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Biggest Banks Fueling Climate Disaster With Billions Poured Into 'Extreme Fossil Fuels'
"Our planet just can't take it."
Jun 21, 2017
Threatening a climate-stable planet, the world's biggest banks are continuing business-as-usual by continuing to provide funding for "extreme fossil fuels."
So finds the latest Fossil Fuel Finance Report Card--produced by Rainforest Action Network, BankTrack, Sierra Club, and Oil Change International--which defines the "extreme" sources as tar sands, Arctic oil, ultra-deepwater oil, coal mining, coal power, and liquefied natural gas (LNG) exports.
As RAN said Wednesday in an email to supporters: "To keep the planet under 1.5 degrees of global warming and stop human rights violations, banks *must* stop financing extreme fossil fuels. Our planet just can't take it."
The "Banking on Climate Change" report--released in collaboration with over two dozen organizations including Bold Alliance, SumOfUs, West Coast Environmental Law, and Indigenous Climate Action--looks at 37 major banks' lending and underwriting transactions, and gives them A-through-F grade based on their policies. It also gives a brief look at banks' human rights failures.
Despite its worrying findings, there is a bit of good news the report. From 2015 to 2016, the analysis found, the amount the banks poured into extreme fossil fuels dropped 22 percent, from $111 billion down to $87 billion. But the report cautions that for the sake of the planet, this must not be "just a temporary decline."
Further qualifying the good news, the report adds:
the $290 billion of direct and indirect financing for extreme fossil fuels over the last three years represents new investment in the exact subsectors whose expansion is most at odds with reaching climate targets, respecting human rights, and preserving ecosystems.
Another startling finding noted by the report:
12 of the 37 banks increased their financing to the top extreme fossil fuel companies from 2015 to 2016, after the Paris Agreement was inked: Australia and New Zealand Banking Group (ANZ), Bank of America, Bank of Montreal, Barclays, China Construction Bank, Citigroup, JPMorgan Chase, Mizuho Financial Group, Santander, Toronto-Dominion Bank (TD), UBS, and UniCredit.
A case study laid out in the report is TransCanada's 1,179-mile Keystone XL pipeline (KXL), which would bring tar sands crude from the Canadian province of Alberta to Nebraska and link to an existing network of pipelines. While the pipeline is back, the report says, "so is the people power that fought to stop it the first time."
And given "the heated criticism banks received for financing the Dakota Access Pipeline (DAPL), any banks associated with KXL or TransCanada face even greater reputational risk than before." The report goes on:
It is yet to be determined whether TransCanada will seek project-specific financing to construct KXL. In the absence of direct project finance, it is the 21 banks on TransCanada's revolving credit facilities that are, effectively, the funders of Keystone XL. Of the banks analyzed in this report, Bank of America, Bank of Montreal, Barclays, Canadian and Imperial Bank of Commerce (CIBC), Citi, Credit Agricole, Credit Suisse, Deutsche Bank, HSBC, JPMorgan Chase, Mitsubishi UFJ Financial Group (MUFG), Mizuho, RBC, Scotiabank, SMFG, TD, and Wells Fargo all participate in multi-billion dollar lines of credit to TransCanada.
JP Morgan Chase earned the dubious distinction of being the biggest Wall Street funder of extreme fossil fuels.
"In 2016 alone they poured $6.9 billion into the dirtiest fossil fuels on the planet," said Lindsey Allen, RAN's executive director. "On Wall Street they are number one in tar sands oil, Arctic oil, ultra-deepwater oil, coal power, and LNG export. Even in this bellwether year when overall funding has declined, Chase is funneling more and more cash into extreme fossil fuels. For a company that issues statements in favor of the Paris Climate Accord, they are failing to meet their publicly stated ambitions."
The report comes amid increasing calls to "keep it in the ground," alongside new state- and city-led efforts to move forward on climate action, and amid growing evidence that fossil fuel investments make poor economic sense.
"There's no question that funding climate change is a deadly investment strategy," stated Jenny Marienau, 350.org's U.S. campaigns director. "Yet banks around the world are funneling billions of dollars into the fossil fuel projects leading us closer to catastrophic warming every day."
"Movements like the Indigenous-led effort to Defund DAPL are rightfully pressuring banks to divest from infrastructure like the Dakota Access pipeline that puts profits before human rights and a livable future," Marienau said. "It's up to us to resist these disastrous projects, push back on these fatal investments, and build the renewable energy solutions we need."
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Green Climate Fund: Where Big Banks Profit Again from Crisis They Helped Create
Letting big financial institutions manage climate adaptation funds 'would pose serious reputational and moral risk' to global body
Mar 07, 2016
As the Green Climate Fund (GCF), the financial mechanism for the UN climate agency, meets this week in South Korea, more than 170 civil society groups are calling on the international body to reject bids from big banks HSBC and Credit Agricole to receive and manage funds to help poorer nations tackle climate change.
Given their role in financing climate pollution and their poor records on human and environmental rights, approving the financial giants' applications would run counter to the Fund's goals, the groups say.
"Creating new business for big banks with large fossil fuel portfolios and poor records on human rights and financial scandal would undermine the very purpose of the Fund," said Karen Orenstein of Friends of the Earth U.S. on Monday.
"There is no profit to be made in building the resilience of those adversely impacted by climate change," added Sam Ogallah of the Pan African Climate Justice Alliance. "Public funds must be used to support local communities in developing countries, not to subsidize big banks."
What's more, "accrediting HSBC and Credit Agricole would be inconsistent with...the Paris Agreement," said Annaka Peterson of Oxfam, referring to the deal hammered out at the COP21 climate talks. "Any private sector partner of the GCF must have a credible strategy in place to make its entire portfolio and operations consistent with keeping global temperature rise to no more than 2 degC, let alone well below 1.5 degC."
Friends of the Earth, Pan African Climate Justice Alliance, and Oxfam are just three of 172 NGOs that released a statement (pdf) earlier this month arguing that offering accreditation to HSBC and Credit Agricole "would pose serious reputational and moral risk to the GCF" due to the banks' historic conduct, including:
- Well-documented involvement in recent money laundering or other fiduciary mismanagement scandals;
- Large exposure to the coal industry and other climate polluting sectors; and
- Poor-quality policies and weak compliance arrangements meant to manage the social, gender, and environmental impacts of their lending, and consequent harm on-the-ground.
For example, a report from BankTrack has shown that HSBC and Credit Agricole provided $7 billion and $9.5 billion, respectively, to the coal industry between 2009 and 2014, "and their coal financing does not show a clear downward trend," notes BankTrack's Yann Louvel.
The Fund's board meeting runs Tuesday through Thursday in Songdo, South Korea. GCF executive director Hela Cheikhrouhou told the Thomson Reuters Foundation last week that she will ask for an increase of between 80 and 120 new staff in order to meet its targets. She also said it was too early to say whether the Fund could meet the board's goal to allocate $2.5 billion in 2016.
This isn't the first time the Fund has engendered criticism from climate justice groups or frontline communities, who say developed nations, despite their role in driving global warming, have been slow to pony up the necessary--and just--financing.
Last year, environmental and social justice organizations expressed outrage when the Fund accredited Deutsche Bank, one of the world's largest financiers of coal, to receive and distribute climate adaptation and mitigation funds.
"We want the Green Climate Fund to succeed," groups wrote at the time. "But for it to do so, it needs to change direction away from accrediting controversial big banks that are heavily invested in fossil fuels and thus actually exacerbating climate change. If the [Green Climate Fund] continues in such a direction, this would reinforce our fears that in the near future we may have to protest an institution we have thus far been supportive of and integral to creating."
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'Monopoly': Calling the Global Financial Sector What It Is
Justice demands that we call things what they are--indeed, we must name the system to change it.
Jun 28, 2012
New York Times columnists Protess and Scott report that Barclays Bank is paying some US$450 million to regulators in the US and UK to "resolve accusations" surrounding its manipulation of a key interest rate, the London Inter-Bank Offer Rate (Libor), during the first years of the ongoing global financial crisis. According to the article, the Libor rate is used as a benchmark rate to price some US$350 trillion in financial products worldwide each year, from credit cards to derivatives and student loans.
The Financial Times reports that the investigation now spans 12 regulators--from the US to Europe and Japan--and 20 banks, including the multinational giants JP Morgan, Citigroup, Bank of America, UBS and Deutsche Bank. The general idea is that the big banks--so far only Barclays has admitted wrongdoing--misreported the rates at which they borrowed from other banks, influencing the LIBOR rate so as to profit the banks. Barclays has also admitted to allowing consultations between various bank departments, and between itself and other banks, before reporting its rates to Libor, an illicit practice.
In most accounts, blame for such unsavory practices are spread around from bank managers and employees seeking higher profits and lower losses, to regulators who were asleep at the wheel, to the secretive and opaque process by which the Libor rate is set. Yet, behind the regulators and the greedy bankers, lies the 'm' word that no one dares utter in the business presses--monopoly. The global financial system is increasingly run by a few big firms operating in a highly uncompetitive market place and wielding enormous power, often behind a veil of secrecy, (intentional) regulatory blindness, and technical complexity.
As any introductory economic textbook shows, imperfectly competitive marketplaces (e.g. monopoly, monopsony, oligopoly and oligopsony) are defined by the ability of a few firms, or only one firm, to manipulate prices and other exchange terms. As markets concentrate, and free competition is replaced by collusion and superprofits, firms gain the market power to influence market rules and prices in their own interest. Indeed, any college freshman in an traditional economics department could foresee that growing concentration in global credit markets would result in price distortions, to the detriment of consumers and other less powerful actors. And, some might also be able to cite a few examples of the manner in which market power confers political power, another dangerous dimension of monopolistic market structures frequently noted in the Marxist tradition, among others (think, say, of Goldman Sach's ability to staff the US Treasury and Federal Reserve).
Reintroducing the concept of monopoly into public discourse is critical for seeing patterns of injustice in the global economy, continuities that are otherwise obscured by national, geographic, partisan and sectoral distinctions. And not just in the financial context. The word "monopoly" helps to understand why it is that Greek citizens suffer austerity even as financial institutions get rescue packages, just as it helps us to understand how it is that Starbucks could rake in record profits from its coffee sales even as world prices fell to record lows during 1998-2002. The word "monopoly" helps us to see why our pigs and cattle are raised in confinement with antibiotics and without any trace of humanity, just as it helps us to see why small farmers in India are killing themselves by the tens of thousands. The word "monopoly" untangles the Mexican tortilla crisis, just as it unravels the overthrow of Arbenz in Guatemala and Mossadeq in Iran. The word "monopoly" helps us to understand why it is that Presidents Bush and Obama have such a similar economic agenda, despite their playing for two different political teams. And, just today, the word "monopoly" helped me to understand how it is that it is illegal for me to collect rainwater in my backyard here in Denver.
Justice demands that we call things what they are--indeed, we must name the system to change it. In this context, the "m" word allows clarity of thought and analysis in the face of often overwhelming economic complexity. The "m" word allows us to strip the economy of its competitive veil, allows us to de-robe the trusts and combines of the 21st century. The "m" word prevents us from lapsing into the view that all of these injustices--from antibiotic resistance to farmer suicide to coup d'etat--must be treated separately by different movements and different peoples. The "m" word allows us to see the architecture of the global economy for what it is--a playground for the new robber barons, a collection of corporate fiefdoms, an integrated system of monopolies, with all of the typical injustices that such arrangements usher forth.
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