The broad coalition of organizations that comprise Stop the Money Pipeline are warning against any immediate measures in response to the COVID-19 pandemic that would exacerbate the ongoing threat of catastrophic climate change. Instead, recovery measures must prepare the financial sector for the threats posed by the climate crisis.
"Now is not the time to relax rules on financial institutions' ability to weather future crises, particularly the climate crisis, the impacts of which continue to unfold even as we deal with COVID-19. Instead, policymakers should be bolstering the resilience of the financial system to safely handle the climate shock that is barreling towards us by requiring banks, asset managers, and other financial institutions to responsibly phase out financing and investments in fossil fuels and transition to a green economy," said Moira Birss, Climate and Finance Director, Amazon Watch.
Time and again the financial sector has proven itself incapable of self-regulation. In fact, the global banking industry is reportedly already trying to use this crisis to roll back common-sense climate risk measures.
"Wall Street's record is horrible -- they've been pouring money into fossil fuels even after the Paris climate accords," said Bill McKibben, a leader of the Stop the Money Pipeline campaign. "If bankers need the help of society, then society can demand that they commit to helping with the other grave crisis we face."
Now, in this moment of crisis, policymakers have a unique opportunity to bolster the resiliency of the financial system and reduce the risk of a climate crash -- which could happen even as we're dealing with the COVID-19 crisis. Doing so will require that lawmakers resist the calls from Wall Street to relax regulations and instead take clear, decisive actions that require banks, asset managers, and other financial institutions to phase out investments in fossil fuels.
These actions must include:
- Restricting the ability of financial institutions to invest in fossil fuel extraction and production.
- Repealing the authority for banks to own physical assets like oil refineries, pipelines, tankers, power plants, and coal mines and trade commodities, specifically including such fossil fuels as crude oil, fracked gas, and coal.
- Establishing a Community Climate Investment Mandate: Financial institutions with a federal charter have a duty to invest a certain percentage into climate change mitigation and resilience efforts.
- Incorporating climate risk into the prudential regulatory and supervisory framework for systemically important financial institutions.
Just last week, Senate Democrats hosted a hearing on the "Economic and Financial Risks of Climate Change," during which a series of financial experts explained how the climate crisis poses a catastrophic risk to the financial sector and overall economy. Experts have published several recent papers demonstrating the risks posed by financial institutions' investments in fossil fuels and the urgent need for policymakers to mitigate those risks.
"Big banks have continually increased their funding for fossil fuels in the years since the Paris Agreement, putting our communities and our economy at risk of massive disruption due to climate change," said Sierra Club campaign representative Ben Cushing. "As Washington and communities across the country are working to address the pandemic, it's critical that Congress ensures that relief efforts go to protecting the most vulnerable and in need, not corporate polluters or those financing their operations."
The banking sector in particular has been fueling climate risk by increasing its support for fossil fuels. As detailed in Banking on Climate Change: Fossil Fuel Finance Report 2020, released earlier this week, major U.S. banks have overall increased their financing of fossil fuels over the last year. Since the Paris Agreement, the big six U.S. banks have funneled almost $1 trillion into fossil fuels. JPMorgan Chase, far and away the world's biggest banker of fossil fuels, has provided nearly $269 billion in lending and underwriting for fossil fuels in the last four years. The top four fossil banks in the world are all U.S.-based: Chase, Wells Fargo, Citi and Bank of America.
"We've seen this movie before," said Jason Opena Disterhoft, climate and energy senior campaigner with Rainforest Action Network. "Big banks always do their best not to waste a crisis, and they're reportedly already trying to shirk their basic climate responsibility. In this recovery we face a clear choice: bail out the fragile fossil financial system and lock in the next climate crash, or keep building a resilient green financial infrastructure that will serve as a stable foundation going forward. Wall Street has already shown us they will choose profit over prudence. Lawmakers, regulators and civil society must ensure that we make the safe choice for all of our futures."
Over the coming weeks, Stop the Money Pipeline will continue to pressure lawmakers and financial institutions to take decisive action during this crisis to help prevent the future threats posed by climate disruption.
