The Solution To Greening Finance? It Lies Within The People
For years the climate debate has been preoccupied with ways to get financial institutions to switch to promote greener, more sustainable business practices that will help protect the wellbeing of the planet and people. But five years on from the Paris Agreement and any change across the finance sector has been pretty glacial.
Not only are banks still funding fossil fuel projects (evidence from Bank Track shows that 33 global banks – many of which are household names- invested $1.9 trillion into carbon-intensive projects between 2016 and 2018). But even when there are green products to choose from, they definitely don’t meet the needs of the people who want to save and invest in them. ‘Green’ financial products are often confusing as to what their green credentials actually are with definitions varying wildly from organization to organization. So for the values-driven investor, it’s difficult to see where your money is actually being invested.
Another major issue is that these products just aren’t accessible to ordinary people with minimum investment amounts starting in the £thousands not £hundreds.
In 2019 the UK Government’s Saving and Investing for a Better World report found that 70% of people said they want their investments to avoid harm and achieve good for people and the planet, yet 55% highlighted the need for greater availability of easily accessible products as a barrier them taking action.
Power from the People
The need for change in the finance sector has never been greater. It’s estimated that between $1.6 – $3.8 trillion needs to be invested every year in order to achieve the goals of the Paris Climate Agreement. So it’s pretty clear that if this is to happen, then people-powered-finance must play a catalytic role, bringing about the transformative change that’s needed across the finance sector if we are to truly bring a halt to the practices that are destroying the planet.
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Now is the time for action
And the people have spoken clearly – they want action. In a recent UN global climate poll, two-thirds of the 1.2 million people questioned think that climate change is a global emergency. They cited key actions as reforestation, renewable energy, and eco-farming as key to getting the results we so desperately need.
Yet, despite a sluggish response to the crisis from many of the big players in the financial services industry, we’ve seen seismic leaps in innovation from others, leading the way for a new generation of savers and investors.
And this innovation is not before time. The voices of the people have grown louder, demanding action from governments and corporations to ensure we build back better from the COVID pandemic. So it’s the financial products that are not only truly impactful, delivering lasting social and environmental impact, but also accessible and transparent that will be in demand.
Making Sustainable Attainable
Positive investing platforms, Ethex and Energise Africa are using the power of finance and technology to put people at the heart of the decision-making process when it comes to using their money as a tool for change. Combined, both platforms have raised more than £100 million in ethical finance for 200+ impactful projects, from 20,000+ everyday people – funding extraordinary organizations to build community-owned renewable energy installations, develop vital infrastructure for sustainable transport, improve food and farming practices that are in harmony with the environment, build sustainable housing and bring clean, affordable, life-changing solar energy access to families and small businesses across sub-Saharan Africa.
And these platforms aren’t standing alone. Using innovative models of blending institutional funding from forward-thinking partners such as UK aid, Good Energies Foundation, People’s Postcode Lottery, and MCS Charitable Foundation, the sector is now receiving vital backing and validation. Match and partner funding from these organizations is boosting trust from investors, not to mention kick-starting the impact their money is making.
Looking to the near future, it’s clear that everyday people will be demanding more of their financial services providers as they start to see their money as a powerful weapon to create meaningful change. And it’s time for the whole financial industry to sit up and listen.
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In the cover picture: Azuri PayGo solar panels. Photo Credit: Ethex.
Editor’s Note: The opinions expressed here by Impakter.com contributors are their own, not those of Impakter.com