Financialisation, Climate Finance, and the Calculative Challenges of Managing Environmental Change

Abstract

This article describes the emergent and unstable dispositif of climate finance that is being built from iterative experiments in climate finance provision. The article provides a periodisation of different phases of climate finance from the 1990s onward using examples from REDD+, ecosystem services, the Green Climate Fund, green bonds, and insurance‐based derivatives, and connects this periodisation to broader processes of financialisation. It analyses how climate finance projects incorporate competing systems of accounting denominated in carbon, natural capital, “green‐ness”, insurance risk and internationally transferred mitigation outcomes. The article argues that many accounting units are evident in current climate finance products, each loosely derived from a different phase in this periodisation. However, experiments in calculating time and value in climate finance continue, and although risk is being increasingly used to correlate different denominators of value, an overall solution for how climate change is to be accounted for in financial interventions remains elusive.

The Regulatory Dynamics of Sustainable Finance: Paradoxical Success and Limitations of EU Reforms

“…As they effectively hold a slice of the overall market, their investment returns will depend on the social, environmental and financial sustainability of the overall economy (Hawley and Williams 2000 , 2007 ; Monks 2001 ). On the other hand, more critical scholars have suggested that this view of sustainable finance is overly optimistic, maintaining that finance is unable to offer real solutions to the sustainability challenges that we are facing (Fletcher 2012 ; Klein 2014 ; Bracking 2019 ). It has been argued that even the current climate disaster has been exploited for financial gains (Büscher et al 2014 ).…”

“…It has been argued that even the current climate disaster has been exploited for financial gains (Büscher et al 2014 ). They tend to emphasise the structural negative implications of financialisation on society and the environment and the inherent unsustainability of dominant neoliberal financial logics (Speth 2009 ; Krippner 2011 ; Lazonick 2014 ; Lagoarde-Segot 2019 ; Bracking 2019 ). For instance, Lagoarde-Segot ( 2019 ) maintains that there are epistemological, ontological and methodological tensions separating standard financial theory from truly sustainable finance.…”

“…In this respect we do think that the work has not been done on financial market regulation. (Interview 30) Some of our interviewees highlighted that, paradoxically, rather than making finance more sustainable, EU sustainable finance has become a driver for the financialisation of sustainability (see Bracking 2019 ). For instance, as a legal expert explains it: It [financialisation] was already there, but I think it is further entrenched.…”

Treating ecological deficit with debt: The practical and political concerns with green bonds

“…The second political concern emerges from scholarship on value and risk in the green bond market. This analysis has primarily focused on the relation between risk and surplus value (Christophers, 2018b); the way risk may coordinate multiple units of value in the green economy (Bracking, 2019); as well as the (re)constitution of risk across different scales and social groups (Bigger and Millington, 2019;. The chief political concern raised here is that green bonds may amplify social inequality.…”

Climate Crises and Crypto-Colonialism: Conjuring Value on the Blockchain Frontiers of the Global South

“…Using blockchain to bring trust to these transactions risks maintaining pre-existing North-South trade and investment flows and neo-colonial geographies of inequality that render much of the global south increasingly marginalized. Scaling up green debt markets in Africa restricts the organic growth of green enterprises as they risk their returns disappearing to international investors, whose income may be guaranteed by public sector entities (Bracking, 2019). The most environmentally-effective solution for companies and individuals with high carbon footprints, whose sites of production are located in the Global North, is obvious -prevent excessive pollution at source.…”