topsoil. With serious national plans, a focused global effort and a new generation of young people putting pressure on their employers and political parties, Gore is optimistic about tackling climate change. “When survival is at stake, and when our children and future generations are at stake, we’re capable of more than we sometimes allow ourselves to think we can do,” he says. “This is such a time. I believe we will rise to the occasion and we will create a bright, clean, prosperous, just and fair future. I believe it with all my heart.” Watch the full conversation here.
Hiro Mizuno, financier and former chief investment officer of Japan’s Government Investment Pension Fund
Big idea: For investors embracing ESG principles (responsible investing in ecology, social and governance), it’s not enough to “break up” with the bad actors in our portfolios. If we really want zero-carbon markets, we must also tilt towards the good global business citizens and incentivize sustainability for the market as a whole.
How? Hiro Mizuno believes that fund managers have two main tools at their disposal to help build a more sustainable market. First, steer funds towards businesses that are transforming to become more sustainable — because if we just punish those that aren’t, we’re merely allowing irresponsible investors to reap their profits. Second, fund managers must take a more active role in the governance of companies via proxy voting in order to lead the fight against climate change. “We collectively own the capital market, and we are all universal owners,” Mizuno says. “So let’s work together to make the whole capital market and business more sustainable and protect our own investment and our own planet.”
Michelle Greene, president of the Long-Term Stock Exchange
Big idea: In today’s markets, investors tend to think in daily and quarterly numbers — and as a result, we have a system that rewards short-term decisions that harm the long-term health of our economy and the planet. What would happen if we shifted that mindset to encompass decades, lifetimes or even generations?
How? In order to change how companies “show up” in the world, we need to change the playing field entirely. And since the stock exchange makes the rules that govern listed companies, why not create a new one? By holding companies to binding rules, the Long-Term Stock Exchange does just that, with mandatory listing standards built around core principles like diversity and inclusion, investment in employees and environmental responsibility. “What we’re trying to do is create a place where companies can maintain their focus on their long-term mission and vision, and at the same time be accountable for their impact on the broader world,” Greene says.