Investing in a More Sustainable World: Intersectionality and Climate Justice

Photo by Deva Darshan on Unsplash

In the context of racial and climate justice, intersectionality reveals how race, economic status, and environmental factors negatively impact historically excluded groups. Our economies' resilience, environmental health, and communal well-being are undeniably linked. This complex reality, where climate change disproportionately affects marginalized communities, underscores the urgent need for an inclusive approach to investing and economics to address the climate crisis in pursuit of a more equitable and sustainable future. Considering intersectionality is essential for a comprehensive approach to a just transition to a low-carbon economy where everyone benefits.  

Black, Indigenous, people of color, people with disabilities, and lower-income and working-class communities are more likely to be near polluting industries, landfill sites, and areas vulnerable to extreme weather events. The aftermath of Hurricanes Katrina and Maria and the ongoing water crisis in Flint, Michigan, have exposed the racial and economic disparities in disaster preparedness and response at the national level. A 2019 study by the National Academy of Sciences found that Black and Hispanic people breathe in 56% and 63% more pollution than they create, respectively. Disproportionate impacts are not coincidental but are rooted in systemic racism and historical policies such as redlining, housing discrimination, and land and job displacement. Yet, despite being the most impacted, marginalized communities are excluded from decision-making forums and corporate responsibility initiatives, exacerbating injustices by subjecting underrepresented groups to disproportionate consequences of the climate crisis despite their lesser contributions, thereby impeding meaningful, equitable progress on climate change.

“Our economies’ resilience, environmental health, and communal well-being are undeniably linked. ”

Workers, particularly those in fossil fuel-dependent industries and residing in economically disadvantaged areas, bear the brunt of the climate crisis. The National Employment Law Project estimates that more than 38.7 million workers in high-risk sectors are at significant risk, and the International Labour Organization estimates that 3.8% of total working hours, or 136 million full-time jobs, could be lost to climate-induced high temperatures by 2030.

Photo Credit: Pedro Lastra

Efforts to combat climate change must consider the social and economic inequalities exacerbating vulnerability to environmental hazards. This includes policies and actions that ensure equitable access to clean energy, job security, sustainable housing, and health care, as well as the active involvement of historically excluded communities in decision-making processes related to climate policies and public investing.

So, what does this have to do with pension and finance systems?

The "business as usual" mindset and corporate short-term profit pressures keep companies from adopting more inclusive and sustainable practices. Investing in community-led renewable energy projects and infrastructure development in underserved areas can help bridge the gap between racial and climate justice and economic empowerment of the most vulnerable members of the working class. Such investments address environmental issues, stimulate local economies, provide jobs, and improve living standards. 

While necessary, transitioning to a green economy — an economic system aimed at reducing environmental risks and ecological scarcities — risks exacerbating inequalities if not managed inclusively and equitably. Ensuring the working class has a say in how investment funds combat climate change is crucial for a just transition. Leveraging publicly-held capital for climate action can mean a direct line toward holding companies and individual stakeholders accountable in service of people and the planet. 

This integration of racial and climate justice, with an eye toward a more sustainable world, requires rethinking and redesigning policies at all levels and using shareholder power to hold companies accountable, including:

• Implementing environmental regulations that protect vulnerable communities, such as the Environmental Justice for All Act, introduced to expand protections for communities most impacted by environmental deterioration.

• Investing in renewable energy and infrastructure projects, prioritizing job creation and economic opportunities in marginalized communities.

• Ensuring that climate adaptation and resilience strategies are inclusive and equitable, providing the resources and support needed for all communities to thrive in a changing climate.

• Making finance systems more transparent and accessible to ensure Black, Indigenous, people of color, lower-income, disabled, and working-class voices inform policies and investment decisions.

Supportive policies and incentives are essential for responsible investing to effectively contribute to racial, climate, and economic justice. Governments can play a significant role by offering tax incentives for green investments, enforcing stricter environmental regulations, and funding training programs that equip the working class with skills needed in a sustainable economy. These measures can help ensure that the transition to a more sustainable future is inclusive. These examples also touch on the many important ways organizations like Climate Finance Action (CFA) are currently working towards equity in climate action. 

At CFA, we are particularly interested in leveraging the more than $6.5 trillion in investor power from US public pension funds to drive real-world climate solutions. We aim to identify and collaborate with key leaders—trustees and fund investment staff—to harness this substantial investor power to advance a sustainable and equitable economy. 

The intersectionality of racial and climate justice underscores the need for a comprehensive, inclusive approach to addressing our challenges. We must listen to and take action to invest and leverage our resources to ensure that the future of our economy, environment, and communities is sustainable for everyone.

ABOUT CLIMATE FINANCE ACTION

Climate Finance Action (CFA) is a women-led, 501(C)3 non-profit organization equipping stakeholders and decision-makers to leverage the transformative power of publicly-held capital for real-world climate solutions to ensure a just transition to an inclusive economy in favor of people and the planet. With a focus on collaboration, education, and strategic partnerships, CFA has facilitated groundbreaking dialogues, developed comprehensive educational materials, and engaged with numerous stakeholders— educating 8,000+ union leaders and members and advising over 40 state treasurers and pension staff working towards policy reform.