Ignore the implacably hostile and carry on
A guest essay in the New York Times reflects the reality that, for some observers, finance is damned if it does and damned if it doesn't when it comes to climate. This minority of the implacably hostile will always be there, but financial institutions should focus instead on showing the broader - and more open-minded - public how they are helping to keep 1.5C alive.
I read this guest essay by Christopher Caldwell in the New York Times titled Bankers Took Over the Climate Summit. That's Bad for Democracy.'
In his telling, it’s somehow sinister that financial institutions with US$130 trillion of assets have come together to support the transition towards net zero carbon emissions. He says it’s undemocratic that finance is trying to lead the energy transition. He suggests that banks would exceed their fiduciary obligations by directing funding towards green projects. But he hints that they’re actually only out to look after themselves rather than trying to achieve decarbonisation. So don’t worry. Or do. Goodness knows what Mr. Caldwell might have said if finance wasn’t trying to do anything at all about climate change.
Goodness knows what Mr. Caldwell might have said if finance wasn’t trying to do anything at all about climate change.
Financial institutions are entitled to feel a little aggrieved about being criticised for what many insiders believe is their most important contribution to society. They are damned if they do by those who fear a bankers’ power grab cloaked in apparent virtue. They are damned if they don’t by NGOs and activists for not immediately exiting the fossil fuel sector that we must unfortunately rely on – albeit in diminishing measure – for many years to come. At least in the eyes of some observers, they cannot win.
In some ways, Mr. Caldwell’s essay is an index of well-established progressive concerns about finance as a shadowy and unaccountable elite, updated for the role the industry is trying to play in limiting climate change. Liberal mistrust in Wall Street has deep roots, but it exploded after the 2008 financial crisis and still burns brightly today. However admirable or responsible the actions of financial institutions may be, some progressive voices will always discern a hidden menace behind them. For some, this talk of sustainability is just a fig-leaf behind which finance can continue business as usual.
For some, this talk of sustainability is just a fig-leaf behind which finance can continue business as usual.
Our advice to financial institutions is to ignore these kind of critiques, focus on delivering and explain what they are doing. It seems some people will never be satisfied with private capital driving the energy transition unless voters somehow ask them to do it.
But I doubt most people will be so ideologically rigid. For the majority, surely what matters is delivering – and financing – an energy transition that will cost an estimated US$131 trillion by 2050. What matters is keeping 1.5C alive.
Large swathes of the general public may have no special affection for financial institutions, but I believe they would be happy to see finance (or any other sector) contribute towards this goal of existential importance. Shareholders should be pleased, too, because a commitment to sustainable finance is likely to mean good business in a greener economy. Regulators will be glad to see finance supporting government policy goals.
So we believe Mr. Caldwell is speaking for and to a minority of the implacably hostile. Most other audiences should prove more open-minded if they can see that finance is helping to save the planet. It’s time for the industry to go beyond pledges, though, and show the persuadable how this is going to happen. Demonstrable achievement in financing decarbonisation is much harder to criticise than there being too many financial types at COP meetings.