In no small part, the climate crisis is a problem of money and it is a challenge where better use and management of money could do much to address the crisis. Sunday, Elizabeth Warren released Stop Wall Street from Financing the Climate Crisis. Simply put, powerful, actionable, and effective measures that would do much to address that ‘problem of money’.
Forget that “invisible hand” malarky, the reality is that economies have structures — rules, regulations, and even norms that provide the context in which economic interactions occur. Sometimes that is gang rule (think Libertarian Paradise of Somalia), sometimes dictatorial (think North Korea), and, for most of the world’s economies, this is dominated by laws and regulations (even as perverted by corruption, illicit actions, cronyism to a greater or lesser extent everywhere) in various forms of (most often some degree of Social Democratic) capitalism. The key is to have a well-regulated economy that enables the positive aspects of capitalism while constraining or addressing its problems.
As someone who has extremely strong understanding of how markets can skew to the advantage of the powerful along with developing paths to create balance between large/small players (think CFPB), it shouldn’t surprise anyone that Warren has considered the linkages between financial (mis)regulation and the climate crisis … and that she ‘has a plan for that’.
Warren(‘s team) cogently lays out reasoning and provides tangible and actionable measures to address how financial markets foster, rather than help address, the climate crisis. These include:
- Fostering pension fund divestment: Investing in fossil fuels inherently is at odds with the long-term concepts that should drive pension funds — while putting money to work creating a more risky future environment for retirees, it is fossil foolish in another way: fossil fuel stocks have been underperforming, compared to the rest of the market, and that underperformance will worsen with moves to address the climate crisis.
- Tightening bankruptcy laws to reduce the ability of polluting firms to privatize profits while socializing costs. From inadequate funds to reclaim coal fields to abandoning commitments to retirees, coal firm bankruptcies have exemplified how the system shouldn’t work. Warren will seek to address this.
- Requiring insurance companies to disclose (and address) climate risks
- Putting climate central to international engagement and trade negotiations
- Declaring that “Personnel is Policy”, Warren commits to appointing key personnel (such as Treasury Secretary and financial regulators) who understand climate change and will incorporate that in their work.
The size and the scope of the risk that climate poses to our financial system requires immediate action. I’ve committed to transitioning us away from Donald Trump’s climate-denying administration at a speed unmatched by any transition in modern history, so that we can begin tackling the urgent challenges ahead on Day One. As part of that transition, I will announce my choices for Cabinet, including a Treasury Secretary who understands the financial risks of the climate crisis, by December 1, 2020. And I’ll staff all senior and mid-level White House positions, like financial regulators, by Inauguration Day—so that we can begin de-risking our financial system from the moment I’m in office.
Oft-hidden from public eye, so many elements in the financial system foster worsened pollution and weakening of our ability to address the climate crisis. To address this, robustly, will required Congressional action and, with all that will be required and all the obstacles to legislative progress, this is far from a guaranteed route even as Warren lays out items for working with Congress. When it comes to stopping the financial system’s funding of the climate crisis, from incorporating a social cost of carbon in government decision-making to appointing regulators who understand (grok) climate implications, there is much that the President can do through executive action to right the situation. Warren gets this.
Elizabeth Warren has released a series of serious proposals to tackle the climate crisis, in no small part building on the work done by Jay Inslee’s campaign.
Putting aside whomever you support in the primary election, the combination of Inslee’s and Warren’s work should become the template for the Democratic Party’s platform and for the next President’s tackling of the climate crisis.