51 Finance Monthly. Inve s tmen t emissions recovered to the 2019 record-breaking level - about 58 giga tonnes and means we began 2022 with only 380 giga tonnes left. At the current rate of emitting about 60 giga-tonnes a year, it is sufficient for only six more years. This reality will catch up with our investments. We have been in many panel meetings, conferences, calls and roundtable discussions with specialists and the broad public, and our sense is very much that the box-ticking ideas of sustainability are passing. Investment professionals, environmental activists, and regulators are coming together in recognition that we cannot cheat our way out of a physical capacity limit the way we can with financial limits. The Catholic sustainability movement, the Laudato Si’ Movement, expresses the general public’s sentiment clearly – it is more than about money, it is about revising an entire way of living. Monetary and fiscal stimulus cannot create more carbon capacity – the six or so years carbon budget is all we have. Whether we do it by design or will be driven to it by disasters, we will start cutting fossil fuel production. Sustainability advocates like ourselves are strongly publicising proposals to reduce fossil fuel production through broad public lobbying of shareholders to step up to their responsibilities and not leave it as a management problem. As these ideas take hold, energy prices will reflect the changing mood. Investment themes will increasingly move beyond netzero and focus on the carbon budget. Bankruptcy here will have no second chance, no chapter-11 recourse where we can keep business going as usual while we restructure and continue. To survive this transition, sustainability will mean businesses will have to make a genuine case for their use of the carbon budget at our expense to provide their goods and services in a way that means other businesses and consumers will be willing to spend their scarce carbon budget on them. Using the budget to build windfarms when wind patterns are uncertain is not as sensible as efforts that directly reduce our carbon budget needs. As China is recognising, we do not have much of a choice. The carbon budget is real. The flooding in October 2021 that displaced almost 2 million people is showing what happens as we use it up – using it up itself will bring more frequent damages and breaching it will take us to the world of “unknown unknowns”. The power black-out triggered by emission limits, lack of wind, and over demand from the world of its production shows the other side of trying to avoid breaching it. Reality will catch up with investments. The events of the year 2021 and COP26 brought out the real significance of our carbon budget. If coronavirus failed to bring the world together, sustainability properly redefined as not exhausting our carbon budget and not simply as netzero ambitions will do so, ready or not. About the Authors David Ko and Richard Busellato are seasoned investment managers and authors of The Unsustainable Truth. They have over three decades of experience working in the investment industry for premier hedge funds and major financial institutions. David and Richard specialise in sustainability and reframing theway investment and profit are viewed in relation to their impact on people and the environment. Together, they are co-founders of Rethinking Choices, a sustainability advocate which helps businesses and communities devise strategies which acknowledge a world with limited resources. David Ko Richard Busellato
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