Oct 022015
By Greig Aitken, BankTrack, 2 October 2015

With just two months to go now before the United Nations climate summit in Paris, the warnings about the consequences of climate inaction are coming thick and fast.

Stepping up this week has been Mark Carney, the governor of the Bank of England, with tough talk on how climate change will lead to financial crises and falling living standards – that is unless the world’s leading countries do more to ensure that their companies come clean about their current and future carbon emissions.”

What almost every major country has been doing in the run-up to Paris is submitting their pledges to reduce carbon emissions, the so-called ‘intended nationally determined contributions’. As the Climate Progress website has reported this week, the pledged CO2 reductions – including from the US, the European Union and China – have delivered something on paper at least. Growing realism, however, about where even a ‘successful’ Paris agreement will likely leave us is summed up thus by Climate Progress:

“So what Paris can accomplish is to give us another five to 10 years of … having five to 10 years to act!!! Woo-hoo.”

The real window for meaningful climate action is closing fast, no more so than for the banking sector, as BankTrack, Rainforest Action Network and the Sierra Club set out earlier this year in our latest annual Coal Finance Report Card. However, as our running of the numbers revealed, the $140 billion global bank financing – in 2014 alone – for companies active in coal threatens to smash the glass and the internationally agreed 2°C pathway, unless the banks heavily involved in coal financing urgently do something about it.

Are the banks even considering the real, shrinking climate window, or are they choosing to focus – short term – on the Paris summit window, also now narrowing, with climate-friendly talk?

This week six major Wall Street banks – Bank of America, Citi, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo – issued a joint statement calling for “leadership and cooperation” among governments in order to reach a global climate agreement at the Paris summit. In the statement, the banks proclaim:

“Our institutions are committing significant resources toward financing climate solutions. These actions alone, however, are not sufficient to meet global climate challenges. Expanded deployment of capital is critical, and clear, stable and long-term policy frameworks are needed to accelerate and further scale investments … Over the next 15 years, an estimated $90 trillion will need to be invested in urban infrastructure and energy. The right policy frameworks can help unlock the incremental public and private capital needed to ensure this infrastructure is sustainable and resilient.”

This is all well and good: that the banks are speaking out on the need for robust climate regulation to emerge from COP21 is very welcome.

But as a reporter at CNBC, one of the US’s main network broadcasters, noted in coverage of the announcement: “the statement lacks specific policy recommendations, which brings into question how it will translate into real action.” And, of course, the statement contains no mention of the banks’ ongoing deep ties to fossil fuel finance, nor, as the CNBC article sombrely concludes, does it “offer any language on the banks further reducing their exposure to fossil fuel companies.”

Evidently, then, when these kind of big bank pronouncements on climate change get boomed out (and there are bound to be more coming in the next few weeks), while they do blow in the right aspirational direction, they only risk being viewed widely as spin jobs when there is no recognition of the climate-destructive core of the banks’ energy financing activities, and very little sign that any of them are preparing to take real steps to curb their fossil fuel financing, starting with coal.

A related phenomenon was evidenced again with the news that Commerzbank, Goldman Sachs and UBS – all of which feature prominently in BankTrack’s coal bank league table – are among a number of international corporations which have committed to make their day-to-day operations ‘100% renewable’. Again, super – but what about the multi-billion dollar financial operations? Ikea, Starbucks and Marks and Spencer, some of the other global names involved, do not – as far as we can tell – have direct financing of coal companies ingrained in their business models.

Which makes the latest research note on coal from Goldman Sachs all the more difficult to stomach. Published last week, and concluding that “peak coal is coming sooner than expected”, it represents the most radical, unequivocal statement yet in what is a growing chorus of anti-coal sentiment echoing out of bank investment analysis offices:

“The [coal] industry does not require new investment given the ability of existing assets to satisfy flat demand, so prices will remain under pressure as the deflationary cycle continues.”

BankTrack’s Paris Pledge campaign and RAN’s recently launched initiative aimed at pressuring Morgan Stanley to stop cashing in on coal are on the same page with Goldman’s analysts. We’d welcome the chance to assist any of the world’s big banks to prepare a further statement: one that would make a tangible difference for the climate, for the planet and for any willing bank’s reputation in the run-up to the Paris summit.

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