Premise of Geofinancial Engineering
In the Anthropocene Age in which we live, current human behavior significantly affects future climate outcomes – both positively and negatively. Pre-emptive mitigation of deleterious behavior, such as burning high-carbon fossil fuels, deforestation and methane-intensive agricultural practices, is an urgently-needed positive response to this challenge.1
In the context of investment and risk management, we call this positive response Geofinancial Engineering 2. In short, if investors divert their capital from climate stressors to more climate-resilient alternatives3, the risks of abrupt and irreversible climate change will be reduced.
Macroclimate's Impact Investment Accounts and MethaneScan® — a service of our sister company, Geofinancial Analytics — offer a path forward within the Geofinancial Engineering framework.
1See Jonathan Foley, “Breaking the Cycle of Climate Inaction“ for a concise summary of a science-based approach to climate solutions that has shaped our thinking. See also The Economist’s guide to actions that have done most to slow global warming (September 20, 2014).
2 Geofinancial Engineering uses financial tools and scientific knowledge to leverage the capital markets in order to alter human impact on the physical world and thus improve the odds of averting catastrophic climate change. It aims to preemptively stop behaviors that cause the most damage — such as burning high-carbon fossil fuels, deforestation, methane-intensive agricultural practices, and loss of non-renewable water sources — before they occur. Geofinancial Engineering does so by increasing the cost of capital of companies engaged in such activities, and by reducing the cost of capital of more climate-resilient alternatives. As a market based-initiative, it operates independently of governmental action or inaction.
3 Unfortunately, even in a low-emission “mitigation” scenario, we face heightened risks of significant additional climate change effects, including moderate risk of abrupt and irreversible changes, according to the most recent IPCC assessment report (March 2014). At present, we’re arguably following a high-emission scenario. View IPCC chart of scenarios and risks.
Schema in graphic based on K. Ricke, Solar Geoengineering: Questioning the “Winners and Losers” Paradigm (AGU, Fall 2013). GHG stands for greenhouse gas emissions (principally, carbon dioxide and methane). Geofinancial Engineering℠ is a service mark of Macroclimate LLC. Copyright 2013-2017 by Macroclimate LLC.
Posted: Mar. 28, 2014
Revised: December 23, 2017