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  • Nikhil Venkatesh

‘Society’s to blame’: Banks, Structures and Climate Change

Updated: Jun 26


‘Structural injustice’ is a philosophical concept that has seeped into public discourse. The idea is that bad things can happen through the well-intentioned actions of decent people – and in this case, the fault is not with anyone in particular, but with some ‘structure’: patriarchy, institutional racism, capitalism, and so on. Individuals can use the idea of structural injustice as an excuse. When someone is told that what they’re doing is harmful, they might respond: ‘it’s not my fault, it’s structural!’ or ‘don’t hate the player, hate the game!’


Sometimes these excuses are simply bad faith – denials of the choices and duties one actually has. If someone shouts a racial slur at me, they’re not excused by the fact that racism is a structural problem: they could, and should, not have done it. But sometimes these excuses ring true. If someone is unconsciously biased against me, due to the effects of growing up in a society that associates competence with whiteness, and they have done their best to overcome that bias, the problem really does seem to be one for which society, not them, is responsible. If you set up a factory that outcompetes mine, putting me out of work, this harms me. But it’s not clear that you’ve done anything wrong – rather, some companies being outcompeted by others is a feature of the market structures on which our society depends, and thus rather than you owing me an apology, society might owe me things like bankruptcy protection or unemployment benefit.


Mention of market structures brings me to this recent report from Reclaim Finance, which showed that how far the world’s biggest banks continue to invest in fossil fuels, despite public commitments to fighting climate change. The biggest culprit, financing $382 billion of fossil fuel extraction since 2016, is JP Morgan Chase. Their head of ‘Environmental, Social and Governance’ for Europe, the Middle East and North Africa is Chuka Umunna, previously a member of Parliament for the Labour Party, The Independent Group, Change UK, and the Liberal Democrats. In an interview with the Financial Times, he appealed to social structures as an excuse for JP Morgan’s performance:

“We reflect society,” Umunna told me. “Society has not come off oil and gas. We all want to get to the promised land where we do substantially reduce our reliance on oil and gas. But we do not, unfortunately, have renewables at scale right now to replace oil and gas… And that’s not JP Morgan’s fault. That is society’s challenge.”

Now, this might look like mere bad faith. JP Morgan Chase is one of the most powerful corporations the world has ever seen. It is the largest bank in the world by market capitalisation, and measures its assets in the trillions – it is wealthier than every private household in the UK combined. Moreover, the Reclaim Finance reports shows that it is substantially more invested in fossil fuels (including via Gazprom and Aramco) than many of its competitors, some of whom are drastically cutting such investments. Nobody forces it to invest in fossil fuels. So it is possible that JP Morgan Chase could invest less in fossil fuels, and more in renewables. And if they can, it seems obvious that they should. Blaming ‘society’ looks like deflection.


However, Umunna has a point. For all its power, JP Morgan Chase is a public company, accountable to its shareholders – they, along with its clients, are the source of its wealth. If their profits start to fall, or simply to not keep up with competitors, their share price will drop, and their clients will take their business elsewhere. Eventually, unprofitable firms go out of business. So they can’t do whatever they like with their money: they are constrained by what Marxists call ‘the coercive laws of competition’.


‘So what?’, you might think – ‘even if doing the right thing is going to lose them money, they still ought to do it!’ But here’s the problem: all their competitors are subject to the same constraints and incentives; they all want to, or have to, maximise their profits. So if the fossil fuel projects that JP Morgan Chase finances are profitable, we can be pretty confident that someone will invest in them. If it’s not JP Morgan Chase it will be Citigroup, or HSBC, or Royal Bank of Canada. The fossil fuels will get burnt just the same, and the climate doesn’t care which particular bank financed their extraction. Looked at this way, blaming JP Morgan Chase for climate change seems misguided, since climate change would happen whatever they did – because of the structures that incentivise extraction.


Are Umunna and his colleagues excused, then? Perhaps, but at a price they might not like to pay. Regarding climate change as a structural injustice rather than any particular corporation’s fault should lead us, in the long term, to consider changing social structures such that the economy is no longer run by firms like JP Morgan Chase, who are subject to coercive laws of competition that lead to environmental destruction. That is to say: we should consider moving beyond capitalism.


In the shorter term – and we must bring emissions down rapidly in the short term to avoid catastrophe – banks such as JP Morgan Chase are going to be directing much of the economy. So what should we do? Short of anticapitalist revolution, we should change structures such that banks (or their shareholders) aren’t incentivised to fund fossil fuels, but to fund renewables instead. A government could do this by taxing fossil fuels to the point where they are no longer profitable (and subsidising renewables so that they are). Those outside government could raise the costs of investing in fossil fuels, by ensuring that corporations that do so receive bad PR, or by taking direct action against them (as, for instance, Extinction Rebellion do, or as Andreas Malm advocates). If every bank that invests in fossil fuel extraction finds its headquarters picketed, its reputation tarnished, its projects disrupted, its senior staff castigated – then no bank will gain an advantage from doing so. As a result, it would no longer be true that there will always be someone willing to invest in such projects.


We can take such action whilst agreeing with Umunna that society, not any particular bank, is responsible for climate change. If climate change is a structural problem then blaming individual corporations might be mistaken, but this needn’t mean that we leave them alone. Sometimes the only way to change the game is to give the players a good kicking.


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