The Ties that Bind: Govering Climate Finance through Networks

Rune Thomsen & Emil Linnet

Student thesis: Master thesis


Climate change marks the most formidable challenge the international community has faced in decades. However, the efforts towards mitigating and adapting to the detrimental effects, had, until the Paris Agreement, failed to materialize into substantive multilateral efforts. Most notably, the funding vehicles set up under the UN system, have been underfunded or “starved to death”, as one interviewee put it, falling far short of the goal of mobilizing $100bn per year by 2020. Meanwhile, the private sector is expecting green bonds issued to the tune of $158bn in 2016 alone. This thesis sets out to explore the current state of knowledge authority in climate finance under the research question “Who can make authoritative claims to transnational climate finance?” As the field under study is highly emergent and expanding, policy solutions institutionalized now concerning the structure and modality of climate finance will have significant long-term implications. In order to provide an understanding of which agents and organizations are at the core of making decisions and producing authoritative knowledge in the realm of climate finance, we conducted a mixed methods case study encompassing a social network analysis of 876 climate finance practitioners with ties to 1679 organizations and interviews with 12 of the most central agents. We find that climate finance constitutes a thin transnational space, which embodies a broad array of prominent actors and yet only garner limited policy attention. Through our analysis we find a tightly knit network of about 50 professionals, who occupy the center of decision-making processes as well as knowledge production and dissemination in the climate finance space. These are, particularly, as one interviewee said “people that are able to have the finance conversation, but also able to have the policy conversation”. In other words, the agents that are most able to embed certain knowledge, ideas and practices, are the agents occupying strategically advantageous positions around “structural holes” in the knowledge network for climate finance. Agents possessing this skillset have, most recently, been described as “epistemic arbiters”: agents that are able to draw knowledge from different pools and utilize their expertise to carve out powerful positions for themselves and to provide saliency to specific policy solutions and ideas. This theoretical proposition provides an accurate description of successful agents in the world of climate finance, which in turnhas significant implications for transnational governance. As such, this study engages with the literature on sociology of expertise and sociology of professions within International Political Economy. In agreement with recent literature on the subject, we find that climate finance is to a large extent governed through private initiatives, soft law and standards, rather than national or transnational regulatory measures codified in hard law. This can be attributed to the prevalence of private authority in climate finance; private financiers take up all but one seat on the steering committee of the United Nations Environment Programme Finance Initiative, which is an important disseminator of knowledge and birthplace to numerous standards, most saliently the Principles for Responsible Investment. The proliferation of private governance is often described as a consequence of a lack of technical subject matter knowledge with regards to climate finance within the governing bodies. Here we find that such proliferation may also stem from IOs actively engaging in “orchestration”, which entails the empowering of private actors, due to the IOs own diminishing authority and capacity to regulate.Our findings contribute to IPE and EPE literature by providing an account of the specific actors engaged in the private governance of climate finance, as well as their sentiments for doing so. We simultaneously contribute to the sociology of professions literature, by providing empirical arguments for the “epistemic arbitrage” framework by Seabrooke. We simultaneously contribute to this theoretical framework by setting forth a dimension of “institutionalizing arbiters”: agents who seek to institutionalize and legitimize the ideas, solutions and knowledge they produce, by establishing clubs and venues for other actors to join.

EducationsMSc in International Business and Politics, (Graduate Programme) Final Thesis
Publication date2016
Number of pages157