Legitimising and expanding financial accumulation: a critical political economy of financial reform in the UK in response to the climate crisis

Without urgent action, climate change will trigger a contraction in economic growth, rising inflation and financial instability (Crona et al., 2020). However, capitalist states are still not acting decisively to redirect financial flows towards the green transition (Paterson 2021). The concept of the structural power of finance provides one explanation for why states are prioritising short-term financial profits (Paterson 2012) over the long-term welfare of the planet. However, whilst this explanation accounts for the power that finance accrues through the financialisation of the economy, it obscures the equally crucial power that finance has acquired through the financialisation of statecraft (Karwowski 2019). As Braun (2020) argues, the use of financial markets as conduits for statecraft gives finance infrastructural power, that is it creates pressure for policy makers to preserve the vitality of securities markets. To analyse the importance of the infrastructural power of finance for the politics of green financial reform, I will investigate the political process through which public and private stakeholders cooperated and struggled to produce the UK's green finance framework. I will then investigate how these reforms have redrawn relations between public and private power in the political economy of decarbonisation in the UK.

This research will investigate how the political dynamics played out between stakeholders in the financial reform process that began in the UK following the publication of the Clean Growth Strategy (2017), when the Green Finance Taskforce (GFT) (2018) was founded. The GFT called together powerful stakeholders in finance, including the Treasury, the Bank of England, and the City, as well as BEIS and DEFRA, alongside other private sector and civil
society stakeholders (GFT 2018).

These reforms avoid regulations to stringently penalise dirty assets, place faith in corporate disclosure of climate risks and net zero plans to alter financial flows, and restrict fiscal interventions so they are principally focused on de-risking assets to be funded predominantly on capital markets (HM GOV 2021). Expert commentators have already raised concerns about the efficacy of this strategy, calling for stronger regulations to devalue dirty assets, and greater public investment (Gabor et al., 2019). By investigating the political production of this outcome, This research will provide a deeper analysis of the constraints placed upon the British state's climate policy by its deep entanglement with financial markets.

The British state has come to rely on financial markets to provide multiple public services and to deliver monetary and fiscal policy (Berry 2021; Dutta 2018; Walter, Wansleben 2020). To theorise the role of the infrastructural power of finance, I will combine this theory with neo-Gramscian theories of power (Cox 1981). This approach draws attention to the material pressures, ideational norms, and institutional hierarchies that are central to creating
path-dependent pressure for governance to work through financial markets.

This framework will be used to address two questions:
1. How did the infrastructural power of finance shape the politics of green financial reform in the UK?
2. How have these financial reforms shaped the political economy of decarbonisation in the UK?