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A green economy is an economy that aims at reducing environmental risks and ecological scarcities, and that aims for sustainable development without degrading the environment. It is closely related with ecological economics, but has a more politically applied focus. The 2011 UNEP Green Economy Report argues "that to be green, an economy must not only be efficient, but also fair. Fairness implies recognizing global and country level equity dimensions, particularly in assuring a Just Transition to an economy that is low-carbon, resource efficient, and socially inclusive."UNEP, 2011, Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication, www.unep.org/greeneconomy
A feature distinguishing it from prior economic regimes is the direct valuation of natural capital and ecological services as having economic value ( see The Economics of Ecosystems and Biodiversity and Bank of Natural Capital) and a full cost accounting regime in which costs externalized onto society via ecosystems are reliably traced back to, and accounted for as liabilities of, the entity that does the harm or neglects an asset. Runnals, D. (2011) "Environment and economy: joined at the hip or just strange bedfellows?". S.A.P.I.EN.S. 4 (1)
Green sticker and ecolabel practices have emerged as consumer facing indicators of friendliness to the environment and sustainable development. Many industries are starting to adopt these standards as a way to promote their greening practices in a Globalization economy. Also known as sustainability standards, these standards are special rules to make sure the products bought did not hurt the environment and the people that make them. The number of these standards has increased in recent years, and they now contribute to building a new, greener economy. However, their effectiveness is often limited by inconsistent enforcement, lack of global alignment, and insufficient incentives for compliance. They focus on economic sectors like forestry, agriculture, mining or fishing, among others; concentrate on environmental factors like protecting water sources and biodiversity, or reducing greenhouse gas emissions; support social protections and labor rights; and home in on specific parts of production processes.
According to Büscher, the increasing liberalisation of politics since the 1990s has meant that biodiversity must 'legitimise itself' in economic terms. Many non-governmental organisations, governments, banks, companies and so forth have started to claim the right to Define and defend biodiversity and in a distinctly neoliberal manner that subjects the concept's social, political, and ecological dimensions to their value as determined by capitalist markets.
Some economists view green economics as a branch or subfield of more established schools. For instance, it can be regarded as classical economics where the traditional land is generalized to natural capital and has some attributes in common with labor and physical capital (since natural capital assets like rivers directly substitute for human-made ones such as ). Or, it can be viewed as Marxist economics with nature represented as a form of Lumpenproletariat, an exploited base of non-human workers providing surplus value to the human economy, or as a branch of neoclassical economics in which the price of life for developing vs. developed nations is held steady at a ratio reflecting a balance of power and that of non-human life is very low.
An increasing commitment by the UNEP (and national governments such as the UK) to the ideas of natural capital and full cost accounting under the banner 'green economy' could blur distinctions between the schools and redefine them all as variations of "green economics". As of 2010 the Bretton Woods institutions (notably the World Bank and International Monetary Fund (via its "Green Fund" initiative) responsible for global monetary policy have stated a clear intention to move towards biodiversity valuation and a more official and universal biodiversity finance.
The UNEP 2011 Green Economy Report informs that "based on existing studies, the annual financing demand to green the global economy was estimated to be in the range US$1.05 to US$2.59 trillion. To place this demand in perspective, it is about one-tenth of total global investment per year, as measured by global Gross Capital Formation."
At COP26, the European Investment Bank announced a set of just transition common principles agreed upon with multilateral development banks, which also align with the Paris Agreement. The principles refer to focusing financing on the transition to net zero carbon economies, while keeping socioeconomic effects in mind, along with policy engagement and plans for inclusion and gender equality, all aiming to deliver long-term economic transformation.
The African Development Bank, Asian Development Bank, Islamic Development Bank, Council of Europe Development Bank, Asian Infrastructure Investment Bank, European Bank for Reconstruction and Development, New Development Bank, and Inter-American Development Bank are among the multilateral development banks that have vowed to uphold the principles of climate change mitigation and a Just Transition. The World Bank Group also contributed.
The International Chamber of Commerce (ICC), representing global business, defines the green economy as "an economy in which economic growth and environmental responsibility work together in a mutually reinforcing fashion while supporting progress on social development". UNDESA, (2012). A guidebook to the Green Economy.
In 2012, the ICC published the Green Economy Roadmap, containing contributions from international experts consulted bi-yearly. The Roadmap represents a comprehensive and multidisciplinary effort to clarify and frame the concept of "green economy". It highlights the role of business in bringing solutions to global challenges. It sets out the following 10 conditions which relate to business/intra-industry and collaborative action for a transition towards a green economy:
Ecological footprint measurements are a way to gauge anthropogenic impact and are another standard used by municipal governments.http://www.fcm.ca/Documents/reports/Ecological_Footprints_of_Canadian_Municipalities_and_Regions_EN.pdf
The market failure to respond to environmental protection and climate protection needs can be attributed to high external costs and high initial costs for research, development, and marketing of green energy sources and green products.(Reinhardt, 1999; King and Lenox, 2002; Wagner, 203; Wagner, et al., 2005) The green economy may need government subsidies as market incentives to motivate firms to invest and produce green products and services. The German Renewable Energy Act, legislations of many other member states of the European Union and the American Recovery and Reinvestment Act of 2009, all provide such market incentives. However, other expertsAmory Lovins, Hunter Lovins, and Paul Hawken, authors of , and Jay Conrad Levinson and Shel Horowitz, authors of Guerrilla Marketing Goes Green argue that green strategies can be highly profitable for corporations that understand the business case for sustainability and can market green products and services beyond the traditional green consumer.
In the United States, it seemed as though the nuclear industry was coming to an end by the mid-1990s. Until 2013, there had been no new nuclear power facilities built since 1977. One reason was due to the economic reliance on fossil fuel-based energy sources. Additionally, there was a public fear of nuclear energy due to the Three Mile Island accident and the Chernobyl disaster. The Bush administration passed the 2005 Energy Bill that granted the nuclear industry around 10 million dollars to encourage research and development efforts. With the increasing threat of climate change, nuclear energy has been highlighted as an option to work to decarbonize the atmosphere and reverse climate change. Nuclear power forces environmentalists and citizens around the world to weigh the pro and cons of using nuclear power as a Renewable energy. The controversial nature of nuclear power has the potential to split the green economy movement into two branches— anti-nuclear and pro-nuclear.
According to a European climate survey, 63% of EU residents, 59% of Britons, 50% of Americans and 60% of Chinese respondents are in favor of switching to renewable energy. As of 2021, 18% of Americans are in favor of natural gas as a source of energy. For Britons and EU citizens nuclear energy is a more popular energy alternative.
After the COVID-19 pandemic, Eastern European and Central Asian businesses fall behind their Southern European counterparts in terms of the average quality of their green management practices, notably in terms of specified energy consumption and emissions objectives.
External variables, such as consumer pressure and energy taxes, are more relevant than firm-level features, such as size and age, in influencing the quality of green management practices. Firms with less financial limitations and stronger green management practices are more likely to invest in a bigger variety of green initiatives. Energy efficiency investments are good to both the bottom line and the environment.
The shift to greener energy and the adoption of more climate regulations are expected to have a 30% positive impact on businesses, mostly through new business prospects, and a 30% negative impact, according to businesses that took part in a survey in 2022. A little over 40% of the same businesses do not anticipate the transition to greener alternatives to alter their operations.
Ulrich Hoffmann, in a paper for UNCTAD also says that the focus on Green Economy and "green growth" in particular, "based on an evolutionary (and often reductionist) approach will not be sufficient to cope with the complexities of [[climate change]]" and "may rather give much false hope and excuses to do nothing really fundamental that can bring about a U-turn of global greenhouse gas emissions. U.Hoffmann (2011), "Some reflections on climate change, green growth illusions and development space" Clive Spash, an ecological economist, has criticised the use of economic growth to address environmental losses, Spash, C.L. 2007. Fallacies of economic growth in addressing environmental losses: Human induced climatic change. Newsletter of the Australia New Zealand Society for Ecological Economics (ANZSEE), no. May, 2-4 and argued that the Green Economy, as advocated by the UN, is not a new approach at all and is actually a diversion from the real drivers of environmental crisis. He has also criticised the UN's project on the economics of ecosystems and biodiversity (TEEB), and the basis for valuing ecosystems services in monetary terms. Spash, C.L. 2008. How much is that ecosystem in the window? The one with the bio-diverse trail. Environmental Values, vol. 17, no. 2, 259-284
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