Cost of taking action: £/$/€ NIL
Recently (2021) a little bit of media attention has been turned to the fact that literally trillions of dollars/pounds/euros have been invested by major banks into supporting fossil fuel industries, investment which comes after the Paris climate agreement of 2015. Here is an example of a recent article about how consumer power might be able to be brought to bear on this major problem.
This has promoted us to encourage people to think about their own individual banking arrangements; please consider whether your bank is the right one to be using, and what you can do to change things if it isn’t.
Is your bank funding fossil fuel industries to the detriment of our environment?
It is important to consider this as two points. Firstly, is your bank one that is investing in fossil fuel industries, and secondly, if it is doing so, is it backing projects to improve things in that industry (from an eco-perspective), or is it investing to exploit the profits from fossil fuel whilst they still can? This balance is one for you to then judge in the light of your own views and opinions of the bank concerned and the fossil fuel companies concerned.
There are precedents for the media slating the finance industry perhaps unfairly in the past. For example, back in the early 1980s Barclays Bank, a major UK bank, was slammed for investing money in companies in South Africa during the time of apartheid. In fact, one of their largest investments was in infrastructure projects to bring electricity to the poorer black townships, which it could be argued was a positive thing to be doing in terms of addressing both poverty and inequality. It’s never a simple or easy matter when weighing up these things.
The recent media reports have highlighted that banks worldwide have provided $2.7 trillion in financing for fossil fuels since the 2015 Paris Agreement, according to the most recent Banking on Climate Change report. This report – published annually – found that banking for fossil fuels had risen to $736 billion in 2019 alone and summarised that “The private banking sector as a whole continues to take a position of extreme irresponsibility in the face of the climate crisis.”
In the US, financiers JP Morgan Chase are lead fossil fuel investors. Others include Citigroup, Bank of America and Wells Fargo. This isn’t intended to be a “name and shame”, rather we are simply highlighting that household names are involved. Most major European banks are also involved, and indeed around the world it is likely that most country’s leading banks will be invested in some way, be it directly or indirectly.
What you can do
As consumers – whether individuals, organisations, or businesses large and small – we all have influence. This is especially powerful if it is exercised collectively.
It is, of course, beyond the scope of this short article to identify which banks are doing what, and things will change in the weeks and months to come anyway. Therefore, the first thing to do is to look at the banks you invest with, borrow from or insure with, and research their environmental credentials. Look at reports and narrative from the banks themselves, but also independent reports and articles from climate activists, so that you can make a sensible, balanced judgement.
Then, consider whether you feel the imperative to move to another organisation. This could incur you in costs and inconvenience, and you might need to take financial advice, so take great care to avoid a knee-jerk reaction to your own financial detriment.
Consider writing to your bank and asking questions, challenging them to change their approach and finding out whether this is likely in the foreseeable future. Ask them to justify what they do in moral and ethical terms and well as financial terms.
If you decide to take your custom elsewhere, or if you are opening new borrowings and investments, take a look at the banks which claim to operate more ethically or with an environmental conscience. In the UK, for example, options include The Co-operative Bank, Triodos, Monzo, Starling, Nationwide and Capital One. However, again, research things carefully and get the balance right between your principles and good financial advice.
Also, remember that other ethical issues surround industries and business in addition to the exploitation of fossil fuels. These include worker and child labour exploitation, arms, pharma, tobacco, alcohol, regime support, corruptions, other environmental exploitation, genetics, and so on. You might want to consider these things too, when making your decisions.
Think about your banking and make decisions based on the ethics and environmental credentials of the companies involved, as well as on their financial strengths and performance. These are individual choices so be sure to research your options well and take care over the decisions.