Green and fair recovery? It’s in our hands.
With mainstream opinion on social issues becoming increasingly fluid, the financial sector needs to be paying attention and poised to act.
Think back, if you can, to the first days of 2020. In early January, if anybody had said you were going to willingly spend months largely shut in your own home avoiding physical contact with friends and family would you have believed them?
One thing we have all learned during the global pandemic is that our perspective, even on issues as apparently fundamental as personal freedom, can change very quickly. In these unprecedented times there are plentiful signs that public opinion on a wide range of issues is shifting radically, and the impact in many sectors, including finance, could be significant.
The ‘Overton Window’, which frames the range of views on social and political issues considered acceptable by mainstream society at any given time, was first described by Joseph P. Overton of the Mackinac Center for Public Policy in the 1990s. However, this once obscure concept has risen to greater prominence in the past few years, being used to explain the success of everything from Trump and the Brexit campaign to Black Lives Matter and the Me Too movement.
Equality is an area in which all businesses, including financial sector firms, need to be attentive to the zeitgeist, but it is by no means the only one. Claire Healy, Director of the Programme on Climate Diplomacy, Risk and Security at independent think tank E3G, believes that the dramatic events of the past few months have also shifted the Overton Window in relation to economics and finance itself.
“We’ve seen direct payments in many jurisdictions and nationalised industries, so I think the unconventional and the unorthodox is now in play,” she comments.
Healy hopes the dramatic shift in perspective forced on society by the pandemic will not only open up debate but inspire more decisive action on wider and potentially no less significant issues, including climate change.
“We’re all having these moments of self-reflection,” she points out. “What’s happening in the world? Where do I fit? How can I help build back better?”
Healy sees the road to economic recovery as an opportunity which needs to be grasped with both hands: “This isn’t an abstract conversation, it’s sort of existential and we don’t have a lot of time. Everyone has to use their agency,” she insists.
The fact that many private sector firms are being kept alive by input from both high street and central banks provides leverage to drive change, however, the message Healy wants to communicate is a positive one.
“This is not a constraint narrative or a burden narrative, it’s an opportunity for banks,” she insists. “We need new finance products and innovative instruments to get to net zero and you’re a big part of it. What you decide to finance ultimately determines the rate of decarbonisation. It’s in your hands.”
In Healy’s view, we are at a pivot point, with the dramatic turn of events giving potential license to turn radical thinking into concrete action for a recovery that’s genuinely green and inclusive. From a financial perspective that means dramatically increasing investment in sustainable economic activities, while winding down businesses, indeed whole sectors, which threaten our future.
“Climate change really is an agenda that people can unite around within a country and also between countries, says Healy. “Political and financial actors will be aware there was a backlash after the last crisis. We are still living with the political consequences. Neither history, nor our kids, will be kind to us if we squander this opportunity.”
Claire Healy is Director of the Programme on Climate Diplomacy, Risk and Security at independent think tank E3G. Hear more from Claire on page 34 in the Summer 2020 issue of Chartered Banker magazine.