You could be forgiven for thinking that Wall Street has had a climatic epiphany. Bank of America brags about its environmental credentials; Citigroup’s new CEO announces on day one that achieving net zero emissions is a top priority. The onslaught convinced many, even in the left-leaning media, that Wall Street will pave the way for a better, greener version of capitalism.
Since April, more than 38,000 customers from Chase, Citi, Wells Fargo and Bank of America have joined a campaign called Customers for Climate Justice, demanding that their bank stop funding fossil fuels.
Unfortunately, if you look beyond the green veneer, you’ll find another story. In 2021, JPMorgan Chase provided $61.7 billion in financing to the fossil fuel industry, Citigroup lent $15.1 billion to the companies fastest growing their oil and gas operations, Wells Fargo and Bank of America provided the hydraulic fracturing industry with $12.9 billion.
In May 2021, the IEA, the world’s most respected energy modeller, announced that to have a 50% chance of limiting global warming to 1.5°C, no new oil and gas fields can be developed. . Yet within three months of the IEA’s announcement, Citi, Chase, Bank of America and Morgan Stanley helped facilitate $36 billion in financing to the companies that are opening new oil and gas fields fastest, including Exxon-Mobil, Aramco and BP.
But let’s stop here. Maybe we are unfair. Leading climate scientist James Hansen may have testified before Congress in 1988 that global warming required urgent action, but the banks have only recently pledged climate action. Maybe we shouldn’t judge them on what they did last year, but on what they say they will do in the years to come. Fortunately, as the biggest banks have now all set climate targets for 2030, we are in a position to do so. Unfortunately, this is where banks’ climate pledges go from bad to ugly.
Four of the largest US banks – Chase, Bank of America, Morgan Stanley and Goldman Sachs – have set 2030 climate goals for the fossil fuel sector using a metric known as “carbon intensity”, committing to achieve between fifteen percent and twenty-nine percent reduction in the “carbon intensity” of the oil and gas companies they finance.
The thing to know here is that reductions in “carbon intensity” and reductions in “actual greenhouse gas emissions” are not the same thing.
Imagine that you are the CEO of an oil company. Your company owns 500 oil wells; it has no gas deposits. Chase gives you a $1 billion loan. You use this loan to purchase 50 new oil wells and open a new gas field that you intend to fracture. You now own 50 oil wells and a fracking operation. Your overall contributions to climate change have increased dramatically. Yet because gas is often considered less carbon-intensive than oil (a fatal mistake, considering methane leaks from gas operations), Wall Street estimates that your company’s “carbon intensity” decreased.
Chase, Bank of America, Morgan Stanley and Goldman Sachs have set 2030 climate targets that they can meet even if their emissions increase.
Only two of the major US banks have avoided the carbon intensity mess and set “absolute emissions reduction” targets: Citi and Wells Fargo. Of these, only Citi has said it is considering ending funding for fossil fuel customers – and only then will it be done as a “last resort”. Given that the oil and gas majors have spent $70 billion developing new oil and gas fields in 2021, it’s unclear how Citi and Wells Fargo think they can meet their climate goals without abandoning companies that are expanding their fossil fuel operations.
Given the long history of rapacious greed on Wall Street, Wall Street CEOs may simply not care about ruling the climate crisis. There are things they care about though. Namely, their brand and their customers. That’s why it’s heartening that so many people are now speaking out against Wall Street’s role in the climate crisis.
Since the Stop the Money Pipeline Coalition launched two years ago, it has grown from a coalition of around 30 organizations to one of more than two hundred climate, environment, human rights groups. Indigenous Peoples and Racial Justice. This AGM season, there have been disruptive protests at shareholder meetings of Town, Wells FargoBank of America and Hunt. A few days before the AGM of Citi un activist bird dog of the bank’s sustainable development manager has been seen by hundreds of thousands of people on social networks. This type of tireless organization represents a brand risk for banks, which is important to them. They also care about their customers.
Since April, more than 38,000 customers from Chase, Citi, Wells Fargo and Bank of America have joined a campaign called Customers for Climate Justice, demanding that their bank stop funding fossil fuels. Many more have signed Third Act’s Banking on our Future Pledge, promising to cut up their credit cards and switch banks if they don’t. If you’re dealing with one of the world’s biggest funders of fossil fuels, you should join these campaigns.
Because that might be the only good thing about Wall Street’s empty climate promises. We can do something about them.