How the Banking System Reinforces Climate Change
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One major way to fight climate change is to get the world’s financial structures to stop funding projects that are destroying the planet’s ecosystems and a climate where 90% of the world’s species can live. But no, that’s not happening, as this March 2021 story reports:
The world’s biggest 60 banks have provided $3.8 trillion of financing for fossil fuel companies since the Paris climate deal in 2015, according to a report by a coalition of non-governmental organizations (NGOs).
Despite the Covid-19 pandemic cutting energy use, overall funding remains on an upward trend and the finance provided in 2020 was higher than in 2016 or 2017, a fact the report’s authors and others described as “shocking.”
Oil, gas and coal will need to be burned for some years to come. But it has been known since at least 2015 that a significant proportion of existing reserves must remain in the ground if global heating is to remain below 2 degrees Celsius, the main Paris target. Financing for new reserves is therefore the “exact opposite” of what is required to tackle the climate crisis, the report’s authors said.
US and Canadian banks make up only 13 of the 60 banks analyzed, but account for almost half of global fossil fuel financing over the last five years, the report found. JPMorgan Chase provided more finance than any other bank. UK bank Barclays provided the most fossil fuel financing among all European banks, and French bank BNP Paribas was the biggest in the EU.
That American and Canadian banks are the worst is not surprising, as among developed nations, these are probably the two worst when it comes to climate change, as both are deeply committed to burning carbon.
The report’s authors said targeting of banks by campaigners and activist shareholders could help change bank policies but that action by governments was also needed.
“When we look at the five years overall, the trend is still going in the wrong direction, which is obviously the exact opposite of where we need to be going to live up to the goals of the Paris Agreement,” said Alison Kirsch, at Rainforest Action Network and an author of the report. “None of these 60 banks have made, without loopholes, a plan to exit fossil fuels.”
“We have seen progress in restricting financing for special places like the Arctic or greenhouse-gas-intensive forms of oil, like tar sands, but these are such a small piece of the pie,” she said.
“One bank after another is making solemn promises to become ‘net zero by 2050’”, said Johan Frijns, at BankTrack, part of the coalition behind the report. “But there exists no pathway towards this laudable goal that does not require dealing with bank finance for the fossil fuel industry right here and now.”
Direct action campaigning against these banks is going to have to be part of the larger strategy here. This is a place where the idea of “voting as the premier action in politics” just doesn’t make a lot of sense. Vote for whoever you want to at this point, it isn’t going to make any difference in the pressure banks feel on their investments. This is going to require activism outside of just the political process, as well as inside the political process, and we should encourage the former as much as the latter.