Unintended consequences
Every action has consequences, but it is the unintended consequences of an action that are often the most troubling.
We launched our Consequences report last week aimed at making us all think about the consequences of our financial decisions. Riffing on this theme we are looking at some larger accidental consequences that have shaped the way the world is today.
The invention of the refrigerator changed the way we shop, store and eat our food, although very early refrigerators used various toxic gases such as ammonia as the coolant to keep the inside cold. In the 1920s there were a number of deadly incidents caused from leakages from the refrigerators.
It was for this reason that CFCs were originally created. They could be a safe, non-toxic and non-flammable coolant. The first CFC was created in 1928 and rapidly expanded in the market place because fridges that kill their owners are a difficult sell!
It took researchers until the 1970s to first hypothesise that CFCs could potentially damage the ozone layer, and a few years after this a NASA satellite found a hole in the ozone layer above Antarctica.
Ozone provides a vital barrier for life on earth. It blocks out damaging ultraviolet light from reaching the earth’s surface, to protect both plants and animals.
The international community recognised this and two years after the discovery of the hole, an international agreement, the Montreal Protocol, had been struck to protect the ozone layer.
What made this so exceptional was the speed with which it was agreed. The deal, signed in 1987 by 46 states, went on to become the first United Nations treaty to achieve universal ratification.
The Montreal Protocol has often been called the most successful international environmental agreement to date. The reason it was was so effective is because it was easy to do and governments could take control of a situation where individuals couldn’t.
It wasn’t all plain sailing. Some of the companies that made CFCs hit back; the chair of the board of DuPont was quoted as saying that ozone depletion theory is “a science fiction tale…a load of rubbish…utter nonsense”.
In 1986, the Alliance for Responsible CFC Policy (an association representing the CFC industry founded by DuPont) was argued loudly that the science was too uncertain to justify any action.
If these arguments sound familiar, it is because they are the same justifications the fossil fuel companies are currently using when discussing climate change. And interestingly enough they are also the same arguments the tobacco companies used when discussing the relationship between smoking and cancer.
The science with CFCs has been well and truly put to bed. The hole in the ozone is slowly improving and projections indicate that the ozone layer will return to 1980 levels between 2050 and 2070.
Time and again, it’s been proven that countries can work together to fix things that are harming the planet and our health, despite those with a financial stake in the status quo going out of their way to avoid it.
Now, it’s time we took a stand once more. For many of us, an unintended consequence of investing — either directly or by holding a pension — is that we’re funding the things we don’t agree with. For example, 66% of Brits think that tax avoidance is unethical yet 98% of the FTSE 100 use tax havens. Most people will have at least a few FTSE 100 companies in their investment portfolio. They may not know they’re helping companies avoid tax obligations.
It’s time that the calls for a more transparent financial services system were heard beyond making token changes. People deserve to know what they’re investing in because it can have an impact far wider than solely on their financial future but that of their society too. If nothing changes, the consequences will catch up with all of us one day.
