The huge role of your savings and investments in addressing Climate Change

#MUNIonThis: What else can we do beyond "conscious consumption" and going "zero waste"? Did you know that the money you have in the bank could be unintentionally expanding the fossil fuel industry?

One of the major lessons I've learned in the past year in the UK is the role of banking - by the finance sector, and by citizens as users of these services - in moving forward the sustainable development agenda through sustainable finance and investment. I'd been talking about "conscious consumption" for a long time with MUNI, but here, I realized that one of the most important ways we could be a more conscious citizen is not just how we spend our money, but where we store (save) and grow (invest) our money! According to a 2019 report by BankTrack, 33 global banks have provided $1.9 trillion to fossil fuel companies since the Paris agreement in 2015, and funding has risen in the past two years. $600 billion of the $1.9T went to 100 companies aggressively expanding fossil fuels. If we redirect this funding, it could help fund the world’s clean energy investment needs, which currently amount to $2.9T per year up to 2035.

The good news is, banks, investors and engaged citizens are waking up to the power of their dollar, pound or peso!

While the world's leading banks have contributed to funding the fossil fuel industry, other banks (e.g. Triodos Bank, which has been around since 1980) offer ethical banking to conscious citizens, through greater transparency and accountability -- I only wish such a bank existed in the Philippines too! Bevis Watts, CEO of Triodos Bank says: “We’d like to see greater transparency from all banks in where they are investing their money, so that customers can make informed choices.” After all, as Craig Bennett, Friend of the Earth's chief executive says in the same article: “How can they (banks) talk about wanting to serve society while investing in planet-wrecking projects such as fossil fuel extraction? Funding the destruction of our planet is certainly not in the best interest of customers.”

Below are some investor and activist movements that show the growing movement for sustainable finance:

  • Climate Action 100+ is a movement with more than 370 investors managing over $35T in assets, encouraging companies to curb emissions, improve governance & strengthen climate-related financial disclosures. This is a huge deal, because the investment world is typically one that thinks in a very short term way, particularly in the recent decades, and with the rise of Wall Street. But the tide is changing, and there are signs that Wall Street is starting to care.

  • DivestInvest is a global network of individuals and organizations campaigning to use collective influence to divest from fossil fuels and invest in climate solutions, and help governments meet their climate promises. It argues that we have a moral imperative (that it is unethical to profit from fossil fuels and not engage in meaningful action to get to "net zero"; it is financially prudent (with the end of the fossil fuel era and the rise of clean energy economy); and it is a legal duty (institutional investors have a "fiduciary duty" to consider climate-related financial risks in their portfolios. Here's a helpful graphic from DivestInvest on how you can get started as an individual:

(They've got more advice on their website for how organizations can Divest-Invest too!)

  • Good Money Week is another organization that campaigns for sustainable, responsible and ethical finance, and this year focused on pensions! "If company bosses and individual savers tell their pension provider these issues matter, huge amounts of pension savers' money can instead be used to support more sustainable companies which benefit people and our planet," Charlene Cranny, campaigns director at Good Money Week said in this Business Green article. "Our pensions are another important lifestyle choice that can have a huge impact."

  • ShareAction also campaigns for responsible investing and primarily, "AGM activism" - or using one's shareholder voice to speak up and influence companies to invest in more sustainable technologies / practices and divest from fossil fuels or other polluting practices. This concept blew my mind when I first heard about it in one of my Masters modules in late 2018. However, these days, I'm a bit skeptical if such engagement is effective in influencing some particular companies (e.g. fossil fuels - particularly those who continually invest in fossil fuels vs. renewable energy) or if those companies are just lost causes and that shareholders should just divest completely. I still mention it here though because there are many other companies that could benefit from more ethical, activist shareholders. Fossil fuel companies are not the only ones we need to demand change from!

  • And in the Philippines, the BSP (Bangko Sentral ng Pilipinas) acknowledged the need and challenged those in the financial services industry and regulators like themselves to do more to advance sustainable finance in an article last Oct. 11! (I thought it might take longer to broach these ideas in the PH, so this is a good sign!) The BSP chief Benjamin Diokno said: “While all these developments in sustainable financing are encouraging, the world is at the beginning of mass extinction due to climate change, and so much more needs to be done,” the BSP chief said. “I challenge everyone in the financial services industry, including us regulators, to do more.” Here's to hoping there's more to this than lip service. And it's up to citizens to demand this change of these institutions, monitor them and hold them accountable.

[From left, counter-clockwise] My Basecamp team: Safia Minney, Terence Chambati, (me), Naomi Martin, Dominic Burke, and our coach Rachel Philips :)

Looking forward to seeing more of the bigger picture and the developments in this space! And in particular, exploring it for Lankelly Chase with my Basecamp group's (see photo) fieldwork challenge as part of Forum for the Future's School for System Change.

The next time you're at your local bank or with your fund manager, ask them where your money is actually invested, and ask about investments that are ethical and sustainable. Unless we ask, they won't know that it matters to us. It's time that we demand more change not only from the companies we buy from and work for, but also the companies we invest in.

'Til my next post!

- @jenhorn_

#sustainablefinance #ethicalinvesting #ethicalbanking #systemschange #goodmoneyweek #divestinvest #climateaction100 #climateaction #mentionthepension #triodosbank #shareaction #agmactivism #shareholderactivism

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