Businesses in today’s market place, in both the financial and non-financial sectors now have to pay attention to the environmental and social impact of what they do, as well as to respect high standards of corporate governance. The group of standards is commonly referred to as ‘ESG’. ESG is now a mainstream activity. President Trump resists. He is mistaken (again).
This blog sees a need to improve the authentication, oversight and scrutiny of ESG claims, ratings and indexing. Despite the efforts of bodies such as the SASB, (Sustainability Accounting Standards Board) and the Principles for Responsible Investment body (PRI) supported by the UN, there are conflicts of interest that produce a lack of rigor and consistency. The labels are scattered around like sprinkles on a tray of cupcakes.
The idea that we should have an artificial global currency detached from the currency of any single nation, or currency zone, has not figured on the international financial agenda for many years. In particular it did not surface in the response to the 2008 international financial crisis.
There are good reasons for this... and bad. The good reason is that the world is awash with liquidity in the aftermath of quantitative easing by the leading Central Banks of the world. We therefore do not seem to need any fresh source of liquidity that a globally managed currency could potentially provide.
The bad reason is the lack of support in the US, the Eurozone and China because of their own self-interest in relation to their own currencies. They do not have in mind broader global considerations.
The question is now re-emerging in the context of moves towards private, digital currencies for domestic and international use. Facebook’s proposal for the Libra, based on a basket of values, is particularly important. The US Fed, the US treasury and Trump himself have urged caution. This blog suggests we should be open-minded to this development.