Banks, asset managers, and insurance companies around the world are waking up to the challenge of global warming. Here’s how they can drive change.

The fossil fuel industry faces a classic business problem: Someone else has come up with a better technology. Over the past decade, engineering advances have helped drive down the price of solar panels and wind turbines by some 90%. Clean energy is now the cheapest way to generate power in most of the world. And today, storage batteries are on the same plummeting price curve—so that, increasingly, the sun’s habit of going down at night is no big deal. Even the car, which has helped define our culture and consumes vast quantities of fossil fuel, is changing fast. No honest person who has driven a Tesla will dispute that it’s a superior machine: fast, with few moving parts, and a quiet elegance that makes a rumbling muscle car seem more than a little old-fashioned. 

Faced with that kind of challenge, incumbent industries usually play for time, trying to eke out another decade or two of profits before wandering off to a well-appointed retirement home. For the energy industry—at the heart of our economy for so long—transition periods have been particularly slow. Fixed investments and established supply lines mean that, in the past, converting from wood to coal or coal to oil has played out over 40 or 50 years or more. Plenty of time for a nice wind-down.