Smaller, Greener Banking
Friends of the Earth Scotland and by Ray Perman
Despite the reforms brought in after the financial crash, we still have a banking system which does not adequately meet the needs of society – and in particular does not provide support for a sustainable future.
This paper does not try to be a blueprint for a root and branch reform of the UK banking system – desirable as that may be. It is intended to stimulate debate on how banking in Scotland could and should try to be better and with this in mind makes the following recommendations:
1 Whatever the outcome of the referendum on independence the Scottish Government should present as strong a case as possible for breaking up the two dominant banks to form a more diversified and competitive market in Scotland.
2 Banks should be encouraged to devolve more decision-making to local managers and to adopt governance models which promote local accountability.
Finance for Sustainability
3 The Scottish Government should consider contributing to the Green Investment Bank to counter the fall in investment in renewables, with a particular focus on increasing finance for community renewable projects and the development of wind, tidal and wave technology.
4 To respond to concerns about the “carbon bubble” the Scottish Government should re-examine its policy on the extraction of fossil fuels including North Sea oil and gas.
5 All banks and investment management companies operating in Scotland should be required to publish the carbon intensity of their loanbooks and equity portfolios to enable them to reduce the carbon intensity of their investments in line with existing legislation to cut carbon emissions.
6 In an independent Scotland the Scottish Government should influence banking competition to encourage new entrants to create a more diverse banking sector which takes more notice of community needs and builds environmental sustainability into its lending criteria.
7 If there is a No vote in the referendum in September 2014 the Scottish Government should lobby in London and Brussels for regulatory frameworks which favour non-traditional business models including credit unions, regional, local, cooperative and municipal banks.
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