Leveraging payment systems to address the climate and biodiversity emergencies | Javier Solana

Javier Solana (School of Law – University of Glasgow) will be discussing the paper Leveraging payment systems to address the climate and biodiversity emergencies.

Abstract

Sustainable finance debates are missing what is, arguably, the most indispensable service provided by the financial system: payments. In this paper, we develop a legal analysis of payments to highlight the potential of payment systems as a source of leverage to address sustainability challenges. This analysis deepens our understanding of the power of banks to influence the sustainability of their clients beyond their lending and investment practices, and it reveals new keystone actors within the financial system whose involvement will be crucial for effectively addressing the climate and biodiversity emergencies: payment system operators. The concentration of final settlement, a key part of the banking process that leads to payment completion in interbank transfers of electronic funds, in a very small number of payment systems, underscores the power of these operators to influence the activities of entire value chains. Banks and payment system operators, and those tasked with their regulation should consider how to integrate sustainability considerations into the provision of payment services.

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