The book presents many progressive proposals to build a just and future-proof financial system that can respond to the climate crisis, assess their potential impact, achievability and any associated drawbacks. Climate activists are presented with a variety of financial tools to power a just transition, including:
- green bonds for public investment in a Green New Deal;
- credit policies by central banks and financial regulators to increase fossil-free lending and cut the flow of finance to the worst polluters;
- the creation of green development banks with a clear climate and social mandate to prioritize public and local initiatives;
- reforming company boards and introducing corporate charters that offer a legal vehicle to hold companies to account for the pollution they cause;
- divestment from fossil fuels, targeting insurance companies underwriting the coal sector as a first priority, and the development of climate investment strategies by public pension funds.
Decades of austerity have stripped the state of much of its capacity to invest through debt financing and undermined the tax base, allowing transnational corporations and a growing billionaire class to shift their profits and wealth beyond the reach of tax authorities. These trends must be reversed urgently, and power shifted back to democratically accountable public enterprises, to move rapidly towards a fossil-free world.
Summary of chapters
Focus: Central Banks
The problem: Central banks and financial regulators rarely take into account the huge consequences of climate change when setting the rules that govern private banks. Their quantitative easing schemes to print more money have bankrolled the financial sector and big polluters.
The solution: Central banks and financial regulators should be given a clear mandate to consider climate risks when making policies. Quantitative easing should be replaced by a massive programme of public financing for a Green New Deal, and major fossil fuel companies should be bought up and “decommissioned”.
3 key steps:
- Give central banks a climate mandate, requiring them to set policies that identify and ultimately constrain the “climate-related financial risk” taken on by the banking sector.
- Replace existing quantitative easing with a broader programme of public finance for a Green New Deal, issuing bonds to support public investment in renewable energy, energy efficiency and public transport.
- The US Federal Reserve should create money sufficient to buy up and “decommission” major US-based fossil fuel companies, while providing economic security for workers affected by the transition away from coal, oil and gas. Low stock prices and the precarious economic position of many companies during the COVID-19 crisis provides an opportunity to enact such measures.
Focus: Private Banks
The problem: Private banks are the…
Read More: Change Finance, not the Climate