白小姐论坛

Despite the stark warnings of climate breakdown from the听IPCC听and the听UN, it鈥檚 business as usual for fossil fuel capitalism. An astonishing听56%听of the G20 nations鈥� Covid-19 recovery funds for energy听have gone to fossil fuel companies.

In April, the听Glasgow Financial Alliance for Net Zero听(GFANZ) chaired by Mark Carney was launched to bring together leading financial corporations to redirect finance towards achieving net zero by 2050. Yet many of its signatories remain among the world鈥檚 top backers of fossil fuels. Some have even issued new financing to companies expanding fossil fuel infrastructure听since听signing up with the GFANZ.

Oil extraction in the Amazon is being听financed by GFANZ members HSBC and Citi, for instance, while听Deutsche Bank, MUFG, and Credit Agricole听are issuing bonds for a company that听constructs pipelines听in Indigenous territories. These are just some of the more prominent players in a financial system that remains too tightly entwined with听fossil capitalism听through unaccountable and complex global flows between fossil fuel corporations and private equity firms, asset managers, pension funds and other financial institutions.

At Cop26, Rishi Sunak announced that the UK will become the world鈥檚 first 鈥�net zero-aligned finance centre鈥� 鈥� seemingly a response to accusations that banks are not doing enough. His move was instantly criticised by climate campaigners as little more than a 鈥渕arketing slogan鈥�. If the Glasgow summit is to live up to its status as the 鈥�finance COP鈥�, we need to radically transform the global financial system so that it serves public purpose over private profit. The GFANZ is a start, but it doesn鈥檛 go far enough.

International agencies and national governments need to impose stringent conditions on how financial corporations operate, switching investments out of fossil fuels and into zero-carbon activities. Through carbon tariffs, renewable energy subsidies and state investments, fossil capitalism can 鈥� and should 鈥� be rendered unprofitable.

A massive expansion of state-owned听green investment banks听will be critical for transforming finance. These provide patient loans and grants, used to fund research and development and startups in zero-carbon technologies. A promising example is the Scottish National Investment Bank, which听invests millions across Scotland听to deliver climate goals. Across the world, public banks are already the pioneers of green lending:听they invest nearly as much as all private banks combined听in the green economy, despite accounting for only 20% of total global banking assets.

Importantly, public banks and听public wealth funds听retain a substantial stake in the capital created by the green transition 鈥� through, for instance, equity shares and revenue participation agreements. If we want to ensure a socially just 鈥� and thus effective 鈥� transition, green investment banks must be governed democratically, and their financial assets should be shared collectively among workers and citizens. This could take the form of a citizens鈥� dividend that would provide everyone with a听guaranteed minimum income, for example. Such institutions can transform shareholder capitalism, which feeds profits back to company shareholders,听into听stakeholder capitalism, in which citizens and workers have a democratic ownership stake.

鈥淏usiness as usual鈥� only leads us down the road of no return. We urgently need to change direction towards a radical industrial strategy that puts climate action at the forefront of financial investments. This will mean restructuring capitalism around a renewed sense of public purpose, channelled through听ambitious missions听to renew the capacities of the state and meet the challenges of the climate crisis. In practice, this means setting measurable goals such as creating good green jobs for听unemployed coal workers, as exemplified by听Spain鈥檚 national Just Transition Strategy, bringing stakeholders together to achieve them, and redirecting resources.

New institutions will be needed to push forward this economic transformation. Europe already has its Organisation for Nuclear Research, known as Cern,听which pools technology and resources for particle physics.听We need an equivalent body for climate technology that would pool investments in climate action across countries and sectors (the听G7 Panel on Economic Resilience, which I was part of, has already recommended precisely this).

We also need a new social contract between the state, capital and labour. This will mean transforming the government鈥檚 reliance on听parasitic public-private partnerships听that socialise the risks and privatise the rewards of important public projects (such as the UK鈥檚 test-and-trace programme). To prevent this from hampering climate action, governments should enforce new conditions that ensure private contractors promote decarbonisation. They could follow Sweden鈥檚 example, which recently insisted that contractors only use听green steel, made without coal.

Governments could also take inspiration from Germany鈥檚 state-owned development bank, KfW, which offers loans to the steel industry that include conditions to reduce carbon and emissions. Or the French and Dutch Covid bailouts for national airline carriers Air France and KLM, which enforced conditions including听cutting domestic flights that compete with rail travel听and reducing absolute carbon emissions. Conditions like these need to be extended across the board to make it impossible for carbon-emitting companies to operate.

At听Cop26听it should be clear to delegates what lies at the root of climate catastrophe. The type of capitalism we have created is driving environmental breakdown and needs to be fundamentally redesigned. There is no time for tinkering; we need radical transformation now.

This article first appeared in on 5^th November 2021.

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• Original article in
• 白小姐论坛 Institute for Innovation & Public Purpose
• 白小姐论坛 Faculty of the Built Environment