Green Party’s Molly Scott Cato recently wrote about the financial industry finally turning on fossil fuels in The Independent:
One of the reasons I became an economist was a fascination with the complex machine that is our economy – a system made up of the moving parts of our work, the goods and services we buy, the things we do for each other, paid and unpaid. While we see these bits and pieces, what we tend to overlook is the fuel that keeps this machine running: in a capitalist economy, that fuel is money. Where we direct that fuel will determine what our economy does, so it is vital that we shift it away from fossil fuels and towards the sustainable industries and businesses of the future.
Infuriatingly, in spite of all the hot air produced about the climate emergency in recent years, the financial system still supports and encourages the very fossil fuel industries that are destroying the global climate. But this is beginning to shift, with greater transparency and changes to the rules under which banks operate.
At the level of retail banking and financial services, we all have a right to know what the banks are doing with our money. That may seem an obvious statement, but I was astonished to find that it was controversial and a principle I had to fight for as an MEP. When people found that there was horse meat rather than beef in their lasagne, there was an outcry, but when the equivalent happens in the financial sector, customers don’t even have the right to know. Our fight was largely successful and the EU mandatory disclosure regime known as SFDR came into force last month.
Greens have long challenged the political consensus that central banks should be politically neutral – refusing to accept that the extraordinary power to create money should be exercised in secret, for the benefit of a tiny minority, and often at the expense of the planet. We have supported a policy known as “credit guidance”, meaning that the power to create money, and therefore to direct economic activity, should be used to ensure we accelerate the sustainability transition. Perhaps the Bank of England could set a declining proportion of bank lending for fossil sectors and set a minimum proportion for sustainable sectors, for example.
