These letters are part of a growing trend of employee activism, where employees, young ones in particular (yes, millennials), are not afraid to voice their concerns and criticism about their employers’ social and environmental impacts. And we are seeing some early indications that employee activism can achieve results, even if progress is slow as we can see in the cases of Amazon and Google.
Activists on the streets, protesting against climate inaction, have raised public and political awareness. But to get companies to take the climate crisis more seriously requires others to also act. The group that is best able to penetrate the corporate shield of indifference is employees: companies are wary of being perceived as being irresponsible and disinterested in the values of their staff.
While the trend of employee activism is on the rise, there seems to be one industry that this trend has skipped so far – financial services. Many of their fellow employees in hi-tech, advertising, retail, and other industries have been taking action in a variety of ways. According to Weber Shandwick: “38% of American employees have spoken up to support or criticise their employer’s actions over a controversial issue that affects society”. Yet employees in the financial services seem to be relatively silent so far on social and environmental issues.
This silence is difficult to explain, given the important role that banks and financial institutions play in supporting the current unsustainable status quo, especially in terms of financing fossil fuel operations. For example, according to the 2019 Banking on Climate Change report, 33 Canadian, Chinese, European, Japanese, and US banks “have financed fossil fuels with $1.9trn since the Paris Agreement was adopted (2016-18), with financing on the rise each year.”
Just as banks, insurance companies, asset managers and other financial institutions currently provide the financial support critical for fossil fuel and high-impact companies, they could – very easily – be the catalyst for major transformative change. This awareness has penetrated to civil society leaders; Bill McKibben wrote last September: “I suspect that the key to disrupting the flow of carbon into the atmosphere may lie in disrupting the flow of money to coal and oil and gas.”
This is not rocket science. The equation we have in our mind is pretty simple: powerful financial services companies x [employee activism + assertive investor stewardship] = a fit for purpose response to climate crisis.
While we understand that there is always a personal risk in criticising your organisation and its leaders, we hope that among the millions working the financial industry there are employees who will find the courage to challenge the dominant mindset in their firms. Senior decision-makers isin financial sector firms are not blind to the risks and are receptive to action on climate, but for a range of reasons, they support incremental actions. It is certainly not the response we need when the house is on fire, to use Greta Thunberg’s words.
So what do we expect employees in banks and other financial institutions to ask their employers? This is what Google employees have demanded:
• zero emissions by 2030;
• zero contracts to enable or accelerate the extraction of fossil fuels;
• zero funding for climate-denying or delaying think tanks, lobbyists, and politicians;
• zero collaboration with entities enabling the incarceration, surveillance, displacement, or oppression of refugees or frontline communities.
Given the timidity of many financial sector employees, it’s probable many would baulk at this agenda; it may be fit for purpose but far more radical than what finance executives are considering. So it may be necessary to start less ambitiously. To move forward with a bold climate change agenda, there is a need first and foremost to start changing the mindset of these firms.
Concerned employees, for example, could request that all staff – senior executives included – undergo climate awareness training, as at Alliance Bernstein. If it can be done for anti-corruption or gender issues, why not for a climate emergency?
Or if senior executives are calibrating to views of climate sceptics and deniers in the workforce (or in their own ranks) – and especially if there are big differences in views of EU versus North American staff – then employees could propose a professionally facilitated organisation-wide consensus-building process that is grounded in the science of climate change. Consensus is easiest if there’s leadership, of course.
If senior management really don’t understand how their firm is enabling the climate crisis, concerned employees could request their firm collaborate with NGOs and climate scientists to do an independent audit.
Ultimately, this is a question of governance, so employees could ask the board to appoint a director who really understands the climate emergency and who knows enough about the sector to be part of the top team. These directors exist but search consultants need to be instructed to find them.
Whilst this focus on creating an enabling framework is essential, it will not be enough. Organisational psychologists are clear that novel actions are often the best way to change mindsets. And the urgency of the situation is such that determined action is what we need. Financial sector firms need both an enabling framework and a bold action to escape the gravitational pull of yet more incrementalism.
All financial sector firms should commit themselves to a managed decline of fossil fuel production to ending financial support for fossil fuel companies. This commitment is aligned with the call by the EU finance ministers’ statement to the EIB and other global financial bodies, such as the World Bank, “to phase out financing of fossil fuel projects, in particular those using solid fossil fuels, taking into account the sustainable development, and energy needs, including energy security, of partner countries”.
To give teeth to this commitment, but also make it practical, finance sector companies should adopt a ‘comply or explain’ approach, reporting on when (and why) they consider it essential to set aside this commitment. This will also create market incentives for financial sector firms to do as much as they can to encourage a phase out of fossil fuels.
Critically and for maximum impact, investors who are members of Climate Action 100+ (CA100+) should form an informal alliance with climate-aware employees of financial sector firms.
Emergencies call for innovative and determined action. To date, Climate Action 100+ has failed to acknowledge the importance of the financial sector as powerful enablers of the climate crisis. We can speculate why, but this failure must not be allowed to continue. If CA100+ members will not act, then a newly formed Net-Zero Asset Owner Alliance should take the lead and will be better placed to manage conflicts of interests.