Awareness about climate related problems can be raised through activism, says financial researcher Lena Tonzer, but can only succeed if a relevant fraction of society responds accordingly and companies inform consumers about what the true climate costs of their products are.
Impact of the climate movement
Residents of Rotterdam could not have missed it last week. On Sunday, June 19th, ten thousand demonstrators from all corners of society and all ages joined the huge climate march and walked through the center of the Dutch harbor city with colorful slogans like "Shrink the airline industry", "Stop the fossil fuel industry", "Vegans 4 Peace" and of course the mantra of the climate movement: "What do we want? Climate justice! When do we want it? NOW!"
Lena Tonzer, who works as a financial researcher at VU Amsterdam, is not a climate scientist herself, but the subject is close to her heart. Like everyone else, she is very concerned about global warming and tries to pay more attention to her consumption patterns, especially in the area of plastic waste and transportation choice.
Yet her biggest concern is the well-being of people on this earth, especially of those who are already poor and suffer the most in terms of having no easy access to water or food, and that inequality will increase due to the climate crisis. “I’m fully aware of my privileges”, says Tonzer, “but I find it very hard to accept that in certain regions such as in Africa, where water is already scarce and people are fighting to survive, young people hardly have access to develop and educate themselves. This is a big difference and I would wish everyone to have the same possibilities as I have.”
As she was writing a paper about the Volkswagen scandal, and analyzed how customers reacted on this fraud, she saw on a German tv channel a documentary about the life of climate activist Greta Thunberg. Inspired by the documentary, she investigated together with her colleague Felix Noth the matter of climate activism. After interviewing more than 600 young Germans, they analyzed their survey data and published the results in their research paper Understanding climate activism: Who participates in climate marches such as “Fridays for Future” and what can we learn from it? a few months ago.
During the research you discovered that gender, more specifically, women seem to play an important role in climate movements. Why is that?
“One reason could obviously be that if you look at who is leading this movement across different countries, you often see that it’s headed by female leaders, like Greta Thunberg in Sweden, Luisa Neubauer in Germany, or Anuna De Wever in Belgium. We thought this could have a positive spillover effect. If you have a woman leading such a movement in a country, it might also inspire other women to participate and to become active. In my field of expertise, banking research, you see that in the boards of banks, the share of women is low. Having more female leaders there could also create an ambiance where women inspire each other and become active. If it works in such movements why couldn’t the same apply for leading institutions and companies?”
Another finding in your research was that among the 600 respondents not all young people were keen to join these climate marches. You said that that had something to do with the trust some of the young people have in corporations to fix the climate crisis. How come?
“We found in our survey data that if you as a young person have a higher trust in companies, then participation in these marches is less likely. If you trust that everything is going well and companies are acting sustainably, you shouldn’t worry too much, right. But if you have a higher level of mistrust, you might feel more pressure to go out to the streets and protest.”
Younger generations are less represented in national parliaments while Fridays for Future is a movement of young people. Is that because they feel the lack of power?
“That might play a big role. The average age of politicians in national parliaments is higher compared to the one amongst the group of students and pupils. Politicians might thus look at the world from another perspective. A perspective that doesn’t seem to produce the urgency to stop with our current way of consumption. Because young people have limited access to these political institutions, the alternative is to go to the streets and use their democratic rights to put pressure for a more sustainable policy.”
What did you learn from the climate movement after you finished your research?
“I think it's really good that there's a movement of young people that raises awareness about the climate crisis. But to change the whole situation you need a larger fraction of the population supporting climate policies to also incentivize politicians to act more strongly and quicker to change rules and regulations, for example, with regard to CO2 emissions.”
Then what should be done to avoid a climate catastrophe?
The topic should be of first order relevance on everyone’s agenda. In general there needs to be much more reliable and fact-based information about these topics that reaches all parts of the society so that everyone becomes more aware and consequently also supports possible policies that accelerate the energy transition process.”
But can we leave the problem of solving the climate crisis up to the private sector, telling the corporations: we would like that you switch to renewable energy but it’s not mandatory?
“There are market imperfections leading to a resource allocation that is not beneficial from an environmental perspective, which might request regulatory interventions. The most often discussed economic reason is that there are “externalities”, meaning for example that we are buying cars whose emissions are environmentally harmful. Yet these emissions are not priced appropriately when we purchase such a car or refuel the car. We are hence not internalizing the emissions’ costs that we impose on the environment. Regulation can be one way to achieve that prices account for externalities that we cause due to our behavior.”
“Another imperfection relates to the availability of information. For example, if you buy a product in the supermarket, you do not know how much CO2 was emitted to produce or transport it. Therefore, we will not adjust our behavior because it's difficult for us, especially for consumers, to really get all of the information about the environmental harmfulness of this product. Hence, information is key in all dimensions.”
“And there's another big problem that relates to intergenerational conflicts. This means that we, the current generations, won't experience all benefits but will carry most of the cost of behaving more sustainably today by consuming less or by buying more expensive products due to climate regulation. This makes it difficult for politicians to change their policies significantly because they might fear to lose voters.”
You study primarily banks and financial institutions. They also play a very big role in financing firms like fossil fuel companies. Why don’t they cut of the funding for these polluting companies?
“As long as a bank can make profits by providing a loan to a corporation, it’s good for its profitability. And as long as the bank does not have to fear consequences, why should it change? Luckily, awareness of investors and regulators regarding sustainability and green finance is increasing. For example, during the pandemic, sustainable funds gained in attractiveness. In addition, there is evidence that banks started pricing risks associated with lending to highly polluting companies. Yet research also shows that large banks might bet on being “too large to strand” and continue investing in fossil fuel companies.”
“Yet when it comes to sustainable investment options, there are again other issues. First, there are not so many companies with high sustainability ratings. Second, we also need to ensure that CO2-intensive companies have access to funds to manage the green transition. Such companies need the money to innovate, to change their technologies in order to become greener. Banks can be useful in this context by continuing to lend to these companies in case this money allows them to become more sustainable.”
Don't you think that movements like Fridays for Future are focusing too much on politicians and less on the other players like financial institutions and banks?
“Maybe. The important thing is also here to remain critical and open-minded; for example, not all activities of banks are bad for us. Furthermore, we all have our money at a deposit account of a bank and probably many people have never checked how their bank is using the money of their customers. Some banks might use it to invest in innovative green technology, others might keep the money in coal mining.”
Isn’t there a new trend within these financial institutions where they are setting sustainable conditions for companies in order to receive new loans?
There are specific banks that are focusing on sustainable investments and I suppose that this will further change over time because the topic is getting more and more important. It is clear that something has to be done and it is in a bank’s own interest to remove stranded assets from its balance sheet, meaning assets of companies whose business models are unsustainable from an environmental perspective due to fossil fuel dependence.
Last question, are you optimistic or pessimistic about the future?
It's mixed. Sometimes I'm very pessimistic when I read the news and see what people are doing. However, as long as there is some possibility to act and to change, there's some hope for me to remain optimistic.