There are many reasons: some having to do with politics, some with the rising cost of credit, and some inverted trends. But green finance as it was in 2020 is in crisis. And the latest defections from Climate Action 100+, the coalition of financial enterprises created on Wall Street in 2017 with the goal of supporting large companies with their green transition, are just the latest negative sign. The coalition lost, at the same time, the participation of JPMorgan, State Street and Pimco, three players managing around 14 billion in assets, says Reuters.
Defections from Climate Action 100+
As summarized by international press sources, this isn’t the only negative news for Climate Action 100+. The coalition has also recently been abandoned by BlackRock, while Bank of America has reversed its previous decision to no longer give credit to projects to build new coal mines, coal-fueled electricity plants and drilling operations in the Artic. The reasons, they said are both technical and political. On one end is the changing core of the coalition, which started with a focus on transparency on activities and environmental risks, but that in the last year has shifted focus towards emissions’ reduction and carbon neutrality. What may appear to be just a variation of the topic, in reality, opens the doors to the possibility of legal risks and the fact that these types of industrial strategies are, especially in the USA, clashing with the position of the Republican Party (during election year).
The crisis of green finance
Those looking at the situation in political terms, observe that the defections from Climate Action 100+ are effectively leaving Europe alone in the fight against climate change. But green finance is also decisively slowing in the Old Continent, after the post-pandemic boom. The golden season of “green bonds” of 2020/2021 was a time during which companies were given credit on the basis of sustainability-related objectives. At the time, due to a series of policies set by the ECB (part of the “quantitative easing” approach), credit costed little, and banks were able to give more of it (and to do so lightly, we add). The usage of green bonds has slowly weakened, and in fact there haven’t been much news surrounding the topic as of late.
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