Banks should not retreat from the fossil fuel industry, says Sandra Phlippen, assistant professor at Erasmus School of Economics and Head for the Netherlands of ABN AMRO’s Group Economics, because, if they do so, the desired effect of the investments will not be reached as emission is then likely to increase. Moreover, this would disrupt the economy.
The threat namely exists that polluting companies will in that case only be financed by companies without social responsibility, which will not take any measures to encourage the companies to reduce pollution. As such, the polluting companies are likely to increase - or at least won't do anything to reduce - their pollution. However, it is better if the banks act as financer. Supported by the draft for the climate agreement, they will be able to encourage these companies to reduce their pollution and to stimulate the energy transition, says to Sandra Phlippen.
Smaller banks can attract customers by advertising that they will not invest in anything that is not sustainable. For larger banks, this would also be a good advertising strategy. However, if you think about the responsibility large banks have to maintain financial stability in our country, it would be irresponsible if the large banks would say they take their hands off polluting companies. His is because the economy still runs on fossil fuels and, as such, the economy could collapse if the banks would stop investing into these companies.
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Listen to the entire podcast on BNR Nieuwsradio, 11 January 2019
