Banks and Climate Governance

62 Pages Posted: 18 Oct 2021

See all articles by Sarah E. Light

Sarah E. Light

University of Pennsylvania, The Wharton School - Legal Studies & Business Ethics Department

Christina Parajon Skinner

University of Pennsylvania - The Wharton School

Date Written: October 18, 2021

Abstract

Major banks in the United States and globally have begun to assert an active role in the transition to a low-carbon economy and the reduction of climate risk through private environmental and climate governance. This Essay situates these actions within historical and economic contexts: It explains how the legal foundations of banks’ sense of social purpose intersect with their economic incentives to finance major structural transitions in society. In doing so, this Essay sheds light on the reasons why we can expect banks to be at the center of this contemporary transition. This Essay then considers how banks have taken up this role to date. It proposes a novel taxonomy of the various forms of private environmental and climate governance emerging in the U.S. banking sector today. Finally, this Essay offers a set of factors against which to normatively assess the value of these actions. While many scholars have focused on the role of shareholders and equity in private environmental and climate governance, this Essay is the first to position these steps taken by banks within that larger context.

Keywords: climate change, private environmental governance, private climate governance

Suggested Citation

Light, Sarah E. and Skinner, Christina Parajon, Banks and Climate Governance (October 18, 2021). Columbia Law Review, Vol. 121, pp. 1895-1955 (2021), Available at SSRN: https://ssrn.com/abstract=3944952

Sarah E. Light (Contact Author)

University of Pennsylvania, The Wharton School - Legal Studies & Business Ethics Department ( email )

3730 Walnut Street
Suite 600
Philadelphia, PA 19104-6365
United States

Christina Parajon Skinner

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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