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Transforming Finance: how can we fix our broken financial system?



How can we fix our broken financial system? That question has been contemplated by many since the economic crisis first hit in 2007. But bringing together leading thinkers to discuss sustainable ways forward, the Finance Innovation Lab’s new Transforming Finance film provides a range of compelling answers.

The 22-minute documentary, which builds on a conference of the same name held in May, hears from economists, politicians, finance professionals and academics. They discuss our “broken” financial system – each from a different perspective – and offer potential antidotes to the rise of what the film calls “short-term financialisation”.

What we have is a financial system that has evolved in ways in which it very largely serves itself rather than the needs of the non-financial economy”, opens John Kay, professor of economics at the London School of Economics, whose 2012 government-commissioned review into long-term decision making laid bare many of the changes required within the investment and financial worlds.

The former Lib Dem MP Lady Kramer describes Barclays, Lloyds, HSBC and the Royal Bank of Scotland as “four large monsters” that have the monopoly on consumer banking options. David Green, Civitas chief executive, says this domination has “had a very harmful effect on enterprise”.

Perhaps most revealing in the opening scenes are comments from Andrew Haldane, the Bank of England’s executive director of financial stability. Haldane has said in the past that finance needs to return to what he called its “patient evolutionary path. In Transforming Finance, he speaks about the “doom loop” of already big banks becoming bigger still over generations.

Their failure would impose even larger losses on wider society, which is why government would feel evermore duty-bound to ride to the rescue”, he adds.

Almost all interviewees agree that a change in culture is required within the financial system. Kay talks about how the so-called “trading culture” – most notably, inherent short-termism – has been allowed to drip through entire institutions. But while the City of London – the country’s financial heart – is often picked out as a rendezvous place for the worst offenders, James Featherby, author of Of Markets and Men, argues it is a wider societal problem, and not specific to one firms located within one square mile in London.

Interviewees agree, too, that a diverse range of institutions is also key to making finance more sustainable. Instead of four large banks with the controlling power, building societies, credit unions, co-operatives and peer-to-peer lenders ought to play greater roles.

A recent study by the Global Alliance for Banking on Values (GABV) said that values-based banks offered better returns on assets and provided more capital to the real economy than mainstream banks. The reason, the report said, was because of their greater transparency, sustainability and diversity.

The unwritten rules of [values-based banks] are not driven by profit; they’re driven by wanting to do something positive in the world. Profit is seen as a way of being able to then support that”, says James Vaccaro of the sustainable bank Triodos.

This isn’t just about being nice again as banks; this is dealing with the world’s challenges.”

Richard Spencer, co-convener of the Finance Innovation Lab, says in the documentary that diversity was arguably the most important attribute in creating a resilient system. One that wouldn’t crash and one that wasn’t disconnected from the real economy. Meanwhile, Bruce Davis of Abundance Generation calls for “nimble, agile, innovative, new business models” that can serve as competition for, to reuse Lady Kramer’s phrase, the “four large monsters”.

An important part of the system, perhaps overlooked in the film’s early stages, is people. Without people, the financial system is defunct, and with them, it has the potential to be transformed.

Davis adds that the only way to change the system is for people to move their money into something they agreed with – whether that’s an ethical or sustainable bank or a direct finance platform like Zopa, Abundance or CrowdCube.

But not all agree that people, or rather consumers, are the primary catalysts for change. Tim Jackson, professor of sustainable development at the University of Surrey and author of Prosperity Without Growth, says, “Although there is much that ordinary people and institutions can do, it really is down to government to create the landscape within which that’s possible.”

But while debate persists over which groups can and should lead the charge towards a sustainable financial economy, it doesn’t when it comes to the necessity for change.

Transforming Finance offers viewers essential insight into not only the problems that exist, but also the solutions.

As Raj Thamotheram, president of the Network for Sustianable Financial Markets, so eloquently puts it in the closing scene, “We know what we need to do. We have the technology. We’ve just got to get on and do it.”

The Finance Innovation Lab has produced a Charter for a New Financial System, signed by a growing community of advocacy organisations, academics, finance professionals and public interest groups including Blue & Green Tomorrow. Click here to add your voice.

Further reading:

What’s gone wrong with finance?

Bruce Davis, Abundance: ‘we can do something different with money’

Small is beautiful: why alternative banks need to step up to the mark

‘A small bit of knowledge can help empower you around your own finances’

The Guide to Sustainable Banking 2013


Will Self-Driving Cars Be Better for the Environment?



self-driving cars for green environment
Shutterstock Licensed Photo - By Zapp2Photo |

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.


Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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New Zealand to Switch to Fully Renewable Energy by 2035



renewable energy policy
Shutterstock Licensed Photo - By Eviart /

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.


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