The factors of production are: land, labor and capital, some distinguish entrepreneurship from labor, in my case I consider it as another form of labor.
There could be production without capital. In fact, people produced goods and services long before the existence of money, even barter.
Likewise, there is production without the intervention of human labor. Seeds spread by themselves and animals reproduce freely.
However, without what the concept of "land" represents, which includes minerals, vegetables and animals, the possibilities of human life would be nil.
There is a general consensus in the developed world that due to the effect of certain activities we carry out, the planet's climate is changing and that this would affect us negatively.
International organizations, both political, financial and research, have allocated billions of dollars to ascertain the effects of the impact of climate change on people's lives and on businesses in order to promote mitigation programs.
While the challenge is the same, to improve production and consumption practices so that the natural state is affected as little as possible, there are different fronts to address:
* Transformation, which involves changing all those processes that are carried out knowing that they have a negative impact.
* Remediation, which represents all those corrective solutions that are implemented to solve the damage done in the past.
* Conservation, which consists of taking care of what we have and enhancing the favorable effects of its existence.
Each of them points to a moment in the cycle of production and/or consumption of goods and services. The first aims to reduce the impact it will have in the future, the second to reduce the impact it will have in the past, and the third to sustain the present.
Companies and individuals carry out activities that can be modified in the future or whose past effects can be remedied; however, certain aspects of industry, commerce and life itself that generate negative impacts are difficult to change or the cost of transformation is very high.
It is in these cases where conservation becomes relevant.
The financial market is developing innovative instruments that combine the interests of the planet with those of business, initiating a sustainable path to face the challenges that this circumstance poses.
Green bonds are a type of debt issued by public or private institutions to finance environmental or climate change-related projects.
There are sovereign debt placements made by countries that link the interest rate they pay to the fulfillment of certain legislative or regulatory objectives aimed at mitigating the effects of climate change, for example, promotions for the generation of renewable energies or the renewal of the automobile fleet for electric vehicles. Such is the case of Uruguay with its 2022 bond indexed to climate change indicators (BIICC), which was issued for US$ 1.5 billion and had proposals for more than US$ 2.8 billion.
Although these are novel and potentially effective instruments, there are new proposals that will revolutionize positive climate action, international trade and finance.
A global trend is social awareness of the production practices of goods consumed on a daily basis. Organic products, recycled packaging or the use of biodegradable materials are part of the new regulatory frameworks and consumer preferences .
Unfortunately, the ideal world does not exist, as these standards complicate production scales and costs.
This circumstance serves as an opportunity to solve the most complex issues:
* Productivity and costs, associated with processes with negative impact and.
* Conservation of what we have.
Associating today's production models with conservation projects shows that both suppliers and consumers assume their share of responsibility and contribute to the resolution of this complex phenomenon.
There are ways to measure the impact produced by most activities. Similarly, the services provided by conserved lands are measured.
It is simply a matter of matching demand with provision.
This is a task that involves regulators as well as producers and consumers.
If there is a small increase in costs, it would be insignificant compared to the price of paying for the obvious effects of the changes we are experiencing.
In summary, climate change has found ways to finance its mitigation.
* Green bonds for transition or remediation.* Public debt related to regulatory frameworks that generate positive impact actions in exchange for improvements in financial conditions.
* Certifications of participation in conservation projects to resolve cases of processes that are excluded from the other alternatives.
In all cases there are four main components for the placement of positive impact financial instruments:
1. for which process or project the resources received will be used.
2. How the progress and results of the investment will be evaluated.
3. The application of the funds.
4. Reporting and auditing of the impacts produced.
It is important to remember that "The past belongs to fools and the future is today", without preserving what we have, it will be of little use to remedy the past or bet on the future, both of which require more time and effort.
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