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A recent issue of Flight Global reported that airlines are forced to go green because their financiers might withhold funds if they fail to install carbon programs. Is real change beginning to take place across the board? It would be welcome news. You can argue about the effectiveness of the various carbon programs or of purifying fuels, but if there's change at the decision maker level, we’re actually really getting somewhere.

A risk expert quoted in the article says the risk management sector is giving as much weight to the effect of public perception as to the still uncertain scientific understanding of aviation’s precise impact on the environment. It appears that Europe is leading the trend. The mix of regulations, new European guidelines and financial considerations that together can make or break an airline financially is tipped to become a model for other industries. “A risk manager will […] as a matter of course take account of a business’s holistic impact on the environment and will subject that to the same level of audit scrutiny as he would traditionally give to a business’s balance sheet”, Flight Global writes. One risk management expert says “We don’t have to prove we’re right about the risk. We just have to prove we may be right.”

A (ratings agency) Moody’s Analyst, George Godlin, confirms this. “If there is successful adherence by European airlines through a formalised structure that could well improve access to capital. These airlines could well show the way, be the harbingers of a trend and could ultimately become the model. But they will first have to demonstrate that they are managing these programmes effectively.”

He believes that a new US administration could be positive for the creation of a [global] emissions trading program. If the Open Skies transatlantic air travel liberalisation is going to step up competition in the airline industry, it will also lead to a further internationalision, which in turm might mean that the European initiative could be adopted in the US as well, Godlin said.

Further evidence of the anticipated trend is the fact that Moody’s has started to work on standardised methods to rate airlines’ pollution in as fair a way as possible. Its methodology includes financial metrics and qualitative considerations such as fleet age, fuel hedging strategies and geographic spread of risk. It looks like the rating agency acts as a bridge between the rather inflexible world of industry to the more flexible world of finance and consumers at large.

Green economics is hardly an established concept academically. That is because economists have difficulties believing that anything other than the input in their models reflects reality. But the numbers they so diligently belabor are only valid because everyone else in the game plays by the same rules. Economists are increasingly being accused of making a big mistake by accounting for the earth’s resources if they were free and infinite. Economics is of course a field that is traditionally highly empirical and therefore it might be slow on the uptake of new logic.

It took us until the 1700s to produce an Adam Smith who had the presence of mind to adopt a systemic approach to the mishmash of Mercantile partying. It’s ironic that now that business practices are once again beginning to resemble Mercantile traits, it is taking us time again to reconcile the new logic with human handled approaches.

It’s of course unfashionable to talk about mercantilism right now because the word in a macro economic context has such a bitter sweet taste to it for US consumers. But then again, consumer strength has proven to be surprisingly strong over the past decade and a half. If consumer driven pressures for sustainable production continue to grow, the professors who train young economists might ultimately begin to talk a different game too. Perhaps they’ll invent a new word for the same thing.




Watch this video of an alternative proposition on the earth’s natural resources. A reaction to the movie reads: “You obviously do not understand free markets. Who is making green technology buddy? Its not the government. Its businesses in the ECONOMY that are creating green technology because it is PROFITABLE to do so.” But it seems that the tipping point is has moved forward. Profitability as a focal point is on its way to being replaced by probability.