A Green Swan
The age of climate-triggered financial crises is upon us
I recently went to a lecture by a psychologist/psychotherapist discussing social science response by individuals and communities to the global climate emergency through “transformational resilience”, an approach developed “to teach behavioral, cognitive, and relational concepts and practices that can support emotional and interpersonal sustainability through the years of uncertainty and calamity that appear to be in store.” As the news of climate consequence burgeons around us, there is no doubt that the real and perceived adversity worldwide can generate concern and anxiety, paralyze individual and collective action, and undermine the mitigation and invention required if we are to react to sustain our future. As climate events have unfolded we all have every reason to wonder what will it take? to convince leaders and government, event private industry, that these challenges must be met.
What will it take?
In my search for an answer I came across a paper published by the Banque de France, a member of the Bank for International Settlements (BIS), a larger international group of central banks and economists, addressing the implications of climate change. Francois Villeroy de Galhau, the French bank’s Governor, writes in the Forward: “Climate change poses unprecedented challenges to human societies, and our community of central banks and supervisors cannot consider itself immune…” He concludes, “…the stark reality is that we are all losing the fight against climate change.”
The central bankers understand. What can be done?
Even economists can find power in metaphor. A concept put forward in 2007 by Nassim Nicholas Taleb suggests certain disruptive financial events, named “black swans,” with three special characteristics: they are unexpected and rare, wide-ranging and extreme, and explicable only after the fact. The metaphor continues to serve with the designation of “green swans,” unique still from their dark species by the prevailing certainty that climate events will continue to materialize in the future; that there is need for ambitious, imperative actions in response; that climate catastrophes are even more serious than systemic financial crises, posing an existential threat to humanity; and that the complexity of challenge and response is of a higher order, with untoward chain reactions and cascade effects associated with both physical and transition risks generating fundamentally unpredictable environmental, geopolitical, social and economic dynamics. Green swans are new to scientific classification and, as such, do not bode well for the future. The authors of the BIS report go on to observe that “this complex collective problem requires coordinating actions among many players, including governments, the private sector, civil society and the international community, and, indeed central banks.” To enact a climate defense will require formidable “transformational resilience” and significant, perhaps not yet known behavioral, cognitive, and relational concepts and practices in revolutionary response.
I suggest that we are now in the midst of our first major global “green swan” event. Consider the worldwide impact of the coronavirus outbreak first identified in the Hubei Province, Wuhan region of China, a respiratory disease like the SARs and MERS epidemics previously, that expresses symptoms that resemble the common cold but that can lead rapidly to serious pneumonia and death spread by human interaction and contact through air, water, and touch. Is this disease climate related? It appears to have originated in the poor hygienic conditions of a seafood market? Or perhaps it was first distributed by bats. How will we know? Will we know in time? International response has been dramatic, literally tens of millions of people confined to their homes, cases isolated, quarantine centers identified or built new, regional and international movement by ground, plane, and ship constricted or cancelled, screening at border crossings and major points of entry worldwide. There is a new sense of urgency now, as if we already know that we are dealing with dimension and consequence heretofore unimaginable.
And then consider the financial implications of this possibly pandemic disruption in a wholly integrated global economy. Consider the cessation of manufacture, supply chain interruption, factories closed, workers confined, revenues lost, and sudden uncertainty, even panic, in world markets presently at all time highs. The massive collective response signals the significance of circumstance outside modern experience, the realization that without equally massive resilience and immediate transformational change, the world economy and all its social and political inter-connections will be overwhelmed by a vengeful bird. Are we ready for the innocence and the anger of a green swan? Is that what it will take?
PETER NEILL is founder and director of the World Ocean Observatory and is author of The Once and Future Ocean: Notes Toward a New Hydraulic Society. He is also the host of World Ocean Radio upon which this blog is inspired.