Corporate ‘Care’ and Climate Change: Implications for bank practice and government policy in the United States and Australia

The global financial crisis (GFC) precipitated a regulatory conundrum about how best to regulate banks. This article takes a seemingly tangential approach to this conundrum: it investigates whether and how voluntary corporate action on climate change presents a redemptive opportunity for banks; and considers the implications for effective government intervention. In so doing, it provides insights into the practical issues of climate-related bank regulation in the aftermath of the GFC and contributes to the broader intellectual debate about self-regulation versus government intervention. This is one of few studies to use empirical qualitative evidence to answer the question of why – in their own words - early moving banks are adopting climate-related practices. The data reveal that the overarching lever for corporate change is business case logic, not ethical conceptions of corporate social responsibility. In particular, a new conception of ‘corporate reputation’ reveals important and subtle implications for how and why banks are motivated to change their behavior. This article then draws implications from the empirical findings for practitioners and policy-makers in the United States and Australia who wish to mobilize the redemptive potential of the banking industry. It uses Thaler and Sunstein’s nudge economics theory to show the desirability of non-coercive bank regulation in market-based economies that can harness the profit imperative and expertise of banks to better society within a capitalist paradigm