Can Biden Break Big Banks’ Bond With Fossil Fuels?
The climate crisis will affect every aspect of our society — the financial sector very much included. We no longer live in the stable climate that our economy was built upon. In fact, economists and major investors warn that the climate crisis already poses a systemic risk to our financial system.
The climate crisis threatens the value of our retirement plans and our homes (and even our ability to stay in our homes). It puts our ability to get decent jobs and afford food and other necessities at risk. If we want to avoid catastrophic climate change, it’s essential that banks stop financing new fossil fuel extraction and begin phasing out dirty energy financing right now.
And when I say “right now,” I’m not exaggerating. Last month, the International Energy Association (IEA), said that to avert the worst impacts of climate change, the world must stop financing new fossil fuel projects, starting this year. This echoed what many Native leaders and civil society organizations, including the Sierra Club, have advocated for years. The IEA offers some of the most authoritative predictors of what kind of energy will power the world — but historically, its rosy projections of fossil fuels’ future have given companies and financial institutions cover to keep investing in projects that damage our climate and our communities’ health. So when they blew the whistle, the financial sector knew to pay attention.
It’s long past time that it did. Banks have fueled the climate crisis for decades through their investments in fossil fuels, while adopting largely toothless climate pledges to burnish their public image. In the five years since the world adopted the Paris Agreement, the largest banks have pumped over $3.8 trillion into the fossil fuel industry. They actually increased their financing for fossil fuels over that time, ensuring this crisis deepens — even as climate disasters multiplied across the globe.
Big banks’ reckless investments leave the rest of us exposed to the consequences of their actions. They want us to bear the costs of their destructive, short-sighted investments, while they rake in the profits. We saw what that looked like in 2008. People lost homes and jobs, and it’s taken years for them to recover financially and psychologically. Many still haven’t.
A growing chorus is demanding our government step in to prevent history from repeating itself. They’re asking it to put up guardrails to protect us from Wall Street’s gambles with our future. President Biden has responded by issuing the first-ever executive order on climate-related financial risks, which requires the White House, the Treasury Department, and other federal agencies to create plans to identify and limit the climate crisis’s threats to our economy. It also helps protect investors and the government from climate risks, and integrates climate risk into federal lending, underwriting, and procurement programs.
Important as these initial steps are, there’s much more to be done to shield our economy from the potentially devastating impacts of the climate crisis — and our financial future depends on it. Our government has many tools that it could use to curtail big banks’ dirty, risky investments, starting with requirements that companies disclose their contributions to the climate crisis — and share how they’re changing their business models to account for it. These rules would help us cut through corporate greenwashing and keep companies accountable for their true impacts on our planet and our communities. Join me in asking the Biden administration to take this next crucial step.
