Where Fossil Fuel Policies Fail To Have An Impact
While many banks have now adopted some sort of coal policy, further analysis reveals this is not the case with oil and gas. The majority of financing goes towards these two sectors. According to RANs data, financing for coal mining companies represents just 4% of total fossil fuel lending and underwriting, compared with 26% for coal power utilities. The figure is far higher for oil and gas, standing at 67%.
And while 34 out of the 60 banks in RANs report have a coal policy that applies to the whole company, just 23 banks have a similar company-wide policy for oil and gas companies. It is more common for banks to have policies with a much narrower remit: 48 banks have a policy that restricts coal projects, while just 38 have a similar policy in place for oil and gas projects. As 91% of the financing in RANs analysis is not project-related, most policies fail to have maximum impact.
Some banks are continuing to support companies expanding their oil and gas operations, lending $185.5bn to 100 companies most linked to fossil fuel expansion, such as Saudi Aramco and ExxonMobil.
Such activity is out of line with the International Energy Agency recommendation in its ‘Net Zero by 2050’ scenario that there is no need for new oil and gas fields.
Senators Markey And Merkley Announce Legislation To Get Big Banks To Stop Financing Fossil Fuel Projects
Legislation will require the countrys largest banks to better protect consumers and the climate from risk by winding down emissions-intensive financing Fossil Free Finance Actannouncedsaid Senator Markey. Fossil Free Finance Act said Senator Merkley. said Congressman Mondaire Jones . HEREHEREFossil Free Finance Act
- Prohibit the financing of new or expanded fossil fuel projects by 2022
- Prohibit the financing of all fossil fuel projects by 2030
- Prohibit thermal coal financing by 2025
- Incorporate financing of emission guidance into the SIFI designation process and add financed emission to the list of criteria for nonbank financial institutions
- Require the Fed to report to Congress commitments made by banks and nonbank SIFIs to reduce financed emissions and progress on those targets
- and Require the Fed to report to Congress recommendations to Congress and other Federal agencies on how to facilitate a reduction in financed emissions and how to support an equitable transition.
Fossil Free Finance ActFossil Free Finance ActPublic Citizen, the Sierra Club, Evergreen, Future Coalition, 350, Americans for Financial Reform, the Sunrise Movement, Action on Race and the Economy, and Positive Money USsaidYevgeny Shrago, Policy Counsel at Public Citizen’s Climate Program.saidBrooke Harper of 350.orgsaidSierra Club Fossil-Free Finance Campaign Manager Ben CushingsaidEvergreen Action Campaigns Director Lena Moffitt.
How To Divest Your Bank Account Of Fossil Fuels
The big five UK banks are among the worlds biggest lenders to the coal, oil and gas industries. If you dont want to help them support climate change, there are viable alternatives
- Sign up to our series on personal divestment on the form at the bottom
Is your current account with one of the big five banks: Lloyds, Barclays, HSBC, RBS/NatWest or Santander? If so, you are helping to support the more than £66bn they have lent to companies around the world engaged in oil and gas extraction. But individuals- who are concerned about climate change can move their money to banks and financial institutions that offer fossil-free alternatives.
The scale of support provided by mainstream banks across the world for the coal, oil and gas industry is breathtaking and it is British banks that are among the biggest lenders. An analysis of Europes 20 largest banks in 2014 found that Barclays had the highest volume of high carbon loans, as a proportion of its total lending, of any of the banks, while Lloyds had the highest amount invested in high-carbon equities.
The five biggest banks in the UK are also the five biggest investors in climate change, says campaign group MoveYourMoney.org.uk.
It also analysed how much the major banks are financing controversial fracking operations. HSBC provides services to Cuadrilla Barclays handles banking for IGas Energy, the company with the most oil and gas exploration licences in the UK while Lloyds loaned £10m to Alkane Energy.
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Canadian Institutions Ignoring Climate Change Risk Could Face Legal Action
According to new legal analysis, investment fiduciaries who overlook the implications of the transition to clean energy and the wind-down of fossil fuels now underway could face legal challenges. With the world expecting Canada to ratify the Paris Agreement any day, Canadian institutions and philanthropic investors are only just coming to grips with the investment risks and opportunities linked to the low carbon energy transition.
In June, four leading Canadian foundations announced they would divest their portfolios of fossil fuels and invest instead in climate solutions. Comart Foundation, Toronto Atmospheric Trust, David Suzuki Foundation and the Catherine Donnelly Foundation became the first Canadian signatories to Divest-Invest Philanthropy, the global alliance of foundations committed to accelerating the clean energy transition.
Recent analysis from asset manager BlackRock, with $5 trillion USD in assets under management supports their actions. BlackRock stresses that all asset owners can and should take advantage of a growing array of climate-related investment tools and strategies to manage risk, search for excess returns or improve their market exposure.
Fossil Free Funds From As You Sow Helps Investors Divest From Fossil Fuel Companies With High Carbon Footprints
Adam corresponds with finance experts to publish industry news coverage related to helping consumers achieve greater financial literacy and improved credit. He has more than 12 years of storytelling, editing, and design experience in print and online journalism and is most knowledgeable in the areas of credit scores, financial products and services, and the banking industry.
Edited by: Lillian Guevara-Castro
Lillian brings more than 30 years of editing and journalism experience. She has written and edited for major news organizations, including The Atlanta Journal-Constitution and the New York Times, and she previously served as an adjunct instructor at the University of Florida. Today, she edits all CardRates content for clarity, accuracy, and reader engagement.
In a Nutshell:Fossil Free Funds is one of six mutual fund search tools offered by 5013 nonprofit As You Sow. Investors can research thousands of mutual funds, fund managers, fund families, and other options to see where the companies embedded in their mutual funds stand on social, environmental, and governance issues. Each fund has a proprietary grade given to it based on several key metrics, including carbon emissions, coal mining, oil drilling, and renewable operations, among others. The nonprofit is making real change in the world, exemplified by its ever-growing track record of successful shareholder resolutions.
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What Is A Socially Responsible Bank
A socially responsible bank is one committed to creating social or environmental good without an exclusive focus on profit and without funding causes that can harm people or the planet. These banking institutions generally prove their impact with external certifications or memberships that reflect their lending practices and community investments.
» Check out the 9 best socially responsible banks
This type of bank looks to further economic, social, racial and environmental justice through its voice, resources and every aspect of how it operates, Ivan Frishberg, chief sustainability officer at Amalgamated Bank, said in an email. Our mission areas are our business.
Socially responsible banks can go by other names, such as values-based banks and ethical banks, and all of these can refer to having a focus on social and environmental justice. The term “sustainable banks” tends to emphasize an environmental bent, according to multiple banks NerdWallet spoke with.
Here’s an explainer on sustainable banking:
» Learn more about environmentally sustainable banking
Individual Actions To Help Green The Banking Industry
Bank.Green is a not-for-profit that aims to educate the public on the environmental destruction funded by the banking industry while fostering an empowered community to take action. Its website has a tool for researching banks that do not support fossil fuels.
Even if there is no fossil-free bank listing for your location, or youre simply not ready to switch banks, you can still make a difference. Express your concerns about your money being used to help fund fracking, oil and gas pipelines, fossil fuel power stations, and other unsustainable activities that harm the planet.
The goal: collective action influences the banking industry to divest itself from fossil fuels. The result? One step closer to a more sustainable world.
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How Does It Work
The proposed regulation would require public companies to report their climate emissions, which come in three standardized reporting forms. Scope 1 emissions are those generated onsite. Scope 2 emissions are those from energy that is purchased. Scope 3 emissions are generated by a companys supply chain and products in service. Some companies already disclose Scopes 1 and 2. These are the easiest to report using energy supply and utility bills. Scope 3 is hard. It requires an analysis of all greenhouse gas impacts from a companys supply inputs as well as the carbon implications for the companys products used over their lifetime. Many companies are pointing to the burden the regulation could create. At the same time, new data mining and modeling methods are being developed to help calculate Scope 3 emissions.
Invest In The Future You Want To Live In
Fossil Free Funds and the rest of the Invest Your Values tools give investors a tremendous amount of power when researching mutual funds from a corporate responsibility perspective. But that doesnt mean company-sponsored retirement plans will offer funds that grade highly on the topics that are important to investors.
Behar often hears from consumers who arent comfortable with their investment options and want their company to offer a better variety of funds that provide guilt-free investing opportunities. While he has seen many employers successfully add new funds, he noted that its a delicate process.
To aid in the cause, the site offers a Fossil Free Action Toolkit that gives individual investors advice and other tools on how to work with a company or investment manager to divest from certain funds. The toolkit even supplies a sample letter that employees can send to their retirement plan administrator to request changes.
You dont want to make unreasonable demands. After all, you dont want to get fired, he said. But you can form a coalition with other employees who have the same values and passions that you have and find the best people in your company to approach the topic. Then, you can bring your request to them and let them know that this means something to you, and that you think its the best investment option for you and your fellow coworkers.
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Community Development Credit Union
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Includes more than 350 U.S. credit unions.
Established two decades before the CDFI program, Inclusiv built a network and the criteria for supporting underserved communities. Its network of community development credit unions, or CDCUs, have similar missions to CDFIs, and in fact, credit unions can be both. CDCUs specialize in fairly priced loans to people with limited credit history, financial counseling and general banking services.
Inclusiv is the only national association of CDFI-certified and credit unions, DeFilippi says. The organization focuses on financial inclusion, community development and closing the nations racial equity gap.
Two Banks That Decreased Their Fossil Fuel Financing The Most Are Based In Europe
At the other end of the spectrum, French cooperatively owned bank Crédit Mutuel had the largest drop in fossil fuel financing, with a 100% decline from $19 million in 2016 to zero in 2020, according to CNBC Make It’s analysis using data from the Banking on Climate Chaos 2021 report.
“In 2018, we made a decision to stop all financing for coal-fired power plants and coal mining in all countries,” says a spokesperson for the Crédit Mutuel, a cooperative bank that is owned by its customers.
In 2020, Crédit Mutuel decided it was willing to lose money “in the short term” for its fossil fuel goals.
“oo many of the commitments made by companies will only serve to weigh on those who come after us,” says the bank spokesperson. “In the course of our banking business, we develop balance sheets over 10, 20 and 30-year periods … it is only natural therefore that we pay particular attention to global warming, which is having an increasingly strong impact on our customers . This calls for rapid action.”
Crédit Mutuel’s leadership in its fossil fuel financing is consistent with its performance and publically stated goals, Rafael Quina, a director at Fitch Ratings and the head of French and Portuguese banks’ ratings, tells CNBC Make It. Part of this is because the bank doesn’t do as much business with large corporate customers like fossil fuel companies when “compared to larger and more diversified European banking groups,” Quina says.
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Clean Energy Investment In The Net Zero Pathway 2016
Total annual energy investment surges to USD 5 trillion by 2030, adding an extra 0.4 percentage point a year to annual global GDP growth, based on our joint analysis with the International Monetary Fund. This unparalleled increase with investment in clean energy and energy infrastructure more than tripling already by 2030 brings significant economic benefits as the world emerges from the Covid-19 crisis. The jump in private and government spending creates millions of jobs in clean energy, including energy efficiency, as well as in the engineering, manufacturing and construction industries. All of this puts global GDP 4% higher in 2030 than it would be based on current trends.
An unparalleled clean energy investment boom lifts global economic growth
The energy transition requires substantial quantities of critical minerals, and their supply emerges as a significant growth area. The total market size of critical minerals like copper, cobalt, manganese and various rare earth metals grows almost sevenfold between 2020 and 2030 in the net zero pathway. Revenues from those minerals are larger than revenues from coal well before 2030. This creates substantial new opportunities for mining companies. It also creates new energy security concerns, including price volatility and additional costs for transitions, if supply cannot keep up with burgeoning demand.
New energy security concerns emerge, and old ones remain
Priority action: Address emerging energy security risks now
In Summary Heres How To Be Eco
1. Check up on your current bank. If you bank with one of the biggest funders of fossil fuels according to the Rainforest Action Network, any move into a community bank or a credit union is an improvement. Even if your money is not currently banked with one of the biggest funders of fossil fuels, you can still be more intentional with your money by placing it in a bank that is vocal about its sustainability efforts.
2.Move your money into a sustainable bank or credit union. If you cant move all your money today, start with some of it. Use the list above to look for a new banking option or search the complete bank database or to find options near you and filter for the conveniences you need, like high-yield accounts, mobile deposits, business loans, and more.
3. Monitor what your deposits are up to. Check up on your bank or credit union every once in a while. Are you content with how they invest your money? If you want more detailed information, heres a guide to see what your bank invests in. If youd like to be notified when new quarterly data is published on Mighty, you can subscribe here.
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The Real Impact Of Universities Divesting From Fossil Fuels
Reporter, HuffPost
Fossil Free UC taking action at the University of California Regents Meeting in Sacramento. The university system announced on Wednesday that it had divested $200 million from coal and sands investments.
The University of California’s announcement on Wednesday that it had pulled $200 million out of coal and oil sands investments may be one of the most powerful divestments yet — but not because it’ll hurt fossil fuel companies’ bottom line.
The university system decided that fossil fuel investments were no longer good ones for its $98.2 billion endowment fund, Chief Investment Officer Jagdeep Bachher said, citing sustainability concerns and shrinking global demand.
Critics often slam these divestments as “empty gestures” and mere “window dressing,” pointing out that few universities invest much in fossil fuels in the first place and that the financial loss is insignificant to energy companies.
But Karthik Ganapathy, a spokesman for the climate advocacy group 350.org, says this misses the point. The goal of getting universities to divest isn’t to financially burden fossil fuel companies it’s to tarnish their image.
Academic institutions, Ganapathy said, have exceptional power to shift public opinion and influence lawmakers.
But with another study pointing out that the U.S. coal industry has lost 76 percent of its value over the past five years, Greenpeace spokesman Joe Smyth says it makes financial sense to divest.
Also on HuffPost:
Your Retirement Plan May Be Fueling The Climate Crisis But It Doesn’t Have To
InvestYourValues.orgMore fundsMajor asset managers handle the retirement savings of millions of Americans.Are your savings invested with one of these financial giants?More blog posts
Fossil Free Funds is a search platform that looks at the climate impact of popular mutual funds and shows you if your money is being invested in fossil fuel companies, or companies with high carbon footprints.
Investing in coal companies, oil/gas producers, and coal-fired utilities isnt just a moral question. Fossil fuel investments carry real financial risks. When emissions are constrained, fossil fuel companies will have their carbon assets stranded. Over the past years, a growing divestment movement of institutional and individual investors representing more than $6tn in assets under management have responded to this risk by divesting all or some of their fossil fuel investments.
Fossil Free Funds empowers you to know exactly what you own, to see if your savings are invested in dirty energy sources, and to find investment options that support a cleaner, greener future.
Search for mutual funds and see if theyre invested in fossil fuel companies. If they are, you can use our database to find comparable options that meet your specific needs.
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