How to Push Wall Street to Ditch Fossil Fuels for Clean Energy

The invasion of Ukraine has put the US and Europe on a wartime mission to abandon Russian fossil fuels. This series looks at speeding up zero-carbon alternatives by lowering political and financial barriers.

It will cost more than the gross domestic product of the entire world to rewire the global economy to run on clean energy.

Policy makers and campaigners focused on ginning up the estimated $100 trillion needed over the next three decades know that governments alone cannot foot this bill: Wall Street must get on board with the energy transition. The odds of decarbonizing the world depend to a significant extent on bankers being swayed to direct their dollars away from fossil fuels and toward renewables.

Whether carrots or sticks, the options being considered are numerous, according to interviews with current and former bankers, nonprofits and academics. They include everything from the introduction of carbon pricing to adjusting capital rules and encouraging financing partnerships between public and private money. And the urgency of the conversation is only increasing as scientists warn the world is warming at an ever-quickening pace, and as the war in Ukraine underlines the dangers of reliance on fossil fuels.

“The challenge of how to incentivize the banks to transition from high carbon to green activities is really a challenge of how to incentivize the bankers,” said Rhian-Mari Thomas, a former Barclays Plc banker who is now head of the UK government-backed Green Finance Institute in London. “Changing behaviors within the financial services industry is all about people: It’s about vision, leadership and ultimately courage to give up doing the business you understand for transactions that are unfamiliar, all within a culture where success is rewarded and talent retained through the bonus pool.”