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brad lander
Our Financial System Is a Suicide Machine
Last week, Bank of America engaged in perhaps the single most irresponsible about-face of the climate era.
Feb 07, 2024
Bank of America has its roots in California. Founded in Los Angeles in 1923, it was acquired by a San Francisco bank, which took the name in 1930—and over time it has grown to become the world’s second-largest bank by deposits, second only to New York-based Chase.
I tell you this for two reasons. One, California is, as of this writing, being absolutely battered by an “atmospheric river” that has knocked out power to hundreds of thousands and caused mudslides on high ground along the Pacific Coast. As Andrew Dessler pointed out yesterday, the physics are pretty simple: “A warmer planet has more water vapor in the atmosphere. And, everything else being the same, an atmospheric river carrying more water vapor will cause more rainfall when it hits land and starts rising.”
And second, Bank of America is a proximate cause of this kind of chaos, because it refuses to stop lending for fossil fuel expansion. Indeed, last week it engaged in perhaps the single most irresponsible about-face of the climate era.
They’re far more afraid of some oil-soaked GOP state treasurer than they are of an atmospheric river bearing down on the world’s fifth largest economy.
Three years ago—in the wake of the Greta-inspired mass uprising of young people around the world—Bank of America apparently felt it had to make some gesture, so it chose a pretty easy route to demonstrate its newfound greenness. It said it would no longer lend for new coal mining or coal-fired power plants or for new oil exploration in the Arctic. These were seen to be beyond the pale because… well, they are. They represent some of the most egregious possible insults to this planet.
But last week they said, never mind. If you want some money for a new coal mine, our window is open again. If you’re an oil company that feels like searching for oil in the Arctic now that you’ve melted it, we can make a deal. As the Times reported last week
Bank of America’s change follows intensifying backlash from Republican lawmakers against corporations that consider environmental and social factors in their operations. Wall Street in particular has come under fire for what some Republicans have called “woke capitalism,” a campaign that has pulled banks into the wider culture wars.
That is to say, they’re far more afraid of some oil-soaked GOP state treasurer than they are of an atmospheric river bearing down on the world’s fifth largest economy. It’s proof, of course, that their words about climate change were just pious nonsense. They’d insisted that they understood how crucial it was to change: “Climate change is no longer a far off risk but rather a global concern with impacts that are already beginning to unfold, including increased frequency and severity of extreme weather conditions, melting glaciers, loss of sea ice, accelerated sea-level rise, and longer, more intense heatwaves and droughts.” But that was, we now understand, to be understood entirely as greenwashing, an effort to reduce the heat they were temporarily feeling.
The actual heat they could care less about. It’s not like something has happened since 2021—except the hottest year in the last 125,000, which takes us back even before the advent of money, if BofA executives can even imagine such a time.
But the only weather change they’ve noticed is political. Out with Greta et al., in with GOP politicians saying scary things. And BofA is not alone. The Bureau of Investigative Journalism reported last week that global giant HSBC, despite a solemn promise that it would stop financing new oil and gas fields, has found ways to keep
selling shares in the refining business of Saudi Aramco, one of the most aggressive expanders of oil and gas. An investor in HSBC told the Bureau of Investigative Journalism that the bank’s policy has been cleverly worded to allow it to fund some of the world’s biggest polluters while boasting about its green credentials.
An analysis of Refinitiv data by TBIJ has found that in the year since HSBC’s new policy was announced, the bank has helped raise more than $47 billion (£37 billion) for companies that are expanding the production of oil and gas, despite dire warnings from scientists that this will push the world beyond its survivable limits.
This is all just sick. The International Energy Agency said in 2021 that if we had a chance of meeting the Paris temperature targets, finance for fossil fuel expansion had to end now. But the banks, and big asset managers like BlackRock, just can’t help themselves. For short-term gain, and to protect themselves from attack by right-wing politicians, they are willing to break the back of the planet’s climate system. The unbelievable economic fallout of those decisions—the fact that the world be immensely poorer, with its prospects hugely degraded, by the resulting rise in temperature—will be the problem of some other CEO down the road; it’s hard not to see our financial system as a suicide machine.
Fighting back is hard. At places like Third Act, we’ve done loads of sit-ins and pickets, and it helps—that’s the kind of action that forced these pledges in the first place. But we need some big players on our side. We’re trying, for instance, to convince Costco to pressure its banker Citi; we need the big tech companies, too, to worry not just about about the climate impact of their phones but also about the climate impact of their money (which is far far larger).
We have some champions, of course, but they’re not as hard-hitting as their Red State counterparts. Brad Lander, comptroller of New York City, gets credit for being willing to take the banks on—last week he announced that he’d try to get them to disclose their ratio of dirty energy to clean energy lending, which would certainly be good to know.
“Despite all their talk, the big banks have made little progress in the energy finance transition over the past couple of years,” said Comptroller Lander. “As long-term investors exposed to climate risk, we can’t just take their word for it. Reporting transparently on their ratios of clean energy to fossil fuel finance is key to seeing whether or not they are living up to their net-zero commitments. Right now, they aren’t—and that must change. Our planet, our economy, and our investment portfolios are all at stake.”
All of that is true. But if the planet is at stake, then perhaps a somewhat harder shove might be required. Lander’s plan seems like a way to win slowly, which on most political issues makes sense. But unless he also has a plan to refreeze a melted Arctic, this kind of pressure seems a tad too gentlemanly.
As you can tell, this about face by BofA stings. It takes so much work to move these guys an inch, and then given half a chance they slide right back to where they were before.
Small banks seem able to make money doing decent things—here’s a nice story about a merger of local California banks where they pledged, among other things, to “refrain from any new financing of fossil fuel extraction activities, especially expansion projects that would develop and lock in dependence on new fossil fuel infrastructure, either through corporate or project-based finance, subject to compliance with banking rules and regulations.”
But the big boys? Damn them to hell, which is clearly where they’re content to send all of us.
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Latest BlackRock Board Appointment Shows Truth Is Worse Than Conspiracy Theory
While our planet was experiencing its hottest month of all time, the Earth’s biggest pile of cash named to its board of directors the CEO of the world’s largest oil company, Saudi Aramco.
Jul 24, 2023
A problem with conspiracy theories—aside from the fact that they always get around to involving “ the Jews”—is that they distract us from what’s happening in plain sight.
So, in case you missed it, here’s the biggest thing that happened in the world last week: While our planet was experiencing its hottest month of all time, the Earth’s biggest pile of cash (the asset manager BlackRock, with $8.59 trillion dollars under management) named to its board of directors the CEO of the world’s largest oil company, Saudi Aramco, which has produced more carbon emissions than any firm on earth.
This decision was barely even noted— The New York Times produced a nine-paragraph account in its Dealbook newsletter. And yet think of what it means. It is the ultimate signal that the world’s financial community has decided to essentially give up on even the modest commitments they made a couple of years ago in Glasgow, where they said they would work to decarbonize their portfolios.
It’s gross when the PGA does business with the murderous Saudi regime; it’s life-or-death for everyone when the biggest business in the world sucks up to the biggest oil company.
Two things have happened since they made those big pledges (BlackRock’s Larry Fink said at the time, “We are on the edge of a fundamental reshaping of finance” to deal with the climate crisis). First, the war in Ukraine produced huge profits for the oil industry, as their old pal Vladimir Putin (who once hung a medal around the neck of Exxon’s CEO) pushed the price of petroleum into the stratosphere. And second, the oil industry’s bought-and-paid-for politicians in red-state America wrote nasty letters about “ESG investing” and threatened to break ties with the Wall Street firms that were “going woke.” Those two developments were more than enough to persuade barons like Fink to walk back their professed concern with a planet on fire. He is clearly a go-along get-along guy, and where we’re going is—well, if not hell then someplace with a similar temperature. (So far seven people have died and 85 have been hospitalized in Phoenix simply from burns from touching the pavement). It’s gross when the PGA does business with the murderous Saudi regime; it’s life-or-death for everyone when the biggest business in the world sucks up to the biggest oil company.
So what does stand-up leadership look like? Here’s Brad Lander, the comptroller of New York City. It’s not a sexy job (not like, say, running for president as your first public office). He’s the money guy, balancing the city’s books. But New York City has a lot of money, and that money gives you the power to do useful things that help people. When it got unbearably hot, Lander put out a video pointing out that the big banks the city does business with were still bankrolling the fossil fuel industry. It is straightforward, powerful, plainspoken:
And a few days later, when the Saudi Aramco news came out, Lander was again just about the only public servant I saw react:
“BlackRock has clearly stated that climate risk is an investment risk, but actions speak louder than words,” New York City Comptroller Brad Lander said in an emailed statement. “At a time when financial institutions need to take a collective approach to addressing the financial risks from climate change, BlackRock shareholders expect climate-competent, not climate-conflicted, directors.”
This matters. BlackRock is the largest external money manager for the city of New York. Lander can move that business and it will hurt BlackRock; and his words will at least be heard in the din of Wall Street. Others are starting to figure out just how irredeemable the fossil fuel industry is. Here, for instance, is an editorial in the Los Angeles Times last week that I think is the most forthright declaration ever on Big Oil by a major American newspaper. Forget pretending that the Exxons and Aramcos will ever change their stripes: instead, “kick them to the curb.” I’m going to quote from it at length because the paper’s editorial board was not engaging in the usual tentative to-ing and fro-ing. They just said it:
It should be obvious by now that fossil fuel companies have no real plans to change in response to the climate crisis. And that the only way forward is without them.
Some high-profile environmental leaders have come to a similar conclusion recently, among them influential climate negotiator Christiana Figueres, under whose tenure as executive secretary of the United Nations Framework Convention on Climate Change the landmark 2015 Paris agreement was developed. She wrote in Al Jazeera earlier this month that after years of holding out hope that oil and gas companies would wake up and participate in the decarbonization of the economy, their actions over the last 12 months have changed her mind.
Former Vice President Al Gore, a longtime champion for climate action, has also been speaking with refreshing frankness about fossil fuel industry obstruction, decrying “anti-climate plotting” by companies that refuse to disclose their emissions or commit to phasing them out while they successfully push government policies to slow down the transition to clean energy.
It’s a little late for powerful voices from older generations to come to the realization that fossil fuel companies aren’t operating in good faith and will fight climate action until the bitter end. But it’s welcome nonetheless, and there’s clear generational shift in that direction that offers some hope. Polling last year by the Pew Research Center found that while most Americans are reluctant to ditch fossil fuels, younger adults are much more supportive of phasing out oil, gas, and coal entirely.
This is the spirit that we desperately need—the spirit that focuses on the actual, the concrete, the things before our eyes. Like the unbearable heat. Not long before his assassination, Robert F. Kennedy gave a speech at the University of Kansas where he spoke about the real with as much eloquence as any American ever mustered. There was a man who could have been forgiven a conspiracy theory or two—after all, his brother had been killed just five years before. But here’s where he was focused:
Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product—if we judge the United States of America by that—that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children. Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud that we are Americans.
Brad Lander, born the next year, is heir to that tradition, and so are the editorialists of the Los Angeles Times, and so are all the other Americans who keep their eye on the moment.
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