- Program 2008-09
A Crisis in Confidence - ESG Risk, the Financial Downturn, and the Recovery
Citigroup Smith Barney Executive Conference Room, 345 Park Ave. 21st Floor, New York, NY
During the past 15 months financial markets have transformed in ways that few imagined possible. Oil has hit $147/barrel. A massive wave of consumer insolvency has brought Bear Stearns, Citibank, UBS, and Lehman Brothers to their knees. And an impending wave of environmental regulation has caused the coal power deal pipeline to contract from 172 projects in planning in 2006 to 15 today. Issues like responsible lending, energy efficiency and carbon management which have historically been treated as peripheral matters of ethics are now determining whether companies survive or fail.
Trust - the most crucial lubricant of the capital markets - has evaporated. Investors don't trust bank's estimates of how much debt consumers can sustain, nor do they trust that auto companies will remain viable while energy is expensive and volatile.
Prior to now Standard and Poor's, and Moody's ratings were widely accepted. That is no longer the case. Investors have also lost faith in the government's ability to act as an effective regulator. Emitting 72 million tons of CO2 annually may damage the environment, but it is currently legal. Lending $400,000 to someone with no assets, no income and $60k in credit card debt may have been imprudent, but it has been and still is within the law.
The question is what needs to happen to restore confidence? Finding the answer to that question entails a realistic assessment of where we currently are and what is needed to navigate this new financial landscape. This panel will examine the origins of the current state of market conditions and will propose ways that enacting sustainability principles can help to restore confidence and stability.
Moderator:Amy Scott, New York Bureau Chief, Marketplace - American Public Media
Allan Sloan, Sr. Editor at Large, Fortune Magazine; Greg Larkin, Sr. Analyst Innovest Strategic Value Advisors, Sean Egan, President Egan-Jones Rating Agency