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This new handbook is an indispensable guide to climate activists and policy-makers alike towards a complete overhaul of the financial system to stop climate chaos. Central to its message is that fossil fuel lending can be redirected towards green energy and that public finance and ownership can bankroll and provide the infrastructure for delivering a Green New Deal.
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:
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.
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:
The problem: Private banks are the biggest investors in fossil fuels.
The solution: Private banks should be more tightly regulated to set upper limits on lending to carbon-intensive industries and phase out fossil fuels, and minimum targets for “green” lending.
3 key steps:
The problem: Public policy should encourage a financial system that affords more space to public banks, cooperatives and local savings banks, and ethical banks. Public investment and development banks could play a particularly important role in financing a transition away from fossil fuels, but strong democratic governance and accountability mechanisms need to be in place to avoid repeating the current and past failures of many such institutions.
The solution: Establish green development or investment banks as a focus for public financing of a transition away from fossil fuels, and legislate to encourage a more diversified financial sector that gives greater space to ethical banks, local savings banks and coops.
3 key steps:
The problem: Financial markets are governed only by short-term profit motives and do not require firms to take responsibility for their climate impact.
The solution: There should be mandatory environmental, social and governance rules for firms listed on financial markets. Continuing divestment campaigns have already helped to undermine fossil fuel companies’ public acceptability.
3 key steps:
The problem: Transnational corporations are too powerful. They undermine efforts to transition economies away from fossil fuels by avoiding tax obligations, which drains public bodies of the resources to act. The way transnational corporations are established and run priorities the relentless pursuit of short-term profits with little regard for the environment or the needs of the communities in which they operate.
The solution: Transnational corporations should be required to run on more democratic lines, with changes in how corporate Boards are composed, and corporate charters that require accountability to the communities in which they operate. A new “unitary” global tax system is needed to overcome tax evasion and avoidance.
3 key steps:
The problem: We urgently need investment in clean infrastructure that removes our dependence on fossil fuels, but the private sector has proven unwilling and unable to provide it. The public sector could and should play a lead role - it is far better placed than the private sector to develop and invest in new technologies, for example – but it is tied back by a lack of resources, and has been undermined by years of privatisation and austerity.
The solution: More public investment and greater public ownership, especially in the energy sector.
3 key steps:
To get involved, you can join the Change Finance coalition. This coalition, initiated by the Brussels-based Finance Watch together with more than 60 other organizations, coordinates campaigns, advocacy and other joint actions because fighting inequality and saving the planet starts with changing finance.