Despite the Paris Agreement banks show little sign, nor genuine commitment, of slowing their investments in fossil fuels. In fact, spending is ramping up. So which banks are the worst offenders? And what, if anything, can you do about it?
The Intergovernmental Panel on Climate Change (IPCC) has issued repeated warnings of the catastrophic consequences should the world exceed 1.5 degrees of warming. Although nearly 200 nations outlined plans to reduce emissions following the 2015 Paris Agreement, since then banks have done little to positively contribute. In fact, their continued financing of fossil fuels aligns instead with climate disaster.
But as shareholders, regulators, clients, and the general public recognise that banks must be held accountable, will we begin to see systemic change? Here, we take a closer look at the global banks who are failing to take responsibility and mitigate their climate impact.
What’s the issue?
The Paris Agreement states that finance needs to be “consistent with a pathway toward low greenhouse gas emissions.” But according to the Banking on Climate 2020 report, large global banks aren’t working towards this goal. In fact, they’re failing miserably.
Over the last four years, the world’s largest banks have pumped $2.7 trillion into fossil fuel firms. (This equates to more cash than is currently in circulation across the entire U.S.A.) And financing looks set to increase with American, Canadian, Chinese, European, and Japanese banks leading the way.
While some have taken steps to mitigate their impact by setting climate-friendly targets, the report states that “overall major global banks have simply failed to set trajectories adequate for dealing with the climate crisis”.
Why does this matter?
To meet the climate targets outlined in the Paris Agreement, by 2030 we must slash carbon emissions by 45% (below 2010 levels). And by 2050, net emissions must be at zero. But this is looking increasingly unlikely without concerted effort and immediate action by banks. Why? Because just 100 companies are responsible for 71% of global emissions. And it’s the banks that continue to fund them, acting as enablers to expand their presence globally.
While we’re being led to the brink of a tipping point, it’s indigenous communities who are paying the price for bank’s failures upfront. We recently reported on the plight of the Canadian Wet’suwet’en clans and the destruction of their native territory thanks to the Coastal Gaslink Pipeline Project. And more recently, President Trump’s administration has finalised plans to open up the Arctic National Wildlife Refuge for oil exploration and drilling.
And that’s before we mention those impacted by increasingly frequent wildfires and hurricanes, and the millions of people forced further into poverty through food scarcity. Put simply, the implications of poor global banking practices isn’t something that *might* impact our planet in future. Their failure to divest from fossil fuels is affecting vulnerable communities and our environment now.
The dirty 30 (well… 35, actually)
We’re naming and shaming #SorryNotSorry. Here’s the reality of just how much cash banks have pumped into financing for over 2,100 companies across the fossil fuel life cycle. Yikes.
A special shout-out to JPMorgan Chase…
According to Forbes, over the last four years, JPM has invested a total of $268 billion into coal, oil, and gas firms; significantly more than any other bank. It also claims the dubious title of the world’s number one bank for fossil fuels (by 36%) and is also the number one banker (by 68%) of 100 top companies expanding fossil fuels.
Its response? CEO, Jamie Dimon, has publicly declared his support of the Paris Agreement and his opposition to Donald Trump’s withdrawal from the climate accord. Yet he continues to lead the bank further into fossil fuel funding. Can you say hypocritical? In addition, earlier this year, the bank’s shareholders defeated the call for greater climate-change disclosure.
If this makes you feel feisty (*read effing furious*), use this letter toolkit created by the Rainforest Action Network to contact JP Morgan demanding action.
Banks taking action
It’s not all bad news. In September 2019, 33 banks (who collectively hold $13 trillion in assets) signed the Collective Commitment to Climate Action. It sets out specific and time-bound actions that the signatory banks must take to align their lending with the objectives of the Paris Agreement. These include:
– aligning their portfolios to reflect and finance the low-carbon, climate-resilient economy required to limit global warming to well below 2, striving for 1.5 degrees Celsius;
– taking concrete action, within a year of joining, and use their products, services and client relationships to facilitate the economic transition required to achieve climate neutrality;
– being publicly accountable for their climate impact and progress on these commitments.
See the full list of signatory banks here. The questions is, will these banks back up the intention with real action? Watch this space…
You may be reading this thinking WTF can individuals do to influence financial powerhouses. The answer is, a surprising amount. As consumers, we do have power. And it is possible to #MoveYourMoney away from banks that don’t align with your personal values.
– We recently shared this article on how to divest your money from fossil fuels and unethical businesses. It contains multiple hints, tips, and advice on how to green your bank account, savings, and investments.
– Use this letter toolkit created by the Rainforest Action Network to contact JP Morgan demanding action. You can also use the template and adapt it for your own personal bank.
– Use this letter template created by The Guardian to contact your pension fund asking for clarification surrounding how they are investing your money.
– Read the full Banking on Climate Change 2020 report here.
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