How banks can support a strong climate deal in Paris
A major new campaign aims to get banks to start divesting coal before the Paris climate summit in November. Catalina von Hildebrand from BankTrack explains more and how you can get involved.
It’s now widely recognised that as a starting point to a transition towards a low-carbon futurethe world needs to break its addiction to coal, the most carbon-intensive of fossil fuels. With the scientific and moral case already clear, the economic case for quitting coal is strengthening too as global coal demand slows.
Against this background, the fossil fuel divestment movement is growing in reach. The Fossil Free campaign website lists over 200 organisations, funds, religious institutions and cities that have pledged to divest - among them Stanford University, the city of Oxford, The Joseph Rowntree Charitable Trust and the British Medical Association.
In June the movement won its biggest victory yet when Norway’s state pension fund – the largest sovereign wealth fund in the world – agreed to divest from coal. Even bastions of capitalism like Forbes magazine have been publishing pieces backing coal divestment as “the obvious — and increasingly popular — choice”.
Yet there’s one big piece missing from this picture. The world’s private sector banks continue to provide a lifeline to this dying industry in the form of massive amounts of finance. BankTrack’s research found US$ 500 billion in coal finance channelled between 2005 and April 2014 from the world’s biggest banks to the coal industry. This is likely to be a significant under-estimate. (While banks trumpet their finance for renewables, they don’t like to publicise their finance for coal.) And most worryingly, the amount of finance they are providing has been going up.
Far from being blind to the new reality, many banks are starting to make urgent noises about the economic fragility of the coal sector. HSBC has warned investors that fossil fuel stocks may become “economically non-viable” as fossil fuels become unburnable “stranded assets”. A Goldman Sachs investor note earlier this year talked of coal having reached “retirement age”. And an internal report from Swiss bank UBS even gushed that “time, youthful energy and stamina are on the side of the fossil fuel divestment campaign”.
These words, generally from the parts of banks specialising in dispensing investment advice, are not being reflected in banks’ lending. Banks need to put their money where their mouth is, and quit financing this dirty industry.
New international campaign
We’ve been saying this for years. But now we’re launching an international public campaign push to make it happen. BankTrack has teamed up with a coalition of over 30 groups, including Avaaz, Greenpeace International, Global Justice Now, Sierra Club, and Ethical Consumer magazine, to present banks with a challenge: to pledge to quit financing coal mining and coal power before the Paris climate conference in November, and produce a timed phase-out plan to do so within the subsequent six months.
We also want ethical banks which have already quit coal – or are headed in the right direction - to support the move by pledging not to finance coal in future.
The time is right for banks to take this step. Two huge banks, Bank of America and Crédit Agricole, made recent surprise moves to pull out of financing coal mining (but not yet coal power). Banks have lined up to distance themselves from some individual controversial coal projects like the Carmichael and Abbot Point developments in Australia, and the Rampal power station in Bangladesh. These are welcome but piecemeal efforts.
Taking the pledge
By taking this “Paris Pledge”, not only can banks take an urgent and concrete step towards cutting off finance for the coal industry, and free up funds to invest in renewable energy, and energy efficiency and green infrastructure. They can also show their support for a strong climate deal in Paris - showing negotiators: we are doing what is necessary, now it is your turn.
Also, unlike much of the substance of the climate negotiations, it puts the emphasis on keeping fossil fuels in the ground, rather than limiting emission levels once they have already been extracted.
How you can help
To make this the biggest public campaign effort the banking sector has ever seen, we need your help. For starters, visit the campaign website and add your name to support the call for banks to sign the Pledge.
If you are part of an organisation which can sign up to support the call, get them to sign up as well. Once you have signed up we will keep you up-to-date as we keep the momentum building in the run-up to the Paris summit.