PRESS RELEASE | UN joins forces with UK & Scottish Governments to Launch Green Finance Taskforce

PRESS RELEASE FROM THE GLOBAL ETHICAL FINANCE INITIATIVE

EMBARGO: IMMEDIATE

UN JOINS FORCES WITH UK & SCOTTISH GOVERNMENTS TO LAUNCH GREEN FINANCE TASKFORCE.

Global finance leaders, including representatives from the UN and both the UK and Scottish Governments, set out the role Scotland's financial services can play in the fight against climate change.

On the day UN climate body the IPCC issued its starkest warnings to date, UN Special Envoy for Climate Action and Finance and former Bank of England Governor, Mark Carney; Scottish Finance Secretary, Kate Forbes and HM Treasury Economic Secretary, John Glen, came together to highlight how Scotland can become a world-leading hub for climate finance through the launch of a new Scottish Taskforce for Green and Sustainable Financial Services, chaired by the Global Ethical Finance Initiative.

They emphasised how Scotland can build upon the legacy of COP26 in Glasgow through its intellectual capital, history as a centre of financial innovation and existing strengths in green finance to lead on the transition to a net zero economy.

Kate Forbes, Scottish Cabinet Secretary for Finance and the Economy, said:
"We know the transition to a net zero economy will be a monumental undertaking. It is going to be the single greatest social and economic transformation required in history, and it is going to impact every sector fo the economy. No part of our economy, no part of our society will be immune to the impact of that transformation. It will be hard: it is going to require the reallocation of trillions of dollars of capital."

Mark Carney, UN Special Envoy on Climate Action and Finance, said:
"The more credible and predictable government climate policies are, the more investors will pour money in, in anticipation, driving large-scale investment, faster decarbonisation, more jobs and greater growth."

ENDS
NOTES TO EDITORS

See pre-launch press release:
https://www.globalethicalfinance.org/2022/02/28/press-release-scotland-stakes-its-claim-to-be-a-leading-centre-in-finance-for-a-net-zero-and-sustainable-future/

Speakers at the event included:

David Pitt Watson, Cambridge Judge Business School
Kate Forbes, Cabinet Secretary for Finance and the Economy
Mark Carney, UN Special Envoy on Climate Action and Finance
John Glen MP, Economic Secretary to HM Treasury
Dame Susan Rice, Chair of the Banking Culture Board

The Taskforce will report on progress and policy recommendations to the First Minister’s Financial Services Growth and Development Board, thereby remaining aligned with existing Scottish Government and industry structures for government-industry collaboration.

Over 160,000 people are employed in finance related jobs and £9.5 billion of responsible funds are already managed in Scotland.

The Global Ethical Financial Initiative has become the hub at the centre of the ethical finance movement. Curating independent conversations among a broad coalition of financial services stakeholders, as well as delivering practical projects.

Kate Forbes, Cabinet Secretary for Finance and the Economy, Scottish Government

Kate is the Member of the Scottish Parliament for the Skye, Lochaber and Badenoch constituency (which includes Dingwall, the Black Isle and the Great Glen) and Cabinet Secretary for Finance and the Economy in the Scottish Government.

Kate is from Dingwall, although she spent part of her upbringing in Glasgow and India. Until she was elected as MSP for Skye, Lochaber and Badenoch, Kate was employed as an accountant in the banking industry. Prior to that she studied History at the Universities of Cambridge and Edinburgh.

As a backbencher, Kate served on the Scottish Parliament’s Environment, Climate Change and Land Reform Committee, the Standards, Procedures and Public Appointments Committee, the Health and Sport Committee and the Rural Economy and Connectivity Committee. She also served as Parliamentary Liaison Officer for Finance and the Constitution. As well as leading a campaign to ban plastic straws, Kate has participated in several cross party groups at Holyrood including Crofting, Gaelic, Human Trafficking, Palliative Care and Rural Policy.

A fluent Gaelic speaker, Kate made history by becoming the first female MSP to give a plenary speech entirely in Gaelic in the current Scottish Parliament chamber.
Kate was appointed as Minister for Public Finance and Digital Economy in June 2018 and appointed into her current role on 20 May 2021.
Mark Carney, UN Special Envoy on Climate Action and Finance; Former Governor, Bank of England

Mark was appointed by UN Secretary-General António Guterres as UN Special Envoy on Climate Action and Finance in December 2019. From 2013 to March 2020, he served as the Governor of the Bank of England and Chair of the Monetary Policy Committee, Financial Policy Committee and the Board of the Prudential Regulation Committee.

In addition to his duties as Governor of the Bank of England, he has served as Chair of the Financial Stability Board (FSB) from 2011-2018, First Vice-Chair of the European Systemic Risk Board, a member of the Group of Thirty and the Foundation Board of the World Economic Forum.

Mark was born in Fort Smith, Northwest Territories, Canada in 1965. He received a bachelor’s degree in Economics from Harvard University in 1988. He went on to receive a master’s degree in Economics in 1993 and a doctorate in Economics in 1995, both from Oxford University.

After a thirteen-year career with Goldman Sachs in its London, Tokyo, New York and Toronto offices, Mark Carney was appointed Deputy Governor of the Bank of Canada in August 2003. In November 2004, he left the Bank of Canada to become Senior Associate Deputy Minister of Finance. He held this position until his appointment as Governor of the Bank of Canada on 1 February 2008. Mark Carney served as Governor of the Bank of Canada and Chairman of its Board of Directors until 1 June 2013


Diversity and Inclusion | Ethical Finance Round Table | Summary

Finance experts shared academic research, personal perspectives and technical expertise on the integration of diversity and inclusion concerns into finance. They emphasised the need for a process that goes beyond mere representation toward a deeper appreciation and integration of diverse voices. Watch now.

For our first Ethical Finance Roundtable of 2022, chaired by Amy Clarke, Chief Impact Officer at Tribe Impact Capital, we were delighted to welcome Prof. Alex Edmans, Professor of Finance at London Business School, Gavin Lewis, Managing Director, UK LGPS at BlackRock & equality campaigner and Lynne Highway, Director of Colleague and HR Experience at NatWest Group to discuss Diversity and Inclusion in the finance sector and beyond. Whilst the discussion showed that the sector must strive to improve, there is a clear appetite for progress on diversity and inclusion from across the financial sector and beyond.

Opening the event, Prof. Alex Edmans explored the business case for diversity, showing that many claims are based on flimsy evidence that is accepted uncritically and emphasising the need to be aware of our confirmation biases when making the case for diversity. Ultimately, while the evidence doesn’t support a business case for boosting superficial diversity metrics, it does support a business case for diversity and inclusion – as Professor Edmans highlighted “it involves far more than putting a few token minorities on the board to tick a box. It is much harder to create a culture where everybody feels psychologically safe at work”. As he powerfully stated, after sharing some of his personal experiences with racism and age discrimination in the workplace, “maybe making more money is not the real reason to do this. Maybe we just agree it’s the right thing to do”.

The question about the moral case for action on diversity and inclusion carried over into a fascinating intervention from Gavin Lewis. Lewis, who co-founded the #TalkAboutBlack’ movement to break the taboo surrounding conversations about race, noted that whilst progress has been made to foster inclusivity, finance had not gone far enough. For example, while hiring practices have improved markedly, retention still lags behind for myriad social, cultural, and economic reasons.

One fundamental problem, he argued, lay with the tacit expectation that firms would do the right thing, and that there was a straightforward business case for doing so. If there was, he said, it would have been done by now, and as he aptly commented, “The right thing didn’t happen when George Floyd was murdered. The right thing has been here all along and it hasn’t worked”.

Lynne Highway shared some of the work that NatWest have done to foster an inclusive culture within their ‘organisational DNA’ in order to not just meet, but exceed, statutory requirements on diversity. She said that NatWest is proud to be nurturing a fair and inclusive bank where they champion potential, helping people, families, and businesses to thrive.

Having a diverse, equitable and inclusive workplace is essential to achieving our purpose, as it enables the Bank to work together to achieve great things with our colleagues, communities, and customers. Improving representation, Lynne argued, requires creating an inclusive environment where colleagues feel able to bring their whole self to work. One way that NatWest have done this is via reciprocal mentoring, to allow for an open dialogue between colleagues from different backgrounds, and at different levels of an organisation.

The roundtable then moved on to a lively audience Q&A which included discussion on:

  • Whether we might see a TSFD (Taskforce on Social-Related financial disclosures)
  • The need to be aware of – and compensate – the emotional labour that might be expected of colleagues from underrepresented groups in the process of improving workspaces
  • Whether it is more important to focus within (on the internal operations) or outside (on investee companies or clients)
  • How the sector can learn from the relatively successful process of integrating climate-related concerns

Click here to sign up to our next event, the launch of the Scottish Taskforce for Green and Sustainable Financial Services, on Monday 28th February.


Launching 28th February: Scottish Taskforce for Green and Sustainable Financial Services

The Scottish Taskforce for Green and Sustainable Financial Services will help to capitalise on the opportunities of financing the global shift to net zero, setting out the actions we will take to promote and establish Scotland as a world‑leading centre for green and ethical finance, and leverage the potential of private finance.

We are proud to be joined by Mark Carney and Cabinet Secretary Kate Forbes for the launch of the Scottish Taskforce for Green and Sustainable Financial Services on Monday 28th February from 15:30-16:30 GMT.

The Taskforce, initiated by Scottish Government with GEFI appointed as Secretariat, presents a unique opportunity for Scotland’s financial services sector to build on the legacy of COP26 by working together to demonstrate global leadership in implementing the Glasgow Financial Alliance for Net Zero (GFANZ) roadmaps.

Sign up now

Responsible finance is critical for a sustainable world. It has the power to support prosperity, climate action, employment, human rights and equality. That realisation is growing. According to Bloomberg, ESG assets jumped to $30.6 trillion in 2018 from $22.8 trillion in 2016 and may hit $53 trillion by 2025, representing a third of global AUM.

Many of the largest financial institutions in the world are signed up to global initiatives such as the UN Principles for Responsible Investment, which represents a collective $100 trillion in assets under management, and the UN Principles for Responsible Banking whose signatories have assets totalling $72tn, >45% of global banking assets.

Scottish finance should participate and benefit in these developments.

In A Fairer, Greener Scotland: Programme for Government 2021-22 Programme for Government (published 7th September 2021) the Scottish Government announced “a new industry‑led taskforce” that “will draw up Scotland’s action plan to capitalise on the opportunities of financing the global shift to net zero, setting out the actions we will take to promote and establish Scotland as a world‑leading centre for green and ethical finance, and leverage the potential of private finance.”

The Taskforce, led by Global Ethical Finance Initiative (Secretariat) in partnership with Scottish Government (Funding Partner) and Scottish Financial Enterprise (Industry Partner), will help to develop and oversee an action plan that will co-ordinate the local financial services to position Scotland as a leading global centre for green and sustainable finance.

The Taskforce will bring together industry leaders meeting 3 times per year, with separate working groups convening more frequently. The group will report to the First Minister’s Financial Services Growth and Development Board twice a year.

The Taskforce will look to:

  • Scope out the scale of the opportunity for Scotland within the UK and beyond
  • Develop domestic networks to enhance collaboration and position Scotland as a source of expertise in green and sustainable finance
  • Support the growth and development of Scottish green and sustainable financial products and services
  • Build capacity within the existing Scottish finance community and help develop a future workforce
  • Present Scotland’s “offer” to global markets to maximise green and ethical inward investment opportunities


1.5 degrees is alive, but its pulse is weak: the finance sector must step up to save it

Unsurprisingly, COP26 president Rt. Hon Alok Sharma MP did not have much time for television in 2021. Yet, amidst the lull of the Christmas festivities, he too was able to join the billions of viewers who tuned into Netflix’s record-breaking film Don’t Look Up. Adam McKay’s climate change allegory sees a pair of scientists (Jennifer Lawrence and Leonardo DiCaprio) catapulted into an impromptu media tour, as they try to warn the people of Earth that a comet is on course to obliterate the planet in less than six months. 

In his speech at Chatham House reflecting on COP26, Alok Sharma recalled the closing scenes of the film. As walls shake and flames engulf the landscape, DiCaprio’s character Dr. Randall Mindy tells his family who are gathered around him, braced for impact: “The thing of it is we really did have everything, didn’t we, in the end?”, echoing the fact that – as the COP26 President said – limiting global warming to 1.5 degrees is still a possibility, albeit a remote one now. 

The harrowing images of planetary destruction at the end of Don’t Look Up Now remain largely confined to cinematic representations and worst-case climate modelling scenarios, but the sense of urgency felt so acutely by McKay’s central protagonists was clearly visible in Alok Sharma’s speech. At the heart of it was a clear message shared by all of us at GEFI: now is the time to transform the commitments gained at COP26 Glasgow into tangible action and to deliver on the promises set out on the banks of the Clyde just over 12 weeks ago. Doing so, as Rt. Hon Alok Sharma reminded us, is our “last best chance” to mitigate irreversible climate change and avoid what Barbados Prime Minister Mia Motley movingly labelled the “death sentence of 2 degrees” if we fail to keep the 1.5-degree target set by the Paris Agreement alive. 

Although the pleas for action underpinning Don’t Look Up are ultimately thwarted by political inertia, Sharma was key to emphasise both the wins achieved at COP26 and the broader reasons for hope. Central to the success of the Glasgow climate pact, he argued, was a sense of collective self-interest. Alongside this shared sense of global urgency to prevent the worst of irreversible damage to people and planet, Sharma was keen to stress that the commitments of the Climate Pact were also born out of the “economic case for climate adaptation and mitigation” shared by all leaders over the course of negotiations. Investing in warning systems and defences, for instance, could yield over 4 times the amount paid in damages, whilst failure to do so will restrain global economy’s ability to grow (the equivalent cost of wiping out 20% of GDP every year). 

At GEFI, we echo Rt. Hon Sharma’s sentiment that finance (and mobilisation of the finance sector) is key to ensuring that the economic gains of a sustainable transition are not lost or left as merely promising words on paper. Alongside what Rt. Hon Sharma cited as a “need to turn our focus to loss and adaptation finance to develop the dialogue started in Glasgow”, his speech also highlighted a further three steps that the finance sector must deliver on, as global attention turns to COP27 and COP28:

  1. Show we’re on track to deliver £100 bn goal 
  2. Encourage firms to deliver with integrity to unleash public and private finance 
  3. Work hand in hand with COP27 Egypt and COP28 UAE to learn from success of Glasgow whilst also engaging with civil societies and young people 

Over the course of our Path to COP26 campaign, we have echoed Rt. Hon Sharma’s call to bring together stakeholders across finance and beyond to raise ambition and drive climate action. Through our Strategic Campaigns, Research & Advisory, Capacity Building, and Practical Solutions we will continue to inspire change and mobilise the finance sector throughout 2022 to deliver the promises of COP26 Glasgow. 

A failure to do so brings us dangerously close to the dramatic scenes of Don’t Look Up. We will have, to quote Alok Sharma, “mitigated no risks. Seized no opportunities. We will have fractured the trust built between nations, and the 1.5-degree target set out in the terms of the Paris Agreement will slip from our grasp.” 

As Sharma ultimately reminded us, “1.5 is still alive but its pulse weak.” If we do not want to look back on a life of abundance that we allowed to willfully slip through our fingers, then the finance sector must be the ones to step up and deliver on the solutions needed to save it. 

Ellen Davis-Walker
Digital Content Executive


EVENT ANNOUNCEMENT | Ethical Finance Round Table: Inclusion and Diversity

Our next Ethical Finance Round Table, taking place on the 22nd February from 14:00-15:30 GMT, will focus on the issue of inclusion and diversity; sign up now. While climate has broken past being a "niche" issue in finance, social issues are frequently neglected in the industry. We will ask whether the finance sector has done enough on inclusion, when it comes to race and ethnicity, as well other social issues including gender and sexuality.

8years on from the beginnings of the Black Lives Matter (BLM) protests, we still seem no closer as a society to resolving the tensions which brought them about. While these issues pervade society as a whole, the finance sector is a part of society, and this event aims to ask the tough questions of those in finance.

Is the sector doing enough, and what is its role?

Should it focus internally (on its own operations) or externally (on the assets it holds or manages on behalf of clients)?

We will be joined by moderator Amy Clarke (Tribe Impact Capital & GEFI Global Steering Group), Gavin Lewis (BlackRock), Lynne Highway (NatWest Group) and Prof. Alex Edmans (London Business School).


GEFI spoke at the Edinburgh Futures Conversations to discuss the future economy

GEFI spoke at the Edinburgh Futures Conversations to discuss the future economy. GEFI founder & managing director Omar Shaikh appared alongside former UK Prime Minister Gordon Brown, and Chinelo Anohu, Head of the AfDB’s Africa Investment Forum.

Omar emphasised that the SDGs must be at the heart of the future economy. They go beyond technological advances (no doubt important) to fundamentally reshape the way we conduct ourselves, placing purpose at the centre of the economy. Profit and purpose, the triple bottom line, conscious consumerism are all terms increasingly prevalent in financial markets. Paul Polman’s work at Unilever was a great ambassador for such.

Purpose, he argued, gets us to the ontological question – the question of being, of what the economy is and what it is for. If it is to provide the essentials and comforts of life, then that immediately leads to the question of what is the good life, and how much is enough? This chimes with Adam Smith’s challenge of reconciling between his two great mentors Hutchison and Hume – balancing innate goodness with self interest.

At GEFI’s flagship annual Ethical Finance Summit, Prof John Kay illustrated in his presentation how social purpose had been slowly stripped out of the narrative within annual reports of multinational Plcs since the 1960s towards a nearly exclusive focus on return on equity and financial performance – in effect shareholder primacy.

We now stand at a point in time where the pendulum appears to be swinging the other way: financial markets and the economy are placing purpose alongside profit. This incorporation of ethical values was historically a maligned practice, seen as the domain of ‘tree-huggers’, but that has changed via the demands of staff, shareholders, regulators and customers.

For example, we now see a total of:

  • $35.3 trillion USD in sustainable investment
  • Over $100 trillion USD managed by members of the Principles for Responsible Investment
  • $1trn+ USD in impact investing

Omar concluded by reflecting on the many more areas where the future economy can improve upon the past, especially with fintech readdressing the fundamental intermediation role of traditional financial institutions. Challenges remain, be that around nature and biodiversity or around social issues, from poverty, to inclusive growth, to addictive products such as tobacco and gambling.

Gordon Brown followed, highlighting the importance of recognising global interdependence, suggesting that “global problems require global solutions”, from the financial crisis to the COVID-19 pandemic. The pandemic has completely exposed the limits of individualism. There must be a break from the 40-year-old Washington consensus, building a new relationship between state, market and society. In particular, there needs to be a reevaluation of the need for fiscal policy.

He focused on the global failure to distribute vaccines equitably around the world, emphasising that this is not simply an unjust policy, but a self-defeating one, asking what this means for the fight against climate change. We can clearly identify both the problem and the solution, but the ‘us versus them’ ideology of political nationalism prevents us from reaching a mutually beneficial solution. Brown suggested that, in the words of Adam Smith who had been mentioned earlier by Omar Shaikh, there needs to be a “circle of sympathy”.


Path to COP26 videos available on EFx

After a successful COP26, all of the videos from our events in and around Glasgow are now available at http://efx.global/COP26.

Across the 2 weeks, we organised a series of events covering climate finance, looking at nature, economics, faith and pensions in detail.


“Hope” is the thing with feathers | The Radical Old Idea with Prof. Tim Jackson

In our latest Radical Old Idea, Royal London’s Kaisie Rayner was joined by Professor Tim Jackson to discuss his latest book, ‘Post-Growth: Life after Capitalism’. In a discussion that ranged from Adam Smith to the teachings of Buddhism, to maintaining hope in the face of despair. Professor Jackson called for a complete rethink on how we define prosperity. Watch the full session now on EFx.

While Professor Jackson’s previous book, ‘Prosperity without Growth’, was close to a policy manual for governments, ‘Post Growth: Life After Capitalism’ is a philosophical examination on the failings of our current economic model. Although written during the Covid pandemic and certainly partly influenced by the fallout of the last 18 months, it is more a culmination of years of reflection from one of the world’s leading ecological economists.  

The session started with Adam Smith, the so-called ‘father of capitalism’. Professor Jackson described how the legacy of Adam Smith has been “used and abused” by free-market capitalism. Proponents of lassez-faire capitalism seized on the ‘invisible hand of the market’, as evidence that Smith would be an advocate of today’s economy.

Professor Jackson disagrees, arguing that Smith would have been appalled by the modern markets, and their domination by monopoly power. Smith believed markets relied upon trust and community, and that the state had a fundamental role in countering unrestrained self-interest. The power wielded by conglomerates over governments today was something Smith warned against, not something he would have lauded.

In his book, Professor Jackson also mentions another great thinker who has had one of their ideas take on a life of its own, psychologist Abraham Maslow. Maslow’s 'hierarchy of needs' has been used as evidence that a linear relationship exists between fundamental human needs such as food or shelter, and social or psychological needs.

Without the former, humans do not engage with the latter. Maslow later upturned this hierarchy – something which has been lost in history. Social and psychological needs are not ‘nice to haves’ but fundamental to human wellbeing. Our physical needs can be secondary to our social needs – a lesson reinforced by our experiences over the last 18 months.   

Professor Jackson also spoke of how Buddhism and capitalism start in the same place – the recognition of suffering. The message of capitalism is to escape from this suffering, to struggle to ensure we escape poverty and ensure that we are not the worst off in society, turning life into a competitive endeavour. The recent trend of billionaires to conquer space is perhaps a manifestation of our existential anxiety to get as far away from suffering as possible.

By contrast, Buddhism teaches to face suffering head on and with compassion, not to escape it. We can learn from Buddhism in many ways, finding joy in being human and not from the material consumption essential for a society dependent on growth. If we can change our definition of prosperity to mean health and balance rather than having more, we will see a powerful transformation at every level.  

To finish, Kaisie asked Professor Jackson if he still has hope for humanity. To answer, he drew on the poetry of Emily Dickinson: 

“Hope” is the thing with feathers

That perches in the soul

And sings the tune without the words

And never stops - at all 

 Something in the human soul means that hope will not abandon us. Hope must however turn to action, and action is the antidote to despair.


The case against a growing economy

Anyone who believes in indefinite growth in anything physical, on a physically finite planet, is either mad or an economist

When Boulding spoke those words in the 1970s, the environmental movement was but a shadow of what it is now. In the decades since, climate change has moved from fringe concern to being at the centre – rhetorically at least – of how we think about our economies. As the problem of climate change takes centre stage, so the question of growth has followed, with countries including Scotland, New Zealand and Bhutan have made moves towards going beyond GDP in their national accounts.

They are still very much in the minority; since the industrial revolution, finance and economics have taken a constantly growing economy to be both a fact of life and an ideal state of being, something to take for granted and to strive for. But there have been voices of dissent. Before he was tragically killed, Bobby Kennedy had raised concerns about the idea of limitless growth. As Prof. Tim Jackson notes in his excellent new book Post Growth: Life After Capitalism, the younger Kennedy had, in a 1968 speech, raised concerns about the accuracy of GDP measuring social wellbeing, and the impact that pursuing it would have on the planet and its people.

Prof. Jackson, Director of the Centre for the Understanding of Sustainable Prosperity (CUSP) will be appearing in an interview with Kaisie Rayner, Climate Change Lead at Royal London on 14 July at 14:00 BST as part of our Radical Old Idea series. In the spirit of that series, inspired by the Scottish Enlightenment, the ideas discussed go back even further: John Stuart Mill professed a sympathy towards a steady state economy in 1848’s Principles of Political Economy, at the start of the industrial revolution.

Despite the constant presence of economic growth since the industrial revolution, it has changed over time. The 5% rates of growth typical in Western countries during the “golden age of capitalism” immediately following World War II had given way to rates of just 1-2%, even before the Global Financial Crisis.

Why is this? Labour productivity has been in decline. While it grows, social tensions between classes can easily be resolved. As the pie grows, we can all content ourselves with a growing slice. When it stops growing, getting a bigger slice for yourself becomes a zero-sum game. In fact, it is arguable that the astonishing growth rates of the post-war period were in fact only possible due to an increasing exploitation of the natural environment.

Since the 1980s, the social contract that characterised post-war capitalism has been broken, as the embrace of neoliberalism by Thatcher and Reagan removed any restrictions on uninhibited profit. Smith would have disagreed, railed against “those who live by profit” – a Radical Old Idea indeed – and advocated state regulation to guard against their capture of the economy. It had lead to a finance system that, as Lord Turner stated in the wake of the financial crisis, includes a lot of “socially useless” activity, focused on pursuing and capturing rents, not allocating capital to where it is most needed.

Can we continue to grow? 1972’s Limits to Growth pushed this question towards the mainstream. Fundamentally, as Jackson argues, people do not like being told their lives are limited. The idea of limits is anathema to most economists. Green growth is the preferred solution. But is it possible? There is, after all, “no growth on a dead planet”, as Jackson states.

So far, we have not decoupled economic output from material input to a great enough degree. Relative decoupling has been achieved: the carbon intensity of economic activity has fallen by a third since the 60s, but this is not enough. To reduce our impact on the planet, we have to decouple faster than we grow, and that is not happening. The solution, according to Jackson, is a reimagining of what prosperity means, moving beyond simple expansion of material wealth.

Indeed, there have been serious questions raised about whether expanding material wealth truly does entail “true” prosperity. The Easterlin Paradox was the remarkable finding by economist Richard Easterlin that, beyond a certain amount, raising average national income does almost nothing for happiness. Once you cross a threshold of roughly $20,000 per person (which suggests that growth is still important for the poorest countries), and extreme poverty and basic needs are taken care of, an ever-increasing average fails to deliver any meaningful progress.

The work of Pickett and Wilkinson in The Spirit Level perhaps goes some way to explaining this – the pair find that equality, rather than material increases, is a more reliable driver of contentment in industrialised economies. Another explanation lies in the idea of “the hedonic treadmill”, introduced by Philip Brickman and Donald T. Campbell, which suggests that humans quickly adjust to new luxuries, moving them from novelties to things they cannot live without, and losing any increase in happiness in the process.

The challenge for humanity – for finance, and for economics – is to find something other than growth to pursue, and to deal with the social consequences of limiting growth. To return to talk of pensions after discussing the future of the economy might seem mundane, but it is important.

To hear Prof. Tim Jackson in conversation with Royal London Climate Change Lead Kaisie Rayner on Wednesday 14th July, exploring these ideas in the context of the pension industry, click here to sign up. We are looking forward to a provocative debate. Tim's latest book Post Growth can be purchased at https://politybooks.com/bookdetail/?isbn=9781509542512.


UK must make its Green Finance ambition work for the whole planet

The UK government has committed to establishing the UK as a global green finance hub, and to propagating consistently high standards around green finance globally. This is a very encouraging move ahead of COP26. At GEFI, we believe very strongly that international cooperation and, in particular, engaging with the global south will be key to developing credible plans for a global net zero economy.

As our co-founder and director Omar Shaikh said:

We welcome the ambition to make the UK a leader in green finance. But Net Zero is a global game and we must use the UK’s financial services position as a global leader to take the opportunity of COP26 to make the green transition fair for every citizen of our shared planet.

Our recent flagship Ethical Finance summit saw a full day devoted to a series of global showcases, bringing in perspectives on sustainable finance from regions including South Asia, West Africa and South East Asia; see our EFx platform to watch all of these and more.

The development and implementation of TCFD and TNFD frameworks must play a crucial role in government and regulatory strategies to ensure climate and biodiversity risks are not only recognised but are measured and reported on by financial institutions. Such developments will drive green finance globally as capital is diverted towards mitigation and adaptation investments.

The emergence of global frameworks provides best practice standards, consistency and transparency the finance sector has been seeking and, in so doing, reduces the threat of greenwashing. You can watch the new TNFD Co-chair Elizabeth Mrema and Mikkel Larsen of DBS Bank, one of the key institutions developing TNFD explain the new nature-focused framework at Ethical Finance 2021.

Ultimately, the financial sector must play a pivotal role in delivering a Net Zero economy, but it cannot do so without international collaboration.

COP26 represents the perfect opportunity for the finance sector to work with governments on a global stage. As the curtain gets set to rise in less than 17 weeks, the UK government must lead from the front to inspire others to commit to a Net Zero and nature positive economy that guarantees both the survival and prosperity of the whole planet. The need to raise awareness and inspire practical action has driven GEFI to convene a powerful group of financial services institutions and stakeholders through our Path to COP26 campaign.

Alongside programmes driving Finance for Nature, and integrating faith perspectives with the SDGs, the campaign aims to unlock the power of ordinary people’s pensions to deliver a better future for everyone, and position both Scotland and the UK at the heart of a global Green Finance that works for the whole planet, ensuring that people (and not simply profit) are allowed to prosper.