Central bank governors make decisions with enormous implications, both for the climate as well as for the economy.
A growing army of activists has drawn attention to finance’s role in the climate crisis during the past two years.
Hidden away from the spotlight, finance is the quiet enabler behind big polluters’ conspicuous destruction.
It’s only thanks to banks, investors and insurers – providing them with credit, backing and coverage – that fossil fuel firms can continue wreaking havoc on the environment.
Technologies
When it comes to banks, they offer the loans that allow the likes of Shell and ExxonMobil to continue expanding their operations.
This allows them to build new coal mines and drill new oil wells, even as the IEA – a conservative industry body that, by all accounts, is on the side of energy firms – declares that this is incompatible with net-zero claims. And so all of this has created an unlikely new target for activists: central banks.
From Greenpeace paragliders landing on the headquarters of the European Central Bank, to Extinction Rebellion spraying fake oil over the Bank of England, to Koala Kollektiv holding a Best Climate Killer ceremony outside the Bundesbank, these institutions – and the central bankers who lead them – are coming under greater scrutiny.
So why are central bankers under fire? In short, it’s because they set the rules for banks. They have the power to introduce new regulations to penalise banks’ fossil fuel lending.
What’s more, they could encourage this money to go toward new green technologies, projects and jobs instead. The problem is: so far, they haven’t, and that’s why campaigners are turning up the heat, making sure that they’re held accountable for these short-sighted and irresponsible decisions.
Central bank governors make decisions with enormous implications, both for the climate as well as for the economy.
Regulations
This argument might seem unusual. It’s easy to think of central banks as apolitical, dealing with obscure financial wonkery that’s got little to do with day-to-day life.
But this couldn’t be further from the truth: central bank governors make decisions with enormous implications, both for the climate as well as for the economy, and who it works for.
That’s why it’s vital that we reassert these bodies’ accountability to the interests of everyday people over those of the financial sector.
The good news is that there have been some developments in our favour. In an important victory for climate campaigners, as of March this year, the Bank of England actually has a new mandate which requires it to support the government’s net-zero target and environmental sustainability.
There are still tensions here, as the Bank also has a mandate to ensure economic growth – which could be used as an excuse to resist the desperately-needed regulations on banks’ fossil financing.
Funding
That’s why it’s so important to maintain the pressure at this moment; that we push the Bank of England to introduce the rules and incentives needed to make our economies sustainable and secure.
As we approach the UN climate talks at COP26 next month, activist groups are mobilising to make themselves heard in major financial districts around the world.
There will be a global Day of Action on Friday, 29 October 2021, where we’ll be calling on banks, asset managers and insurers to stop funding climate chaos. There are actions happening across the UK and world, so please find your nearest and how to get involved here.
Thousands of us are also calling on the government to fund a fair, green transition. We’re demanding that they work with the Bank of England to stop fossil fuel lending, and encourage investment in new green, job-creating projects instead. Sign the petition here.
This Author
Rachel Oliver works for Positive Money, a not-for-profit research and campaigning organisation based in London.
