We have been interested in shifts in the flows of finance and capital away from “stranded assets” (like petrocarbons) towards sustainable assets (like wind and solar). Partly this is hard-nosed stuff. Like the way that the dot-boom of the late 90s laid in the infrastructure for our current digital ubiquity, the steady investment in renewable infrastructures and capacity now provides a basis for another business shift.

But it’s also about the science of climate warming, and the ethical claims which that science compels. So how can we be active rather than passive about these investment flows? One obvious way is to vote in regimes - on the rare and risky opportunities where voting arises - that have a mandate to use their powers of government to compel change (the Biden administration is trying to exploit that opportunity).

But maybe you could also create an “ethical investor” culture that mobilises those many millions who do dabble in the marketplace. We’ve seen that recently when the activist investors Engine No. 1 compelled the oil giant Exxon to take on climate progressives as board directors. Is there any way this kind of activity could become more widespread? What could be inhibiting its rise?

So we were very interested to find this paper from the Future Narratives Lab, titled ‘Beyond Ethical Finance’ [download for free by signing up at the linked title].

Here’s the FNL’s modus operandi -

In many of the major social challenges that we face, our ingrained conventional understandings and mental models, or ‘narratives’ limit the terms of debate, blocking the constructive consensus needed for effective action.

The Future Narratives Lab brings together experts from a range of backgrounds to analyse these existing narratives, design new alternatives, and create the strategies and partnerships to replace them.

They’re applying this narrative approach to the question of ethical finance. See the text and slides from the Executive Summary below:

This briefing paper explores the role that narratives play in limiting the effectiveness of communications about ethical finance, which we define as products and services that enable ordinary people to save or invest in ways that have a positive impact on society and the environment.

It sets out how the cultural patterns and models we hold about money and finance are a significant barrier to the growth of the ethical finance market, and explores how we might begin to develop new ways of communicating that build awareness and engagement beyond existing customers and campaigners.

This is particularly important in the context of environmental breakdown, deepening inequality, and a battle over the future of finance in which technology threatens to intensify, rather than address, the speculative and extractive nature of our financial system.

Through desk research, interviews and a participatory workshop, we identified a number of common themes across public attitudes and narratives, and communicators’ messages and challenges. These are initial, exploratory findings, rather than conclusions, and we hope that this is the beginning of a longer conversation about narratives and ethical finance

As we emerge from a devastating global pandemic, facing a climate crisis that threatens the wellbeing of current and future generations, the need for ethical finance is greater than ever.

This should be the moment when it becomes common sense to want to understand the real-world impacts of your money, and when customers shift to ethical providers and products on a mass scale. Yet ethical finance providers and campaigners face major barriers to growing their audiences.

While different segments of the population will differ in their relationship to money and finance, our research identified a number of themes that are strikingly consistent across the public in general.

We found a clear division between how people see themselves and their own money, and how they see the wider financial sector:

What are the deeper narratives that drive these attitudes and beliefs? We have identified five myths about money and finance that shape the way we think about and engage with (or avoid) our money and the wider financial system.

Just as we saw themes of agency, value(s) and ownership in the higher-level attitudes and beliefs, we see them in these deeper narratives, underpinned by two ‘premises’ – foundational myths about the nature of money and finance:

What messages do providers and campaigners use, and how might these reinforce, challenge or bypass the existing narratives that the public hold?

Our research identified some striking patterns across the sector, which align with the three themes of agency, value(s) and ownership:

We draw our findings together using the metaphor of an iceberg (see below), in which practical communications challenges and explicit beliefs are underpinned by deeper narrative challenges. These challenges are, in turn, rooted in deeper tensions around the place and purpose of finance:

Money and finance exist in both the public and private realms, spheres
that we often see as distinct or even opposing. We struggle to ‘place’ money and finance, with a tendency to characterise the former as private, personal, emotional and taboo, and the latter as external, distant, unchangeable and scary.

Both money and finance are characterised as existing for private gain, but both also serve (or should serve) the public good, providing essential economic infrastructure and creating very real social and environmental impacts. This dual purpose does not fit our binary thinking around public and private interests, meaning that messages about ethical finance can fail to register effectively.
To address the public-private divide in narratives on money and finance, we will need to engage with the power structures that define and maintain the current status quo. How can we build a mass movement of citizens and customers with the power to transform our financial system?

Sign up to download the paper here.

And for a shorter article laying out in brief the report’s thesis, read the blog, Private shame, public suspicion: the narrative rift that holds back ethical finance.

What are the stories in our head, and our culture, that inhibits us from embracing ethical finance? Future Narratives Lab tells us