What will 2019 be remembered for? I went through my Sunday notes of the last decade to identify a leading macro- or microeconomic theme for each year:
2009 – The Great Recession (MSCI index for global equities +30% after a terrible ‘08)
2010 – The BRIC Hope (+11%)
2011 – The European Meltdown (-6%)
2012 – The ‘Whatever-It-Takes’ Moment (+16%)
2013 – The Hypocenter of the ‘Lower For Longer’ Syndrome (+26%)
2014 – The Oil Price Crash (+10%)
2015 – The (Nitro) China Wobbles (+2%)
2016 – The Industrial Recession (+10%)
2017 – The Global Synchronized Recovery (+20%)
2018 – The Geopolitical Attack On Economics (-7%)
2019 – ? (+24% YTD)
Many aspects of 2019 have been most uninspiring, both politically and economically, soured by a twist of environmental gloom and only saved by an exceptional, albeit exuberant stock market performance. I was inclined to call 2019 ‘The Year That Wasn’t’. Yet this year may prove to be a turning point when it comes to one critical matter.
Some may dismiss the current trends related to corporate sustainability as a fad, in particular when it comes to its environmental component. I would refer them to the argument underlying the wager put forward by Blaise Pascal, a 17th century philosopher and mathematician, in his ‘Pensées’ (Thoughts): In a religious context, Pascal argues that a rational person should act as though God did exist. If God did not exist, such a person would have only a finite loss in the form of foregone ‘pleasures, glory and luxury’, whereas he or she would stand to receive infinite gains in the form of an afterlife in heaven whilst avoiding infinite losses in the form of an eternity in hell. In Pascal’s words: ‘There is here an infinity of an infinitely happy life to gain, a chance of gain against a finite number of chances of loss, and what you stake is finite. […] And so our proposition is of infinite force, when there is the finite to stake in a game where there are equal risks of gain and of loss, and the infinite to gain. […] If you gain, you gain all; if you lose, you lose nothing.’
Doesn’t the same logic apply to environmental sustainability and, behind it, climate change? The rational bet is to believe in its existence and implications when comparing the finite losses with the infinite gains (a sustainable world) and the avoidance of infinite losses (peril and perhaps annihilation) for mankind.
2019 may actually prove to be ‘The Year of the Wager on Sustainability’.