Is Your Bank Funding Climate Disaster?
Less than two months ago, the CEOs of JPMorgan Chase, Bank of America, Citigroup, Morgan Stanley and Goldman Sachs signed an open letter to Donald Trump, urging him to keep the United States in the Paris climate accord, which provides “a framework to manage climate change” and achieve emissions reductions while also expanding markets for “clean, energy-efficient technologies which will generate jobs and economic growth.”
To be clear, it is highly commendable to see corporations willing to stick their necks out for a principle. However, in order for the actual practice of these banks to align with these public principles—and specifically, to align with the Paris Agreement ambition of limiting global warming to 1.5 degrees—the banking sector needs to address the billions they continue to pour into the most problematic fossil fuel sectors in the world.
In 2016 alone, that figure is $86.6 billion. That means the biggest global banks signed deals to the tune of $86.6 billion for the dirtiest of oils such as tar sands, Arctic, and ultra-deepwater oil; for coal and coal-fired power plants; and for liquefied natural gas (LNG) terminals that drive fracking projects upstream and release massive amounts of methane, which is many times more potent than carbon dioxide.
As the top Western funder in this arena, JPMorgan Chase alone funneled more than $6.9 billion to extreme fossil fuels last year. Chase is number one in tar sands oil, Arctic oil, ultra-deepwater oil, coal power and LNG export. And it’s getting worse. In fact, Chase’s funding to extreme fossil fuels actually increased from 2015 to 2016, the first full year after the adoption of the Paris Climate Accord.
Simply put, financing extreme fossil fuels needs to end.
Banks need to accept that these activities are bankrupting all of us, economically, environmentally and ethically. The hard truth is that any bank that facilitates capital for extreme fossil fuels has no grounds to call itself socially responsible. The examples mount daily—tar sands pipelines face unified opposition from 122 Indigenous tribes and First Nations through the Treaty Alliance Against Tar Sands Expansion.
Less than two weeks after President Trump approved the Keystone XL pipeline, the Seattle City Council voted to divest from banks that finance TransCanada, the company behind the pipeline. In February, New York Mayor Bill de Blasio told 17 banks to withdraw from financing the Dakota Access Pipeline. “The people of Standing Rock should not be threatened by the greed of a few wealthy oil industry executives.”
And it’s not just oil—the Rio Grande Valley, in South Texas, is facing three planned liquefied natural gas export terminals that would destroy the coastline, threaten children’s health, trample Indigenous cultural sites, and threaten the critical tourism economy.
There is a silver lining: 2016 saw an actual decrease in this extreme sector funding from the previous year. Over the past three years, global bank financing to more than 150 extreme fossil fuel companies went from $92.3 billion in 2014, up to $111.0 billion in 2015—and down to $86.6 billion last year. While positive news, it is far from enough. This decline needs to not only continue—it needs to accelerate. And banking institutions need to play their part. They can no longer profit in the shadows by financing projects like the Keystone XL, Dakotas Access or Trans Mountain pipelines.
The fact is that banks do not have strong policies in place to ensure this downward trend accelerates. The only sector that has even halfway-decent policy safeguards is coal mining, in which many U.S. and European banks have made commitments to move away from the sector. Thanks to a six year long campaign by activists across the country, Bank of America was the first bank to adopt a policy to reduce its funding for coal mining—and though Bank of America’s overall extreme fossil fuel investment has increased over the past three years, their coal mining numbers have dropped. Remarkably, Bank of America was the number one funder of coal mining just five years ago.
Without policy guardrails in other sectors, we could see extreme fossil fuel funding reverse direction — especially with the current administration in the U.S. issuing dangerous promises to “bring back coal” and “unleash fossil fuels.” The truth is, if we extract all the oil, gas, and coal in the fields and mines that are already in production, we would blow the world past the Paris Agreement’s 2 degrees goals on global warming. In fact, even if we stopped burning coal completely—today—currently operating oil and gas fields alone would tip us over the 1.5 degrees goal.
Expansion in the extreme fossil fuel sector will not only decimate our environment but will stunt our investment in emerging clean technologies. A January Department of Energy report made the facts clear: In 2016, the solar industry employed 373,807 Americans. Coal? 160,119.
These regressive and dangerous projects and companies will lock us into outdated and dying systems. We cannot go backwards solely to line the pockets of the fossil fuel industry and their supporters. It’s time to step into the future and stop funding disaster.