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Heavy-hitters in business and finance prescribe risk management, market solutions — i.e. carbon dioxide tax — to divert “the coming climate crash”.

Former U.S. Treasury Secretary Henry M. Paulson Jr. — who knows quite a bit about society-threatening “bubbles” — now warns that “we’re staring down a climate bubble that poses enormous risks to both our environment and economy.”

Paulson, former New York City mayor Michael R. Bloomberg and retired hedge fund manager Tom Steyer have formed the “Risky Business” project to “add reliable financial data to the science.” The project’s report will be published tomorrow at

Of his fellow conservatives, Paulson writes: “They’re right to consider the economic implications. But we must not lose sight of the profound economic risks of doing nothing.” He adds that “We need to craft a national policy that uses market forces to provide incentives for the technological advances required to address climate change… We can do this by placing a tax on carbon dioxide emissions.”

In citing business risk management as a basis for climate change analysis, “Risky Business” is reflecting the burgeoning policies of the insurance industry. Within that industry “standing downstream” of the financial consequences of unsustainable business practices, insurance companies are increasingly assessing their clients performance on environmental, social and governance (ESG) issues before issuing director and office (D&O) insurance and investing in corporate bonds. Likewise, savvy institutional investors are increasingly asking corporate boards for analysis of potential climate change impact on long term valuation.  

“Risky Business” data does not directly rebut the “risk arguments” of climate change skeptics such as  Mr. Bjorn Lomborg, founder and director of the Copenhagen Consensus Center and author of “The Skeptical Environmentalist”. Mr. Lomborg contends that over-blown climate change expenditures should be weighed in the context of the costs needed to address current or short term macro problems in society. 

Mr. Paulson (“I’m a businessman, not a climatologist”), explains his risk management philosophy this way: “When I worry about risk, I worry about the biggest ones, particularly those that are difficult to predict — the ones I call small but deep holes. While odds are you will avoid them, if you do fall in one, it’s a long way down and nearly impossible to claw your way out.” Sound familiar?