What is Green Capitalism?

The definition of green capitalism is the view that capital exists in nature as natural capital (the world’s stock of natural resources) on which all wealth depends. Green capitalism is also referred to as eco-capitalism or environmental capitalism. As part of our sustainability month here at Business Leader, we’ve covered everything you need to know about it.

Why is green capitalism good?

Many corporations and companies are profit-driven, which often means that damage to the environment is allowed to go on provided money is being made. However, green capitalism is a way for companies to pursue profit along with environmental objectives. So, not only can the company and its shareholders benefit, but also the environment and wider community can too.

In a world where sustainability is becoming increasingly important, sustainability can also help businesses to get an edge on the competition.

What are green bonds?

Green bonds, or climate bonds as they are also known, are a type of project finance scheme that corporations, governments and banks use to finance new and existing projects that deliver environmental benefits.

Most green bonds are issued by banks, although corporations issue them as well. The issuer raises a fixed amount of capital from investors and then repays the capital invested once the bond matures. An agreed number of interests on the capital invested over the life of the bond are also paid.

Is there a risk of greenwashing with green capitalism?

Greenwashing refers to the idea of a company conveying a false impression or providing misleading information about themselves and/or their products being more environmentally-friendly than they are, and yes, there is a risk of it happening when companies ‘engage’ in green capitalism.

Shell were recently told to pull their Drive Carbon Neutral advertising campaign after it misleadingly claimed that their customers can offset the carbon emissions from their fuel purchases.

Electric cars are another potential example of greenwashing. Whilst the shift away from fossil fuels will undoubtedly have environmental benefits, much less talked about is how they are produced.

Their external body is very similar to petrol and diesel cars, meaning their environmental impact is similar in this respect. The batteries they use, lithium-ion batteries, are also produced through mining and factory manufacturing. Transporting lithium also produces a relatively large carbon footprint. So, you could make the argument that greenwashing is taking place here.

Do corporations have a responsibility to engage in green capitalism?

In a Carbon Majors Database report from 2017, they found that just 100 companies have been responsible for 70% of the world’s greenhouse gas emissions since 1988. Therefore, there is a strong argument to make that corporations have a responsibility to engage in green capitalism.

However, you could also argue that better regulation from governments worldwide will force companies to engage in greener practices and hold companies who greenwash to account. The UK government’s recent announcement that they are tightening rules to stop greenwashing of electricity tariffs is a good example of this.

With the damning IPCC report highlighting the need to cut global emissions now, the time for measures such as these needs to come sooner rather than later.