World's Banks Driving Climate Chaos with Hundreds of Billions in Extreme Energy Financing
Wall Street continues to back the most polluting fossil fuel industries "at the expense of some of the most vulnerable communities on the planet," states new report
Turning their backs on climate science and the consensus of governments and civil society across the globe, the world's biggest banks are dangerously advancing the climate crisis by pumping hundreds of billions of dollars into the world's most polluting fossil fuel industries, according to a new report published Tuesday.
The report, $horting the Climate: Fossil Fuel Finance Report Card 2016 (pdf), put forth by Rainforest Action Network (RAN), BankTrack, Sierra Club, and Oil Change International, evaluates the private global banking industry based on its financing for fossil fuels. For the first time, the seventh annual installment of the report breaks that funding down by the most high-risk subsectors of that industry, including coal power, extreme oil (tar sands and Arctic and ultra-deep offshore drilling), and Liquified National Gas (LNG) export.
According to the report's analysis of the last three years, Citigroup, topping the list with $24.06 billion of coal power plant funding, and Bank of America "are the Western world’s coal banks." At the same time, JPMorgan Chase, Barclays, and Bank of America—with a respective $37.7 billion, $26.49 billion and $24.85 billion in high-risk financing—"are the bankers of extreme oil and gas."
These loans, the groups point out, fly in the face of the Paris Climate Agreement, under which governments pledged reduce emissions in an effort to limit global warming to 1.5 degrees Celsius to avoid the most catastrophic effects of climate change.
"If governments follow through on the Paris climate agreement... investments in coal infrastructure, LNG export terminals, and extreme oil projects will be largely unprofitable," explains Jason Opeña Disterhoft, senior campaigner with Rainforest Action Network. "These investments would only pay off if the international community fails to rein in global warming. So big extreme fossil fuel investments are massive bets that governments won’t stop climate change."
"In financial terms," Opeña Disterhoft continues, "'shorting' is doing a deal in which an investor profits if a company or asset declines in value. In other words, it means betting on failure. After the Paris climate agreement, funding extreme fossil fuels amounts to shorting the climate."
The report continues:
The global banking sector is no stranger to breathtakingly cynical and short-sighted financing practices, having precipitated a global credit crisis in 2008 that brought the global economy to its knees before governments and central banks stepped in with a bailout.
But if banks continue to bet that the fossil fuel industry wins and the climate loses, no bailout will be able to undo their recklessness this time. And while banks and investors may be able to wring fees and profits from fossil fuel companies over the short term, they will do so at the expense of some of the most vulnerable communities on the planet who live in or near fossil fuel “sacrifice zones” around the world.
These communities include "towns near blasted-off Appalachian mountaintops, coastal regions off the Gulf exploited for export terminals and offshore drilling, First Nations whose lands and waters are contaminated by tar sands mines in Canada, and communities from Poland to Indonesia to Bangladesh who breathe contaminated air and drink contaminated water from smokestacks, oil spills, and other routine disasters caused by fossil fuel infrastructure."
The report issued letter grades to banks based on their policies and performance with respect to financing for coal mining, coal power, extreme oil, and LNG export, in addition to a grade on their overall human rights policies and practices. Overall performance was poor, with an average grade "D."
Armed with this information, the groups are demanding "a fundamental realignment of bank energy financing to end support for fossil fuel projects and companies that are incompatible with climate stabilization."
In its call-to-action, RAN laments: "We hope, for everyone’s sake, that it will not take water seeping into the lobbies of Wall Street office towers at mid-century for executives at banks and other financial institutions to understand that when it comes to climate change, their fates are bound up with everyone else's."