Our recent blog on the move towards a Green Bank has been explored further by our colleagues at Mckinsey in a recent article in the Mckinsey Quarterly.

The underlying hypothesis that we put forward was that climate change will be a massive wealth creation event, not a wealth destruction event. This argument is now starting to take shape and gather weight.

Mckinsey articulate the nature of the massive opportunity now facing the global financial services industry as the new green economy takes shape. As this sector grows there will not only be an exponential demand for funding for infrastructure and technology, but also a whole new segment requiring a vast array of financial products and services - from reporting, measurement, analysis through to the creation of new instruments and markets.

We believe that the response to climate change, like any crisis that requires a large scale innovative response, will generate wealth not only in the industries directly effected, but more broadly right across the entire economy. It will be interesting to observe, as more data comes to light and economists start to model this in greater detail, what the net ‘costs’ and outputs actually are. Could it be that the climate change could create a net benefit for society?

We suspect that just as the emergence of the fossil fuel industry created untold wealth, new industries and masses of new jobs right throughout society, so too will the emergence of the green economy and clean energy technologies. While the transition between the old economy and the emergent one will be rough, as transitions of this nature usually are; the advantage of globalisation - both social and economic, and the pervasive nature of the internet means that everything happens at a much faster rate.

So just as the worst recession to occur in 75 years looks like lasting little more than 12 months, (compared to the horror 2-3 years of the pre-internet 1990’s and the 5-8 years of the 1930’s), one hypothesis worthy of consideration is that the transition from the fossil fuel economy to a renewable one can and will occur much quicker than was previously expected.

Given the emerging data on the pace of climate change, this is one optimistic scenario in an otherwise bleak outlook.