There is a law that no one disputes, no one repeals, and that orthodox economics pretends not to know: the second law of thermodynamics. Every energy transformation produces entropy — an irreversible degradation, a disordering of matter. A burned forest does not reconstitute itself in a few quarters. A depleted aquifer does not repay itself in five years. A soil leached by forty years of intensive agriculture does not recover its microbial life because an ESG fund ticked a box in an annual sustainability report.
Entropy is the real cost of all production. And the genius — if one can call it that — of financial capitalism is having managed never to record it in the accounts.
The Physics That Economics Forgot to Read
Nicolas Georgescu-Roegen, an economist of rare lucidity, laid out the problem as early as 1971 in his foundational work The Entropy Law and the Economic Process. He demonstrated that all economic activity draws from a stock of low-entropy resources — concentrated minerals, fossil oil, fertile soils, fresh water — to produce high-entropy waste. This flow is unidirectional and irreversible. It does not loop back. Infinite economic growth in a finite world is not a political vision: it is a physical impossibility.
Georgescu-Roegen was never refuted. He was simply ignored by standard economics textbooks, too busy modelling perfectly balanced markets in a universe without friction, without degradation, without irreversible time. Physics does not negotiate with doctrines. It waits.
It is within this framework that Ronald Coase, in a 1997 interview, formulated with clinical coldness what mainstream economics teaches in more polished forms: economic agents do not pollute out of vice — they pollute because it is the least costly way to produce something in a price system that never bills for degradation. Pollution is not an industrial accident. It is the rational consequence of an accounting system built on the invisibility of entropy.
The Profitability of Dissipation: Numbers to Back It Up
If we map business models according to their entropic profile, a correlation emerges with brutal clarity: the more a model accelerates the dissipation of natural capital, the higher its operating margin.
In the energy sector, oil majors externalise the global climate cost of their hydrocarbons with remarkable efficiency. In 2025, TotalEnergies generated an adjusted EBITDA of $40.5 billion, with a return on capital employed of 12.6% — the best performance in its category. ExxonMobil generated an operating cash flow of $52 billion, maintaining its production at historic levels through intensive exploitation of deposits in Guyana and the Permian Basin. The profitability of these assets rests on one simple premise: the real cost of carbon emissions is never recorded in their balance sheet.
In textiles, the ultra-fast fashion model follows the same logic. Shein projects a net profit of $2 billion for 2025 — up from $1.1 billion in 2024 — by fully externalising the costs of microplastic and chemical pollution of waterways. The Dynamite Group displays an adjusted EBITDA margin of 36.6% in 2025, with revenue growth at a 20% compound annual rate over four years. These performances do not reflect superior productivity: they reflect the systematic externalisation of the entropic cost onto the collective.
A 2026 University of Surrey study of more than 2,800 listed companies across 61 countries confirms this: firms that appear most efficient in purely financial terms are often those displaying the most severe environmental inefficiencies once their real footprint is incorporated into the analysis. Conventional profitability masks the true level of global value destruction.
Defensive Sustainability: When Doing Right Costs Dear
At the other end of the spectrum, companies seeking to limit their environmental impact run headlong into what might be called the virtuous margin paradox. They internalise the entropic cost that competitors reject — and they pay it in cash, without being able to fully pass it on in their prices, on pain of immediate market share erosion.
The figure is well-known but remains striking: while 65% of households declare a preference for eco-responsible brands, only 26% act on that preference at the moment of purchase. Good intentions do not pay margins. Consumers overwhelmingly arbitrate in favour of price, which means that ecological virtue remains an uncompensated structural cost for the company that practices it.
Agriculture illustrates this fracture with surgical precision. Conventional farming maximises yields through intensive artificial capital — synthetic fertilisers, pesticides — that generates high protection costs but guarantees stable volumes. The organic model eliminates these chemical inputs and reduces protection costs to around €50/ha versus €150/ha in conventional farming, but suffers structural yield losses of 35% for field crops and up to 50% for orchards, while requiring 5–10% more labour. The inflationary crisis of 2022–2024 produced a 12% drop in organic sales in large-format retail, 35% of organic milk declassified to conventional pricing, and the net loss of 110,000 hectares of organic farmland in two years.
The dominant evaluation method compounds this distortion further. Life Cycle Assessment expresses impacts per kilogram of finished product, which artificially penalises low-yield systems. Per unit of surface area, organic agriculture emits fewer greenhouse gases and preserves 30% more biodiversity. But per kilogram of food, it appears less efficient — which skews retail and public policy decisions against virtuous supply chains.
The Regenerative Model: Insolvency as a Rule of Law
If defensive sustainability suffers from margin compression, regenerative models — those that do not merely degrade less but actively reconstitute natural capital — face something more radical: a structural insolvency legally imposed by regulation.
The instruments for remunerating ecosystem services — Payments for Environmental Services, Agri-Environmental and Climate Measures — are framed by WTO rules and EU Common Agricultural Policy regulations. These stipulate that compensation granted to a farmer for virtuous practices cannot constitute a disguised subsidy. Consequence: remuneration is legally capped at the strict sum of real additional operating costs and the foregone income from reduced production. No margin. No premium. No compensation for the value created for the collective.
A farmer who dedicates a fraction of their land to recreating a wetland, restoring ecological corridors, regenerating biodiversity receives exactly zero euros in net profit. They cover their costs and their losses. They produce collective value — water purification, carbon storage, pollination, hydrological regulation — that benefits the community for free. And they cannot capture any fraction of it as income.
For a wheat producer transitioning to regenerative practices, adopting permanent cover crops and eliminating tillage generates a profitability drop of over 60% in the first two years. A return on investment of 15–25% is theoretically achievable after ten years — but financing the transition remains a major bottleneck in the absence of any risk-pooling mechanism.
Unlike extractive activities, which convert degraded natural capital into distributable private margin, regenerative activities are structurally confined to the role of neutral cost centres. This is not a marginal regulatory anomaly. It is the accounting translation of a paradigm: economic value is attached to destruction, not to creation.
The Root of the Problem: A Currency Built on Entropy
Why does this system persist despite the accumulating evidence, reports, and crises? Because the asymmetry is not a bug repairable by regulatory tweaks. It is an architectural property of the monetary system itself.
Contemporary money is created by bank credit. It is born as debt — and debt demands repayment with interest. This means that every monetary unit in circulation requires, somewhere in the system, the production of additional value to service that interest. This logic is intrinsically expansionist. It pushes toward permanent growth of the production flow — and therefore, thermodynamically, toward permanent increase in the entropy flow.
Within this framework, the activities that produce monetary value most rapidly — those that dissipate natural capital fastest — best satisfy the requirements of debt. They repay quickly. They distribute dividends. They attract capital. Regenerative activities, by contrast, reconstitute natural capital at a biological pace — slow, non-linear, difficult to certify — and structurally fail to meet the profitability requirements of financial capital.
We will not solve this problem by adding green labels, inadequate carbon taxes, or ESG funds that continue financing fossil assets in the background. These instruments tinker with incentives at the margin. They do not change the fundamental price signal: destroying is profitable, regenerating is insolvent, because money itself was built on dissipation.
NEMO IMS: Reversing the Thermodynamic Signal of Money
It is precisely at this architectural root that the NEMO IMS system (NEgentropic MOney International Monetary System) is directed. The central idea is simple to state, radical to operationalise: anchor money creation in the regeneration of living systems, not in debt-growth.
Within the NEMO IMS framework, money is not created in exchange for a debt to be repaid with interest. It is issued in exchange for the measurable and certifiable restoration of natural capital — living soil reconstitution, reforestation, wetland restoration, biodiversity recovery. These regenerative activities thus become the thermodynamic collateral of the monetary system: they anchor value in negentropy, in the reconstitution of complex biological order.
This reversal structurally resolves the asymmetry described in this article. If money is created by regeneration, then regenerating is no longer a cost: it is a source of liquidity. The zero margin of current PES schemes is not an economic fatality. It is the symptom of a monetary system ill-adapted to the thermodynamics of the living world.
The key instrument is the Green SDR (Special Drawing Right) — a supranational monetary unit issued in exchange for the certified regeneration of natural commons. It offers regenerative operators — farmers, forest managers, ecosystem restorers — an inverted price signal: the more you reconstitute, the more liquidity you generate. Thermodynamics and economics finally cease to contradict each other.
What Physics Tells Us That Economics Refuses to Hear
The data is there. The logic is implacable. There is a structural and systemic asymmetry between the profitability of models that destroy and the insolvency of those that regenerate. This asymmetry is not a market failure correctable by tax reforms. It is inscribed in the architecture of the monetary system and in the accounting conventions that allow companies never to record the entropy they produce.
As long as money is created by debt and debt demands growth, markets will channel capital toward accelerated dissipation. Not because economic actors are bad. Because the price system sends them that signal, and they respond rationally.
Georgescu-Roegen wrote this fifty years ago. Economics continued to ignore thermodynamics. The biosphere has not. It renders its accounts on its own timescale — and its bill, unlike PES schemes, is not capped.
Refounding economics is not about greening it at the margins. It is about teaching it to count entropy. It is about building a monetary system whose internal logic rewards negentropy instead of punishing it. It is about making regeneration what extraction is today: the most profitable thing one can do.
Jean-Christophe Duval