In January 2023, Preventable Surprises hosted an online dialogue on climate finance and behavior. The week-long conversation was designed to increase our collective understanding of the role of people and human interactions in accelerating the pace of climate finance. In other words, given there is no shortage of available information on climate solutions and on the agency, powers and limitations of capital markets to facilitate a transition to clean energy, what could we learn if instead of focusing on greenhouse gas emissions or markets, we focused on people as the metric of change to close the gap between what the planet needs and what the financial system can do?
For five days, a group of 60 or so finance professionals, activists, academics, and other experts discussed a range of topics, such as their own experience and social currency, the value of truth and agreement, the role of economic and emotional incentives, the role of group dynamics and the power of storytelling.
For more background, please read this summary deck of the dialogue and check out the collaborative reading list that emerged during the dialogue. This blog is part summary, part post-event reflection.
For all the resources and technology, humankind has yet to muster the societal will to act boldly, decisively, equitably, and quickly, on climate change, as one participant framed it. This is fundamentally a political, psychological and societal organization question. While the tide may be turning as the consequences of climate change are increasingly being felt, vested interests, political opposition, time wasting, inevitable trade-offs, the diffusion of responsibilities, the spectacular uncertainty of massive and global change, and the fragmented nature of economic and political decision-making on a question with global ramifications continue to hamper the pace of transformation. Crises like the pandemic or invasion of Ukraine, the sometimes-questionable nature of financial solutions and regulation (greenwashing), and the limited successes of the global multilateral process, do not help either.
So why so much resistance to the ideas we find so obvious?
When we take the people angle, we discuss psychology, agency, the nature of human relations and community level organizations. This is not at the expense of other discussions and of the critical nature of financial flows, equity, technology, or political leadership – rather it is a complement and an opportunity to approach questions differently.
The dialogue was not conceived as a consensus building exercise, but one in ideation. Generative tensions often rested on some fundamental differences in experience, spheres of influence, and the degree to which participants could view finance decision makers as partners or as antagonists. Are we working on the basis of trust? What can we do to create some conditions of trust? While things are not as binary as the following suggests, perhaps it helps paint a picture of the sort of perceptions that people work with.
On the side of campaigners, beyond ideological preferences, there is often the experience of decades of disappointment and predatory delay by economic incumbents. This is bitter, damages relationships and seeds distrust. On the side of financiers, there is the necessity of working with clients, partners, or portfolio companies. The relationships exist regardless of ideologies – they are the raw material of the work to be done. Some level of trust is a necessary ingredient. They might very well experience satisfaction when they see progress, and they may also experience dissonance and negative feelings when they measure the gap between the trickle of progress, the setbacks, and the scale of the task at hand.
Often, generational divides are at play. Sometimes, there is faith in people but no faith in the systems, sometimes the converse is true. Many find solace in seeing some change taking place – the source of hope. Many observe a deficit in values. As one participant said, the environmental crisis is not just a moral but also a spiritual crisis.
The dialogue turned out to be the busiest Preventable Surprises ever organized, at times overwhelming. Sometimes it was hard to see the path forward in the commotion. Still several leading ideas emerged. They may reinforce existing projects or toolboxes, or lead to new ones: ultimately, everyone can apply these ideas in a range of settings, and with a range of audiences – from households to finance decision makers, to voters to politicians, in a range of countries.
Listening: is an opportunity to ground climate action in the realities, needs, emotions, and perceptions of those with power to shift behavior. Many climate advocates talk “at” the people whose behavior they want to shift. The challenge is that it negates the agency of the people, investors, decision makers, on the receiving end. Listening is an opportunity to build trust and to learn about ways to problem solve. Listening is an opportunity for social inclusion – which is direly lacking in climate finance. Of course, there are preconditions to listening, starting with the willingness of both parties to be in the same trusted room or space, the size of the group being addressed, cost, and so on. This is not always a given, can require social status or nous that not everyone can gather. And of course, when we listen, we may be disappointed by what we hear. Still, this partner centric approach is a topic that both psychologists and client-facing participants from the financial world agreed on as a lever for solutions and agency, for co-designing our future. In addition, many participants noted that public advocacy can be complemented with private listening and may yield complementary outcomes. The bottom line is that knowledge – of which we have plenty – needs to be complemented by deep relationships – which are scarce. The question to all is: in a world full of noise and with myriads relationships to manage, we need to invest more of our time and capacity to create more listening spaces. Just how do we do that?
Climate finance as a cultural thesis: unambiguously, dialogue participants agreed on the importance of storytelling and narratives in climate finance. This is in part because numbers can only reveal part of the complexity and uncertainty of climate change, climate risk and climate finance. Partly this is because of the need to inspire people and give them strength to manage this uncertainty. There are far ranging applications for narratives. For example, some dialogue participants are working to encourage the use of narrative scenarios for Central Bank and other financial supervisors. This is an effective way to move financial risk and societal risk closer together. This effort could be amplified and extended. Like listening, narratives can also be a way to empower certain groups of people, when the stories reflect their experience, their questions, and opportunities and in general the specificity of their experience with climate change. This can be relevant for certain groups of finance clients (say, high net worth individuals in Florida, or dentists in Arizona), as it is a tool to engage people across political divides. There are two opportunities here: one is to train climate finance professionals and advocates in storytelling, for example through writing workshops. The other, beyond finance, is to promote culture and media supports that approach climate change from the perspective of its audiences and effectively ask: what is your climate story?
Climate finance as a moral thesis and not simply a profit thesis. This trend of thought recognizes that if climate finance has a moral dimension, then it is also a power thesis, because it lays claim to the consequences of how power is exerted by the powerful. For example, when we try to convince a corporate CEO or a wealthy philanthropist to focus on climate finance, what we tell them is a moral story about their power. If this is accurate, then this requires recognizing that diverse social groups (e.g., different sources of power) will have diverse moral intuitions. As with narratives, advocacy and listening. Here again the top down (climate science, climate solutions, etc) and bottom up (moral intuition) may appear at odds. But this is a clear call for a new ethic of power – one in which a range of social groups, from NGOs to religious groups, are already at work. The opportunity is to multiply and amplify this. How can advocates and professionals – each in their sphere of influence – help devise new Honor Codes for economic elites, one where climate action is a centerpiece of how respect is granted and received?
Climate finance as a leadership thesis. As several dialogue participants pointed out – climate finance is clamoring for new leadership on economic thinking. With many linking the wide-ranging adoption of Milton Friedman’s shareholder primacy theories with the slow pace of climate action as other interests take to the fore, more people pointed out the lack of visible counterpart on nature. To be clear there is no shortage of rich academic thinking and advocacy, from the likes of Michael Mann or Greta Thunberg. And maybe it’s too early to tell, but currently there is no one of the stature and influence of Milton Friedman when it comes to reinventing the economic system. The opportunity is for institutions such as academia, philanthropy, or cultural actors to support the emergence of leaders, via awards, prizes, documentaries, etc. with a very singular focus on the intersection of economy, society, and nature.
A learning opportunity for everyone in climate finance. There is a significant learning opportunity in the field of climate finance and behavior, one that should be available much more broadly. The insights gained from this group are invaluable, and we have all benefited from this conversation. However, such discussions are not happening frequently enough. There is a need to provide more platforms for finance professionals, NGOs, climate activists, and others to engage and educate themselves on the social dimensions of their work. Multiple opportunities exist, including the development of academic curricula, continued education courses for professionals, and spaces where groups, like the one that convened for this dialogue, can gather, and discuss real-life case studies and news related to climate finance, and better comprehend the human factors involved.
Finally, climate finance as a meditation and opportunity for self-reflection. When we take all these ideas into account, what we are faced with is the necessity of letting go. Letting go of what we think is the way forward, of control and expectation on other people’s behaviors, of control over our own future, and constantly adjusting our agency as a result. Letting go of our knowledge and accepting that it co-exists with others. Climate finance is far too complex and when we let others speak, when we give others agency, when more people are involved on a wider set of moral grounds, new things will emerge beyond our own current grasp. That is neither to ignore climate science nor of the imbalance of power and responsibility, far from it, as much as it is about co-existence and the human soul. As humankind, we can accept an ecology of theories of change – not all equal, not all human equally honest, but ground zero to support real change. For all, but particularly those in business and finance, this means letting go of illusions, of the sometimes-excessive promise of progress, leadership, and innovation to tackle the unknown, that is often a veil for the security and comfort of what we do now and know well.
We encourage readers, actors of climate finance, from VCs to philanthropists, ESG executives to CIOs, advocates to folks-on-the-street, to read the stimulating conversation starters our dialogue engaged with, form their own opinions, and work to support the myriad solutions and tools available. For our part, we plan to convene dialogue participants and other volunteers on a regular basis to apply our learnings to real life stories and case studies in finance as they emerge.