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Climate activists demonstrate outside the headquarters of JPMorgan Chase during the bank's annual shareholder meeting on May 17, 2022 in New York City.

Climate activists demonstrate outside the headquarters of JPMorgan Chase during the bank's annual shareholder meeting on May 17, 2022 in New York City. (Photo: Spencer Platt/Getty Images)

Biden Treasury Urged to Act as US Banks Help Big Oil 'Torch Our Planet'

"Until Wall Street firms are held to account," says a new letter, "no amount of investment in renewables can credibly undo the damage that their fossil fuel financing does to the climate."

Kenny Stancil

An analysis of the financial sector's net-zero emissions commitments out Wednesday reveals that the six biggest U.S. banks' climate pledges and actions fall far short of what's needed to stave off catastrophic levels of planetary heating, prompting dozens of progressive groups to call on the Treasury Department to take steps to ensure a swift and just clean energy transition.

"2030 targets should be based only on actual emissions reductions, and not rely on carbon removal or offsets."

Published just days before the Net Zero Banking Alliance (NZBA) is expected to release an update on its members' progress toward their net-zero commitments at the United Nations COP27 climate summit, a new report by the Sierra Club's Fossil-Free Finance campaign sheds critical light on the targets and policies of a half-dozen U.S. banks—JPMorgan Chase, Citi, Wells Fargo, Bank of America, Morgan Stanley, and Goldman Sachs.

Although all six banks have pledged to reach net-zero financed emissions by 2050, they continue to dump trillions of dollars into expanding fossil fuel extraction, jeopardizing the future of humanity and making a mockery of their purported commitments. Climate justice advocates have long argued that the pursuit of "net-zero" is flawed because it is "premised on the notion of canceling out emissions in the atmosphere rather than eliminating their causes."

Despite repeated warnings from climate and energy experts that new fossil fuel projects are incompatible with limiting global warming to 1.5°C above preindustrial levels, U.S. banks remain the world's biggest backers of coal, oil, and gas production. Chase, Citi, Wells Fargo, and Bank of America alone are responsible for roughly a quarter of the $4.6 trillion in global fossil fuel financing since the 2015 adoption of the Paris agreement.

"The science is clear that in order to reach net-zero by 2050—and help steer the world away from climate disaster—banks must stop funding fossil fuel expansion," Adèle Shraiman of the Sierra Club's Fossil-Free Finance campaign said in a statement. "But big U.S. banks have fallen far behind the best practices of their global peers, setting only weak targets and policies riddled with loopholes that allow billions of dollars in new fossil fuels projects each year."

As part of their 2050 pledges, Chase, Citi, Wells Fargo, Bank of America, Morgan Stanley, and Goldman Sachs have established interim emissions reductions targets for 2030 in two key polluting industries: oil and gas and power generation.

According to the report, "All six major U.S. banks' 2030 targets fall well short of what scientists say is needed in order to actually meet the goal of net-zero emissions by 2050, though some are doing significantly better than others."

In order for their end-of-decade goals to be credible and robust, the Sierra Club's Fossil-Free Finance campaign urges financial institutions to develop stronger targets that:

  • Disclose methodology and high-quality data;
  • Cover both lending and underwriting; and
  • Use a carbon dioxide equivalent metric to assess and reduce multiple sources of greenhouse gas pollution, including methane;
  • Measure and pursue "absolute emissions reductions" rather than "intensity-only emissions reductions," which are relative to total dollars financed or units of energy produced and therefore allow for an increase in fossil fuel financing; and
  • Cover the entire oil and gas supply chain—including emissions generated in scopes 1, 2, and 3—to prevent the bankrolling of pipelines, export terminals, and tankers.

Notably, the report states that "the most ambitious 2030 targets should be based only on actual emissions reductions, and not rely on carbon removal or offsets."

In addition to setting emissions reductions targets, Chase, Citi, Wells Fargo, Bank of America, Morgan Stanley, and Goldman Sachs have also created so-called "exclusion policies," which are intended to "delineate which types of projects they will finance within the fossil fuel industry," the report explains.

According to the report, policies guiding the six banks' financing decisions in key sub-sectors, including coal, and high-risk geographies, such as the Arctic, fall "seriously short of what is needed to meet global climate goals."

As the Sierra Club explained, "The vast majority of bank financing for oil and gas is in general corporate financing, not project financing, meaning that exclusion policies focused on project financing allow the banks to continue pouring billions into fossil fuels in places like the Arctic and in dirty energy sources like coal."

The report makes two key recommendations:

  • At minimum, all six banks should tighten their Arctic exclusion policy to restrict corporate financing for any company expanding in Arctic oil and gas production, and broaden their definition of 'Arctic' in order to ensure more complete coverage; and
  • A robust exclusion policy for coal mining companies should restrict financing for companies that derive over 20% of their revenue from coal mining, with the ambition of gradually decreasing this threshold over time. It is essential that the policy not only apply to new clients, but to existing clients as well.

"The yawning chasm between the stated climate commitments of the big U.S. banks and their actual policies and targets lies in sharp contrast to the increasingly robust fossil fuel policies of many large European financial institutions," said Paddy McCully, senior analyst at Reclaim Finance. "U.S. banks should follow the lead of their European peers, rather than continue with the anti-science fallacy that expanding fossil fuel production is in any way compatible with a livable climate."

Soon after the Sierra Club published its report detailing how "all six big U.S. banks are severe laggards when compared to the best practices set by some of their international counterparts," it joined more than 70 other advocacy organizations in sending a letter imploring Treasury officials to "clearly and publicly communicate that it expects financial firms to rapidly transition their business to support and advance a green economy."

"Until Wall Street firms are held to account," says the letter, "no amount of investment in renewables can credibly undo the damage that their fossil fuel financing does to the climate, to U.S. climate leadership, and to our chances of meeting the goals of the Paris agreement."

Signatories, who requested an immediate meeting between Treasury officials and key frontline groups, said the department's expectations should include:

  • Direction to financial firms that the transition plans they are developing relate not only to their own transition risks, but also to risks banks pose to the health of our planet–health necessary for the health of other financial entities and the financial system. Transition plans must be aligned to credible scientific scenarios, not just aligned to the needs of the institution creating the plan.
  • Transition plans must be consistent with achieving a rapid phase-out of fossil fuels and deforestation and include the following: an immediate end to financing for fossil fuel expansion; a complete exit from sectors such as coal mining, coal power, tar sands oil, extractive industries in the Arctic and Amazon, fracked oil and gas, offshore oil and gas, and liquified natural gas; and a phase-out of all financing for existing fossil fuel projects and companies.
  • Clarification to banks that net-zero plans cannot rely on forest offsets, unproven carbon capture and storage technologies, and removal and trade schemes to "compensate"—falsely—for a lack of emissions reductions.
  • Support for a precautionary approach to managing climate-related financial risk, as the uncertainty inherent in the effects of the climate crisis make it unsuitable for managing via risk modeling and quantification alone.
  • Guidance to ensure banks adopt strong, binding policies to respect Indigenous peoples' right to sovereignty and self-determination. Guidelines must make clear that financial firms have a responsibility to ensure that corporations both consult and obtain the consent of potentially impacted Indigenous communities before any proposed activity occurs on community lands.

"Climate change is not a far-off threat—it's impacting communities and our economy now," the letter continues. "Treasury plays a critical role in fulfilling the goals of President [Joe] Biden's executive order on climate-related financial risk and ensuring that financial institutions' net-zero goals are achievable and reduce greenhouse gas emissions without relying on false or unproven solutions."

As Public Citizen, one of the groups behind the letter, made clear, "the critical need for Treasury to act is underscored by actions of the Texas attorney general and other Republican attorneys general" who—as part of a broader GOP push to pressure financial institutions to keep supporting the fossil fuels driving the climate emergency—recently launched a probe into the involvement of Chase, Citi, Wells Fargo, Bank of America, Morgan Stanley, and Goldman Sachs in the U.N.-backed NZBA.

Akiksha Chatterji, lead campaigner at Positive Money U.S., said that "as COP27 approaches, financial institutions continue to torch our planet and devastate communities all around the world by pouring billions of dollars into fossil fuels and deforestation, leaving those least responsible for the crisis to pick up the bill."

"We need an all-hands-on-deck approach to rein in Wall Street's destructive and dangerous behavior," said Chatterji. "The Treasury must make clear that it expects financial institutions to immediately stop funding oil and gas expansion, and start supporting clean energy and green jobs instead. Treasury must also meaningfully engage with the communities and groups most impacted by the climate crisis and the predatory actions of big finance, and reflect their concerns in policy decisions."


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