The word “finance” conjures up images of Wall Street and big business. But finance also touches every one of us in our daily lives, whether we’re shopping at an online retailer or buying a house. And while it’s easy to think of finance as something that happens far away from where we live (or don’t live), the truth is that the financial sector is an important part of how many things fit together.
The world’s financial systems can be one of the most powerful forces in driving change – either for better or worse.
The world’s financial systems can be one of the most powerful forces in driving change – either for better or worse.
For example, a recent report by the World Economic Forum shows that since 2008, financial crises have led to an average of 15 percent higher growth rates than those countries that did not experience a crisis during that time period. This is largely due to countries’ efforts to pursue sound economic policies and implement structural reforms.
However, this same report also found that there were notable differences between countries when it came to their ability use money for good purposes: “Some 30% of people surveyed say they have been affected personally by poverty caused by natural disasters like floods and earthquakes… about 20% say they would like their governments do more about climate change.”
We need to look at the value chain.
The value chain is a concept used to understand the entire system of production, distribution and consumption. It consists of three parts: inputs (raw materials), processes and outputs (goods).
The first part is inputs which are purchased by companies and then used to make goods. For example, if a company purchases paper pulp from farmers in Asia who grow it on their land and sell it to them at an agreed price, that would be considered one input into their supply chain. They could also buy energy or other resources such as water or natural gas which are required for production along with labor costs associated with producing goods using these resources.
The second part is processes where raw materials become processed into finished products like paper towels or clothes; this includes equipment needed for processing such as conveyors that move raw materials through factories on conveyor belts under pressure from pumps so they don’t get dirty during transport between locations where these processes occur before reaching us here at home where we consume these finished items after having been processed by workers following instructions given by managers who oversee them directly without being able to see what’s happening firsthand since most manufacturing happens behind closed doors away from prying eyes!
Banks investing in conventional energy.
- Banks are investing in fossil fuels.
- Banks are investing in renewable energy.
- Banks are investing in nuclear power.
- Banks are also investing in coal, but we don’t have time to go into that here.
Insurers investing in conventional energy.
Insurance companies are increasingly investing in conventional energy sources, including coal power stations and oil and gas companies.
Insurers have also invested in renewable energy, but not as much as you might think. The majority of the world’s largest insurers are still investing in traditional fossil fuels because they make money off of them—and it’s cheaper for them to do so than to switch over to clean alternatives like solar panels or wind turbines.
Pension funds investing in conventional energy.
Pension funds are investing in fossil fuels.
Pension funds should be investing in clean energy. They should also be investing in companies that are leading the way in renewable energy, and they should be doing so with a view to sustainable finance so that their investments can grow over time into something more valuable than just money sitting on a balance sheet somewhere.
Bank loans to oil and gas sector.
You may have heard about banks lending money to oil and gas companies, but what exactly are these companies? They’re large corporations that extract fossil fuels from the ground and sell them for profit. Because they must pay back their loans with interest, banks often offer them attractive terms—and this is where the problem begins.
The biggest emitters of greenhouse gases in the world are banks who provide loans for fracking operations (the process by which natural gas is extracted from shale formations). These operations release large amounts of methane into the atmosphere as well as carbon dioxide (CO2), which causes global warming when it enters our atmosphere.
Private equity investment in oil and gas companies.
Oil and gas companies are the most profitable in the world. As a result, they’re also some of the most controversial: private equity firms have been buying up fossil fuel companies around the globe, with some even calling for divestment from them.
But how could investing in an industry that causes so much damage to our environment make sense? In many ways it does—but only if you take into account both sides of this equation: what happens when we stop investing in fossil fuel industries? And how can we ensure that we don’t lose out on profits as a result?
The answer lies with understanding how much money is at stake here. It turns out there’s a lot! According to Bloomberg New Energy Finance (BNEF), private equity firms have been investing heavily into oil & gas over recent years; between 2014-2017 alone they poured $200 billion into such investments worldwide![1] These investments have been made by large institutions like sovereign wealth funds who see opportunities for growth within these sectors due to higher demand levels projected thanks largely due increased global population growth rates[2] along with rising incomes levels across regions such as China where electricity demand has recently soared past supply capabilities resulting in shortages across major urban centers such as Beijing.[3]
Finance should be a force for good, but it’s not always that way.
Finance should be a force for good, but it’s not always that way.
When you think of finance in the media and on social media, there are several common themes: money; greed; power; corruption and fraud. These are all true when we talk about some sectors or companies within the financial industry (like Wall Street), but they’re not necessarily true when considering how big a role finance plays in our lives as whole (and even more so with our consumerism). Finance can be an incredible tool for helping people make ends meet, especially those who don’t have access to traditional banking institutions or credit cards/loans like most Americans do today—it provides these folks with another option when they need cash fast without having to go into debt themselves!
Conclusion
At the end of the day, finance is one of the most powerful forces in our world. It can be used to bring about positive change or negative changes, depending on how it’s used. The best way to stop this problem is for banks and policymakers alike to implement regulations that protect against corruption and bad behavior.
