There’s a framed photo hanging in Michelle Chan’s living room that makes her feel uneasy when she stops to look at it. It shows an old Chinese couple standing in an alley. The man’s eyes are downcast. The woman looks up, into the distance, soft light illuminating her face. Behind them are round, woven baskets leaning against a wall. From the moment Chan bought the picture, she says, it got to her: “I knew the picture was of a scene in a place that doesn’t exist anymore.”
Chan fought for nine years to save that place, but her efforts ultimately failed. Despite the vehement objections of environmental and human-rights organizations, the Chinese government built the Three Gorges Dam on the Yangtze River, completing it in 2008 after more than a decade of construction. The dam displaced an estimated 1.4 million people, flooded 370 miles of farmland, destroyed towns, villages, and countless archaeological sites, and threatened the river’s fish stock and endangered dolphin species. And of course, it displaced the old man and woman in the picture, whose home and ancestors’ graves are now under 500 feet of water.
Though Chan couldn’t stop the dam, the struggle gave her motivation and direction in her career. In 1995, Chan, just twenty-three at the time, took on the Three Gorges battle as a campaigner with the environmental organization Friends of the Earth. Instead of protesting against the Chinese government directly, she and fellow campaigners took a new approach: They exposed the Wall Street banks involved in funding the project, a tactic that gradually reshaped public expectations of banking.
It was the first major project in which non-governmental organizations (NGOs) had gone to private-sector banks and asked them to take responsibility for the ethical and environmental impact of the projects they funded. And it was the first time that some commercial banks acknowledged that certain projects were too harmful to merit their involvement.
The term “sustainable” has become commonplace, but it usually refers to consumer products, agricultural practices, or energy. Chan’s work has done much to create and push forward the concept of sustainable finance: the idea that banks should evaluate investments based on social, ethical and ecological as well as financial criteria. Organizations such as Friends of the Earth see banks as key to getting corporations to practice corporate responsibility. Thanks in part to pressure from NGOs, more than 60 commercial banks have voluntarily adopted a set of ethical principles for assessing the environmental and social impact of investments in the developing world. Many banks have also begun to implement environmental and social responsibility policies affecting their operations.
With worries over climate change intensifying and a financial system in crisis because of widespread use of risky investing practices, many environmental organizations think the time is right for sustainable finance to become even more far-reaching. “The public—especially the American public, because we’ve paid a lot for the bailout—is ready to see a return to soundness, sustainability, and decency in our financial system,” Chan says. “People are hungry to participate in a way that allows their savings and investments to create positive change.”
One afternoon in her office in San Francisco’s financial district, Chan is laughing hard, catching her breath to talk, then losing it again. She has a bottle of Maker’s Mark bourbon in her hand and is about to toast her office mate, Adina Matisoff. But the success she’s celebrating is a quiet one. She and Matisoff have just completed a paper analyzing China’s new financial regulations; surprisingly, they include environmental laws, which Chan suggests provide an example to the U.S.
It’s hardly a high-profile stunt, but pushing forward new ideas is Chan’s particular brand of activism. “A lot of what advocacy groups struggle with are power issues,” Chan says. “Part of the job is to shape the debate, to get your ideas out there.”
