Banks shouldn't be put in the position of public policy making. If society thinks certain activities are desired/undesired, this can be accomplished via taxes and regulations. Financial cancel culture is a road to hell laid with good intentions.
Why can't they go to a different bank if they feel so strongly about it?
Pesticides are a necessary chemical to industrial food production. Consumers can opt to prevent that from being used/manufactured by buying organic[1]. Organic goods are widely available in US supermarkets. The fact that organics haven't outpaced conventional foods tells you all you need to know about consumer preferences.
>Can poorer car buyers opt for any thing cheaper than the currently available options? Or rather, because there are no options available for them, should they simply not use cars instead of using the polluting gasoline cars?
So according to you, poor car buyers are forced to choose between a gas guzzler or no car at all, because the fuel efficient cars are too expensive. Clearly the right thing to do is... stop gas guzzlers from manufactured in the first place so they're forced to not have a car?
[1] organic allows certain kinds of "natural" pesticides, which might or might not be worse than their banned counterparts, but this is another can of worms
Or tax gas guzzlers more? Provide tax incentives for fuel-efficient and electric cars? Both?
Agreed. And what banks do has (or should have) little bearing on that.
> This does nothing to help the poor but environmentally conscious person.
That's debatable.* But in any case, banks aren't charities. Modern capitalism holds that they have no obligation to anyone except their shareholders.
*For actually "poor" people, car ownership is a burden. They have to pay high interest rates and tie up a significant portion of their capital just to get around. Whereas most developed countries (and even a great many developing countries) have efficient public transportation, which doesn't have these downsides for poor people. Also the poor have more to lose from climate change, so arguably these banks are serving them better in the long-term by divesting from carbon.
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For the other part I agree companies aren’t charities. My entire point here is that people should quit trying to pressure them into acting like charities. Let companies make money, that’s what they are good at. If you want to eliminate ICE engines pass a law.
You keep saying "pressure" as if it's a magic word. How can you pressure a business to do something against what it believes to be its own (or its shareholders') interest? All kinds of people lobby companies and government to do literally everything under the sun. Companies don't listen to all of them. They only listen to the ones they think are good for them. And if they choose wrong, the market will punish them. Right?
On a separate note "companies shouldn't be woke" people also tend to be among the most ardent worshippers of the free market. Somehow their faith is shaken when companies do something they personally disagree with - then they fall back to "they're just giving in to activist pressure". I'm not saying you're like that. Just pointing out the irony.
Re: more expensive cars hurting the poor in North America, I'm honestly skeptical. If anything more expensive cars will be a forcing function towards developing more affordable housing close to work and better public transportation systems. Kind of an inverse Jevon's paradox. This will save the poor money in the long term.
If there's not sufficient voter support for legislating morals then democracies shouldn't be legislating morals. The voters should get what they want even if it's stupid.
I recognize that these may be entirely separate subsets of free-market libertarians, but it's enough to make me grow frustrated at the entire group.
If they really see it as a risky investment, that's fine.
> Bruce Duguid, head of stewardship at Federated Hermes’ EOS division, said there was a need for “dramatic shifts” in bank financing in order to meet the Paris goals and “avoid the looming systemic risk of a ‘carbon crunch’ hitting their balance sheets”.
It seems pretty straightforward that investing in something that violates a global UN agreement is not a financially sound decision.
Funds coming from adult entertainment are (1) high risk (in theory) for being proceeds from a crime (prostitution) and (2) high risk for money laundering because those businesses are often high cash or cash-only.
You can see how designating a business as #1 necessarily creates the situation that gives rise to #2 and so it becomes a self-fulfilling prophecy: the business is high risk because it’s high risk.
Climate change threatens to devastate hundreds of millions of lives. It will disrupt the global economy for decades. So, yes, fossil fuels are a risky investment.
Of course group action is more meaningful, and that's why this group of investors is pressuring a group of banks.
That marginal effect is exactly that, marginal. It makes as much difference as adding a single drop of water to the ocean. If you're doing a risk calculation, which is what we're talking about - not a moral calculation - then adding zero to any term in the calculation doesn't change the result.
I know where you're coming from, your heart is in the right place, but your mathematically wrong here.
> Of course group action is more meaningful, and that's why this group of investors is pressuring a group of banks.
That's the only way it can work. I wish them luck.
How do you know these banks aren't betting that being seen as climate-friendly will make them more attractive to customers and investors? And thereby increase pressure on competitor banks that aren't similarly climate-friendly to follow suit? This would result in the type of coordinated action that actually can make a difference to climate change at a macro level. Mission accomplished.
At the end of the day banks are businesses doing what they feel is right for themselves. If you disagree with how they run their business, you should divest yourself from them and end your business relationship with them.
Agree here that soft-rules to exclude finance will cause a lot of negative results, expected and otherwise.
People that complain finance will not voluntarily comply are right, most finance activity specifically and actively "does not care" and this also must be exposed publicly. Sunlight is a strong disinfectant.
ps- per piketty [0] the finance system is currently self-perpetuating, no longer solely an expression of real value. Humans are proven dangerous, so, take care with "laws"
https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
Either you're for or against the system. Capitalism's end game was not to be counted a citizen but to become the oligarchy. Congress has a lot of power but only what the people give them, well the people have lost most of their voice/power so now congress is fueled by the power that money can buy from the companies that fund them.
Thus it is we've entered late-stage capitalism. The federal government won't ever do anything about it as long as they're allowed to control congress by the wallet.
Short-term as myself a libertarian-socialist I see this as a positive - because the alternative is lots of death from climate change...
Long-term as a libertarian-socialist, I see this as a scary power grab by corporations. In some movies/shows/books you see companies that govern and have whole worlds and solar systems named after them.
When you take away regulations, when you move to allow companies total freedom to do whatever you want you have to be willing to take the consequences of whatever those freedoms bring, whether that's polluting the water supply or encouraging MLB to pull out of Georgia over voter rights.
You can't have your cake and eat it too!
Banks have been choosing who they fund and who they don't for a while and it hasn't really been decried so far. This only highlights that we live in a society that is both democratic AND capitalist: decision making power is distributed, on the one hand, "equally" to each citizen via voting rights, and, on the other hand, to whomever holds the most capital.
You could even argue that the proportion of the power that goes to capitalists is inversely proportional to the amount of state actions in the form of redistributive policies, market legislation, etc.
Once you take this into consideration, your initial observation doesn't reflect a new financial "cancel culture". Rather it reflects how much of the decision making power is now in the hands of capitalists in the US.
I'd much rather banks and investors were explicit and public about the values driving their choices.
If your hypothesis is right that the big banks are leaving money on the table, I'm sure somebody will start a tobacco/child labour/fossil fuels ETF investors can buy if they can stomach it.
The optics of such a nonsense ETF would itself drive investors away. Like seriously?
If a bank decides not to invest in some given company or sector, that's not "public policy making". That's just the bank exercising their right to decide where to put their money. Indeed, they can't do anything less. Whether they invest or not, they are making a decision that has social impacts.
If the bank instead paid lobbyists to persuade politicians to create new rules (and I'm sure they do), that would be closer to "public policy making".
Also, this concept of "cancel culture" is absurd. People and companies have always risked falling from public grace if they say or do things that go against the values of the majority of the public.
Was it "cancel culture" when Studio 54 got shut down? Or when Tim Leary got fired from Harvard? Or when Ellen's sitcom got cancelled?
Right or wrong, each was merely the result of going against the grain. Today, the cultural middle has shifted, and so some groups are finding themselves in a position they're unaccustomed to: being in the minority. (Or more accurately: not being _consistently_ in the majority.)
But the consequences are no different than those faced by any minority, and this is healthy for society. It's never a good thing when one group has so much social leverage that they get to dictate the terms for everybody else. I would argue that today, there's no such thing as a majority group. We're all minorities to varying degrees, and we all need to learn how to get along. I think that's a net positive, albeit a very messy one.
Isn’t that what a corporation is supposed to do?
You might be able to argue for the existence of a naive utility, one that doesn't bother being aware of the impacts of its investments. But that seems kinda silly in my books.
If banks decided to invest in carbon producing companies, is that an activist policy? What about if they invest in US companies? Or invest in developing countries?
What makes this (avoiding investments in polluting firms) activist investing while the opposite isn't in your view. Seems hypocritical.
Also, why does THIS count as an activist policy, and not literally everything else banks have ever done?
There's no such thing as a neutral way to invest money. Every investment sends money towards one group and away from another. We give control of our money to banks with the trust that they are being intentional about how to use it.
Why is this an "activist policy" more than anything else?
Should they stop advertising too? Advertising also has a viewpoint, after all.