Calls for public banks to finance a Green New Deal and Just Transition

Two new reports in September call for a greater role for public banks to finance a Green New Deal and just transition.

A US Green Investment Bank for All: Democratized finance for a Just Transition   was published by the Next System Project in September, proposing  a new, democratically- managed  structure for financial institutions so that they function in the public interest to achieve a green and just transition.  From the report: “Of the $454 billion in climate finance invested in 2016, the private investment sector, which controls 80 percent of all banking assets, contributed $230 billion, while the public sector contributed $224 billion. That is, with only 20 percent of total assets, public banks invest nearly as much as all private banks combined. The short-term, return-maximizing horizons of private finance have failed, utterly, to drive anything like a green transition. The future of climate finance must look to the public sphere, not the private.” ….  “ The key political-economic decision in the design is the balance between concessionary lending (nonprofit and loss-making operations) and non-concessionary lending (that is, for-profit). The answers must follow from the bank’s public interest mandate and triple bottom line.” The full report is summarized in “We need a democratized Green Infrastructure Bank  for a Just Transition ” in Open Democracy.

A second report also cites the failures of the international global market-based financial system.  The 2019 Trade and Development Report: Financing a Global Green New Deal  was released by the  United Nations Conference on Trade and Development (UNCTAD) on September 25,  and states: “We can meet the UN Sustainable Development Goals (SDGs) by 2030, but only if we find the political will to change the rules of the international economic game and adopt policies that scale up the resources needed for a big investment push led by the public sector and set the global economy on an expansionary course.”

UNCTAD economists project that a net increase in global employment of at least 170 million jobs, with an overall reduction in carbon emissions by 2030, if total green investment were increased annually  by around US$1.7 trillion, which they estimate at one third of what is currently spent by governments on subsidizing fossil fuels.  Although each country will require a unique policy mix, the report calls for changes for all to include fiscal stimulus, public investment in infrastructure and green energy, and measures to boost wages. The report also contends that the 2030 Agenda goals  to eradicate poverty and meet nutrition, health and education goals will impose unsustainable financial burdens on many developing countries, also requiring reforms to the international trade, financial and monetary system.

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