Changing Finance: new this month

A new monthly round-up of news, ideas and initiatives related to transforming the UK financial system for people and planet, compiled by the Lab’s CEO Jesse Griffiths.

Climate and environment

McKinsey sets out the commercial imperatives for banks to manage climate risk. One of the world’s biggest fossil fuel financiers, JP Morgan Chase, commits to aligning to the Paris Agreement but it’s not enough. Here are three principles for Paris Agreement-aligned business plans they could look at. This is why 2050 is way, way too late for banks to aim for net zero.

Two thirds of British people are unknowingly funding climate change through their pensions and savings. But there is strong demand for green investment, while big investors call on the UK to issue green gilts. A new paper argues central banks should take threats to nature (very) seriously.

The Government

HMT has drafted a new Financial Services Bill. The FCA opens a welcome discussion on whether it should add a new climate goal to its objectives(it should!).

Here’s a useful summary of HMG’s finance-related policy responses to COVID, and critiques of them. A new call for a (state-owned) British Development Bank, based on the German model. The European Commission is reviewing prudential rules for insurance companies – Finance Watch responds.

COVID-19

COVID-19 has exposed rifts between what we value and what is financially remunerated, with low pay for key workers being a classic example. Meanwhile senior bankers and hedge fund managers are – like key workers – to be exempt from COVID-19 quarantine rules. Banks consider debt collectors for failing bounce back loans, while possibly netting £26 billion from the scheme.

Ethical, sustainable investment

ESG funds have outperformed other funds by up to 20% in the first 8 months of 2020. The Global Impact Investing Network releases new reports on agriculture and financial inclusion. Few surprises in Good With Money’s top six ethical savings accounts. A new analysis of lending by 20 banks signed up the Principles on Responsible Banking found they were a long way from being sustainable.

The digital revolution

Protecting cash (finally) stirs government interest with new data on loss of access to cash during the lockdown, while 72% think the cashless society is arriving too fast. Is this the end of free bank accounts? Scepticism on whether proposals for central bank digital currencies will have major impacts on the global monetary system. Meanwhile, further details about the infamous challenger bank rivalry of Starling vs Monzo emerge.

Inequality, exclusion and racism

The FCA estimates that 12% of the population – 12 million people  have ‘low financial resilience’ (or, in other words, are struggling with debt). The pandemic has boosted the wealth of billionaires while adding 144 million to the numbers of extremely poor people living on less than $2 per day. The investment industry is urged to tackle systemic racism.

And finally …

A useful digest of what’s happening on the international economic stage at the IMF, World Bank, UN and G20. A voice from 2023 shows how we fixed the economy, and how to be a good ancestor. Hat Tip to This Week in Africa, whose format I copied.


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