Transcript ppt, 2380 K - Green Economist

Sustainable Finance for Business
Rethinking Cash Flow, Equity and
Investment
Molly Scott Cato
Professor of Strategy and Sustainability
University of Roehampton
Only a crisis—actual or perceived—produces
real change. When that crisis occurs, the
actions that are taken depend on the ideas
that are lying around. That, I believe, is our
basic function: to develop alternatives to
existing policies, to keep them alive and
available until the politically impossible
becomes the politically inevitable.
Milton Friedman
Public Investment Bank?
• Project Merlin: targets
missed
• Funding for Lending: risk
transfers to taxpayer
• We hold controlling
stakes in two banks
• Why £1bn. From
taxpayers?—for highrisk securitised loans?
Laughing all the way?
The Last Great
Depression
• Failure of aggregate
demand
• Repayment of debts
• Failure of lending and
borrowing
• Recessionary spiral: ‘the
death spiral’
The Linear View
= wealth creation
= taxation
= private sector
= consumption
= public sector
= wealth circulation
The Systems View
= public sector
= wealth creation
= private sector
= wealth circulation
= taxation
= third sector
= recirculation of
taxed wealth
What really happened?
What really happened
Money: Unstable and Unsustainable
3000000
2500000
2000000
1500000
1000000
500000
0
And in the UK?
• Banks had resisted
separation of retail from
merchant banking
• Abolition of exchange
controls in 1979: when
Thatcher came to power
you could only take £500
out of the country at one
time
• Big Bang in 1986
What Mervyn King said . . .
• ‘Of all the many ways of organising banking, the
worst is the one we have today.’

‘Unemployment is up,
businesses have closed, and the
direct and indirect costs to the
taxpayer have resulted in fiscal
deficits in several countries of
over 10% of GDP – the largest
peacetime deficits ever.’
Getting the boundaries right
• Businesses try to keep
money flowing within their
boundary
• Public authorities seeking
growth should maximise
flows throughout the
system
• Banks should operate to
support the second, not the
first
Local Bond
• Rates of return can
outstrip bank interest
rates, especially when
supported by the FiT
• Creates an investment
vehicle for savers who
receive virtually no
return from banks
• Especially powerful on a
local basis
Ecotricity’s EcoBonds
• Launched in October 2010 to secure up to £10
million of funding for its Green Energy projects
• Ecotricity challenged the profit rates required by
banks
• By the deadline more than 1,800 people had
applied for almost £15million worth of
EcoBonds, oversubscribed by nearly 50%
• The most successful private bond ever issued in
the UK.
Mutual Home
Ownership
• Creation and fair
sharing of equity
• Also provides a pension
• Balances asset holding
over the life course
Peer-to peer lending
• Zopa has lent more
than £200m since
2005
• Makes equity
sharing available
on a small scale
• Shared risk but no
significant
commitment or
relationship
Can we create money for a green
economy?
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•
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•
•
Shift consumption into the local economy?
Encourage activity in the core economy?
Reduce rather than increase inequality
Counteract recessionary pressures?
Reduce consumption?
Encourage activity in the core economy?
Can we change the velocity of circulation?
• Interest encourages
people to hold money and
slows it down
• Negative interest
(demurrage) might speed
it up
• Silvio Gesell (1862-1930)
• Do we want to speed up
circulation?
 Uses principle of
The
demurrage
 Electronic and paper
money
 Back one-for-one by euros
 Can be exchanged back
for a 5% fee
 More than 500,000 in
circulation generating
transaction volume of
€0.5m
Chiemgauer
Design of the Stroud Pound
Bristol Pound
•
•
•
•
•
Heavy involvement with local council
Partnership with credit union
Good support from businesses
Powerful media coverage
Can it compete with the pound sterling?
Find out more
www.greeneconomist.org
gaianeconomics.blogspot.com
www.greenhousethinktank.org
Green Economics (Earthscan,
2009)
Environment and Economy
(Routledge, 2011)
The Bioregional Economy
(Earthscan, 2012)