Is it feasible to reform global capitalism and the international financial system? Perhaps. But as in the case of cutting emissions, it seems likely that intelligent action will be too little too late to prevent ecosystems from collapsing around the world.
The idea of reforming the global financial system in time to prevent catastrophic ecological collapse may already be approaching the limits of possibility—not because the tools are lacking, but because the systems of power are designed to resist the kind of long-range thinking that survival now demands.
Mark Carney’s “Tragedy of the Horizons” has proven to be more than a warning—it has become an indictment. Despite a decade of high-level reports, model-based forecasts, and growing evidence of planetary instability, the default stance of powerful institutions remains short-termism and political expediency. The financial system, much like the atmosphere, has tipping points. And we may already have passed several of them.
But the question remains: Can we reform the global financial system quickly enough to matter? Or, more realistically: Can we reform enough of it, in enough places, to reduce the harm and preserve some habitable future?
Let’s consider the landscape.
1. The System Was Not Built for Planetary Stewardship
The modern financial system evolved to accelerate capital accumulation, not to regulate ecological stability. Its core imperatives—compound growth, risk externalization, quarterly returns—are not aligned with biophysical limits. Markets price carbon badly. They discount the future aggressively. And they reward extraction over regeneration.
That is not a bug. It’s the operating logic.
So any meaningful reform must challenge that logic—by redefining what counts as value, what counts as risk, and what constitutes a return on investment. That means moving from extractive finance to regenerative finance—where ecological and social outcomes are not just “impacts” but fundamentals.
This requires more than ESG tweaking. It demands a systemic reframing.
2. Reform Is Possible—But Politically Fragile
Carney, Sachs, Sheren, and others make it clear: we could have implemented mandatory climate disclosures, aligned central bank mandates with planetary thresholds, and scaled climate finance mechanisms when there was still momentum. But the window of political opportunity—opened slightly after the Paris Agreement and again at COP26—has largely closed.
This is the real “tragedy”: the collective capacity to act was visible, but leadership was missing. National politics—not science, not feasibility—has been the primary barrier. As the Shears study shows, central bank engagement with climate risk is driven less by data and more by political climate. In the U.S., partisan capture of the regulatory state has turned climate risk itself into a political liability.
Meanwhile, international coordination is gridlocked. As the Bonn talks demonstrate, even small procedural advances on climate finance are mired in geopolitics and institutional fatigue. The Global South continues to demand reparative finance—while the Global North increasingly shifts burden to private capital markets. This is not climate justice. It’s strategic abandonment.
3. Technocratic Delay Is Disguised Catastrophic Risk
By requiring that climate be treated only when it becomes a clear threat to financial stability—as Michael Kaplan of the U.S. Treasury reportedly argued—regulators risk ignoring the fact that financial markets are often the last systems to register slow-building existential threats. Capital markets are reactive, not anticipatory. They crash after the warning signs become obvious.
By the time financial systems begin to signal distress from climate impacts, critical ecological systems—forests, fisheries, ice sheets, atmospheric feedbacks—will have already crossed thresholds that no amount of money can reverse.
The issue, as Lisa Sachs points out, is not technical blindness but conceptual failure: we have confused financial stability with planetary stability. In a world where GDP is still the primary metric of progress, we are tracking the wrong dashboard while the engine fails.
4. What Could Be Done Now?
While sweeping reform may be politically blocked, pockets of transformation are still possible, especially where finance is being localized, mission-driven, or community-anchored. Some high-leverage possibilities:
- Mandate planetary boundaries as part of systemic risk frameworks. Central banks and the FSB could expand their definition of macroprudential risk to include biophysical thresholds (e.g., carbon budgets, water stress, biodiversity).
- Create regenerative finance mechanisms. Support carbon drawdown, ecosystem restoration, and bioregional capital flows through public banking, PACE-style instruments, biodiversity credits, and climate-aligned sovereign debt instruments.
- Shift from shareholder to stakeholder governance. Require long-term value creation based on planetary and community health—not just financial performance.
- Establish a global financial floor for climate justice. Wealthier nations must fulfill—and vastly expand—their commitments to climate finance for adaptation, loss and damage, and clean energy infrastructure in the Global South.
- Leverage AI and system modeling. Use machine learning and integrated assessment tools to simulate alternative futures, assess blind spots, and support anticipatory governance.
5. Will It Be Enough?
Realistically, reform alone will not prevent ecological collapse in many parts of the world. As Nate Hagens and Rod Schoonover would both likely affirm, we are well into the “Great Simplification”—the phase where energy, ecological, and institutional limits begin to converge and unwind the scaffolding of industrial civilization.
But the point now is not to prevent all collapse—it’s to shape the descent, to preserve critical functions, to reduce suffering, and to lay the groundwork for a regenerative future. That may sound modest, but in the shadow of overshoot, it is everything.
Final Reflection: From Control to Care
Reforming the financial system, if it is to mean anything, must go beyond stability. It must become about responsibility. Not the kind defined by quarterly reporting, but the kind rooted in intergenerational ethics.
We cannot fix this with better models, clearer disclosure, or clever incentives alone. What’s required is a moral and cultural shift in what we believe finance is for.
And perhaps that’s the final irony: the survival of the financial system itself will ultimately depend on its ability to step outside its own time horizon—to care about futures it will never see.
That is not a technical reform. It is a leap of imagination.
And it is still possible.
(AI-enhanced)