Capitalism does work but it does have to be capitalism

There is much woe and gnashing of the teeth over how the investment industry is gaming matters:

As socially conscious investing surges, dodgy metrics and dirty tricks abound.

…

Being able to label a fund as net zero is a marketing coup for fund managers, and has prompted some to try some classic financial engineering.

Yes, obviously. If strewing a few pretty words around and continuing to do the same ol’, same ol’ makes money then pretty words will be strewn and the same ol’ done.

If you actually want people to change what they do then you’ve got to recall that first important part of economics - incentives matter. What you do is change what makes money, not what rhetorical wrapping you put around it.

This is the argument in favour of that carbon tax. Every price in the economy is changed by its existence. What is profitable to do is then informed by that. Every capitalist - and every manager of capitalists’ money - can instantly see that incentive reflected in the numbers of every potential investment.

At which point we don’t need standards and exhortations and committees and meetings and social movements. For the task is already done - all investments are now made taking full account of both the costs and benefits of that climate change and how to deal with it.

The reason being that capitalism really does work but it really does have to be capitalism. Haul ‘em in by their wallets and all else will follow. Change the incentives, not the language, investors face and investors will change their actions. It really is just that simple.