Financing a sustainable future – more essential than ever

WIFS works to create a platform for balanced leadership, where diversity and inclusiveness contribute to a better and healthier financial sector. Previous nominees include TNI Associate Sara Murawski. 

Sustainable finance should be about ensuring that banks and investors are funding activities, companies, governments and individuals that contribute to positive impacts on society and the environment, including urgent action to mitigate climate change. Sustainable finance was first considered an outlandish idea but was subsequently embraced as part of the Paris agreement and EU Green Deal. However, the objectives and small achievements are currently under attack not only in the US but also in the EU. 

In the EU and elsewhere, policy makers and legislators never wanted to compel and regulate the financial industry to fund sustainable activities and stop those that harm people, society and the planet. Voluntary initiatives by the financial industry faltered and remain a tiny fraction of global capital flows. Supervisors warn that the impact of climate change can cause a financial crisis as many financial assets (e.g. company shares and loans) will lose their value.  Since the Paris agreement went into effect (2016), 65 big banks committed $7.9 trillion in fossil fuel financing (lending underwriting), institutional investors held $5.1 trillion bonds  and shares in coal, oil, and gas companies, and shareholders received more than $ 15 trillion in dividend and repurchasing of shares by the largest global companies that mainly continue to contribute to climate change.

As part of civil society, Myriam with many other colleagues made proposals and demands on how to orient finance to a sustainable future. After some small achievements in EU law, civil society voices have been dwarfed again by the overwhelming financial and corporate lobby. Even just corporate reporting on the impact on the environment is seen as a  barrier to maximising financial returns and a reason to deregulate again. People and planet are suffering when more financing is provided to the fossil fuel industry than to renewables. When big investors receive excessive profit, it is at the expense of workers, employees and consumers, and the transition to a global economy of well-being for all.

Personal dedication at all the levels of society, governments and the corporate world to raise the importance of the role of the financial industry in the current crises is needed to reverse the current tide. Cutting through the complexity and misleading information, build bottom up awareness and alternative solutions that serve people and planet need to be brought into various corridors of power and decision-making while strengthening solutions from civil society.