(American Institute for Economic Research) For environmental activists, shaming has worked wonders in recent years. From nagging their families into submission over recycling, to reusable paper bags, to electric cars, lots of people who don’t really see what the fuss is about have acquiesced to the indignant crusades of their green friends. Virtue signaling is alive and well.
During the year of St. Greta, another form of moral suasion seriously entered the environmentalist’s toolkit: flight shaming. Going beyond the obligation merely to reduce one’s own carbon footprint in whatever way possible (short of the most obviously effective way, that is), one now ought to actively shame others who make use of the despicable machines we call aircrafts. Never mind their benefits and never mind that they constitute a vanishingly small share (2–2.5 percent) of global emissions.
These days, perspectives don’t matter; numbers don’t matter; all that matters is that everyone, everywhere, join the climate crusade and pull their moral weight – regardless of whether your business has the competence or your industry is well-placed to efficiently reduce emissions.
The latest victims in this spillover story of moral suasion are bankers. Two of Britain’s largest banks, Lloyd’s and Royal Bank of Scotland, have both publicly committed to slash the CO2 emissions associated with their loan book, presumably by opting out from financing high-emission industries like oil and coal. Quite a number of the world’s largest banks, mostly British, French, and Australian ones, have made public pledges to refrain from financing oil extraction in the Arctic.
Following the debacle at the UN climate summit in Madrid last year, the Atlantic’s Robinson Meyer wrote about activism in finance as “a different kind of global governance”:
“Goldman will now refuse to finance oil exploration or drilling in the Arctic, including in the Arctic National Wildlife Refuge in Alaska. It will also decline to finance new thermal coal mines, mountaintop-removal mines, or coal-fired power plants.”
The world of high finance, wrote the Financial Times journalists behind the newspaper’s Moral Money initiative, “is quick becoming public enemy number one for climate activists, as they turn their focus to the banks they blame for funding the global expansion of fossil fuel.”
Most financial institutions, from BlackRock, the world’s largest fund manager, to the two oldest central banks – Sweden’s Riksbank and the Bank of England – are now loud promoters of green finance.
All across the financial world, we see the proliferation of the climate creed: banks are offering mortgage rate discounts if your home passes climate inspections; governments float green bonds, directly earmarking funding for renewable-energy projects or other “appropriate policy projects”; the Economist recently reported that almost a quarter of issued green bonds are so-called “sustainability-linked,” meaning that part of the interest is waived (increased) upon achieving (missing) some social or environmental goal such as management gender equality or renewable-energy use…
Perhaps none of this matters, as placing one’s goodness on display is more important than actually doing good – which promoters of Sweden’s 2020 green-bonds program freely admit. It is highly doubtful that having a central bank selectively buy outstanding debt with green labels would in any meaningful way contribute to a greening of the economy.