Despite the Paris Agreement, banks show little sign or genuine commitment to 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 repeatedly warned of the catastrophic repercussions of exceeding 1.5 degrees Celsius of warming. Although nearly 200 countries announced plans to reduce emissions following the 2015 Paris Agreement, banks have done little to positively contribute since then. In reality, their ongoing support for fossil fuels contributes to global calamity.
Will we see systemic change, however, as shareholders, regulators, clients, and the general public recognise that banks must be held accountable? Here, we take a closer look at the global banks that are failing to take responsibility and mitigate their climate impact.
And the issue is?
According to the Paris Agreement, banking must be “consistent with a pathway towards low greenhouse gas emissions.” However, according to the 14th annual Banking on Climate Chaos report, U.S. banks dominate fossil fuel financing, accounting for 28% of total fossil fuel financing in 2022. Since the Paris Agreement, JPMorgan Chase has been the world’s worst funder of climate chaos, and since 2016, Citi, Wells Fargo, and Bank of America have been among the top five fossil financiers.
In 2022, banks provided $673 billion to finance the fossil fuel industry, even as oil and gas companies made $4 trillion in profits, according to the annual Banking on Climate Chaos report, authored by a group of nonprofits including The Rainforest Action Network and the Sierra Club.
While some have taken steps to reduce their impact by setting climate-friendly targets, the report concludes that “major global banks have simply failed to set trajectories adequate for dealing with the climate crisis.”
And this matters because?
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 zero. But this is looking increasingly unlikely without concerted effort and immediate action by the 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 the bank’s failures upfront. For example, the plight of the Canadian Wet’suwet’en clans and the destruction of their native territory thanks to the Coastal Gaslink Pipeline Project. More recently, President Biden’s approval of Project Willow
.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 practises aren’t something that *might* impact our planet in the future. Their failure to divest from fossil fuels is now affecting vulnerable communities and our environment.
The Diamond Jubilee of Banks
We’re naming and shaming #SorryNotSorry. Here’s the reality of just how much cash banks have pumped into financing 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 last 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 then collectively held $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 using 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 question is, will these banks back up their intentions with real action? Watch this space…
#LittleGreenSteps
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.
– 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 2022 report here.
– Read 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.
– Make My Money Matter is an excellent resource to understand how ethical your bank is.