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Bankers Took Over the Climate Change Summit. That’s Bad For Democracy.

The big annual United Nations forum for debate on climate change ended this month in Glasgow in a way that left many attendees bewildered. Money men have taken the thing over.

COP26, as the event was called, was less like its predecessors and more like a second “Davos” — the January meeting of the World Economic Forum where the global economy’s moguls and regulators meet to map out our economic future. Dozens of private jets arrived for COP26, bringing investors and fossil-fuel lobbyists in embarrassing profusion. The finance writer Gillian Tett noted that between 2015 and today, the “tribe” of COP attendees had been transformed from one of “environment ministers, scientists and activists” to one of “business leaders, financiers and monetary officials.” That is bound to render the movement’s tactics and goals less democratic.

For environmentalists, COP26 ended in disarray, with the world’s two largest coal-burning countries, China and India, refusing to sign on to a phaseout of that dirtiest of fuels. For the finance industry, prospects were rosier. The new Glasgow Financial Alliance for Net Zero united 450 financial institutions around a “private-sector” plan to move the world to so-called net-zero carbon emissions. Bank of America, BlackRock, Goldman Sachs, Vanguard and Wells Fargo have signed on. Insurers (like Lloyds), ratings agencies (like Moody’s), pension funds (like the California Public Employees’ Retirement System) and financial-service providers (like Bloomberg) have also given their backing. They are ready to roll even if the COP activists are not.

The group is fronted by Mark Carney, a former Goldman Sachs executive and a former governor of both the Bank of Canada and the Bank of England, who is now the United Nations “special envoy” for climate and finance. About $130 trillion was said to be at the alliance’s disposal. That is serious money. It is more than the world generates in a year, and about six times the gross domestic product of the United States.

The alliance’s plan is vague. It involves “driving upward convergence around corporate and financial institution net-zero transition plans” and using financial “levers” to impose carbon-neutral rules on economic actors. The upshot: The alliance wouldn’t disburse the funds on climate “projects.” It would direct how those funds could be invested, favoring behaviors the finance industry deemed virtuous and freezing out those it deemed not. This would be an extraordinary concentration of political power in bankers’ hands — exactly the place where prudence might counsel us to fear power most.

“We can’t get to net zero by flipping a green switch,” Mr. Carney announced late last month. “We need to rewire our entire economies.” That is a euphemistic way of describing the sought-after “energy transition,” which would inevitably mean enormous expense, widespread disruption and a reassignment of many property claims. The question is whether financiers — as opposed to, say, scientists or voters — ought to be trusted to do the rewiring. The alliance seems to want to resolve that question before the wider public even realizes that it has been asked.

A case can be made that money managers have a certain legitimacy in leading any international effort to save the planet. It is the same legitimacy that such politically active celebrities as Charlize Theron and Bono and Sean Penn have. Their power isn’t democratic but it somehow feels like it is. You’ve “voted” for those stars by buying their products.

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A banker, too, is someone to whom you have yielded a part of your dreaming self. You have handed him control of your savings. And fighting climate change requires predicting the future — or at least making reasonable assumptions about it. That is just what you trust your investment adviser to do, at least with that narrow part of your future that is measured by the Dow Jones industrial average. What is more, if rewiring the world is really our goal, then it will take resources of the sort that only the financial system controls. “There’s no budget of any country that can do what we need to do,” said John Kerry, the Biden administration’s climate envoy, at an early meeting of Glasgow Financial Alliance in April.

But that is the problem. Governments lack the money to do these things because they lack the legitimacy. The money that Mr. Kerry proposes using for a climate-rescue program has not been levied in taxes for that purpose. It is people’s personal property, their private investments, their life savings. People might be willing to surrender it for the noble purpose of saving the planet, but in a democracy the government must first ask their permission. Until they assent, it is not the government’s money.

In most cases, it is not the banks’ money either. Mr. Carney, for one, seems to have lost sight of that. “We have all the money needed,” he said at the summit. No. Bankers “have” the money in the sense of holding it, but not in the sense of being free to do what they will with it. A banker merely stands at one of the choke points through which other people’s money passes. In most cases he is permitted to stand there only so long as he is selfless. He is a “fiduciary.” He is bound by law and custom to protect only the interest of the people whose money he is holding. He cannot wield that money in his own interest — whether financial or ideological.

Bankers have always chafed at these traditions. Certain investment consultants in the alliance forthrightly declare that shilly-shallying while the world overheats is itself a violation of fiduciary responsibilities. The Biden administration shares this view. Earlier this fall, the Labor Department drafted a rules change in the Employee Retirement Income Security Act that would require fiduciaries to consider “environmental, social and governance” factors as well as the interest of the depositor.

Banks have a hard time ignoring traditional fiduciary rules as long as they have competitors who obey them — because, in theory at least, depositors will flock to other banks that are focused more single-mindedly on returns. A project such as the Glasgow Financial Alliance therefore comes with the expectation of government protection, protection from competition. At the April meeting of the alliance, the Morgan Stanley managing director Thomas Nides said, “This is a time for financial institutions not to compete but to work together.” Deciding whether this is a good idea depends on whether you believe financial institutions, acting in concert, are more likely to promote decarbonization or protect their own prerogatives.

At Glasgow a few self-nominated representatives from a very rich industry laid claim to a special role in shaping the human future. In doing so, they opened a rift. Climate activists were skeptical, noting that many alliance members continue to be involved in financing oil extraction. The bankers of the alliance, on the other hand, seem to believe society is ready to follow their lead. Voters, not bankers, should be the judge of that.

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