This post is a part of a series on COVID-19 and the Coronavirus Pandemic
Update 5/4/20: Last week, JPMorgan Chase disclosed that it will appoint a new lead independent director to replace former ExxonMobil Chair and Lee Raymond by summer 2020. This move is a significant victory for shareholder advocates and climate activists—including UCS supporters and allies in the Stop the Money Pipeline movement—who have campaigned for Raymond’s removal. The next step is for JPMorgan Chase to remove the architect of fossil fuel industry climate deception campaigns from its board altogether.
As the coronavirus pandemic has disrupted lives and livelihoods, I’ve been grateful to be healthy, at home, with sufficient resources to stay here. I’ve been thinking about how we can help those who are most at risk—with science-led action, government support, protection of voting rights, and mutual aid. And I’ve tried to redirect my worry, fear, and uncertainty toward imagining how we might rebuild the economy and the energy system around principles of justice, transparency, and science-based decisionmaking.
A new report released last week by a range of organizations provides valuable information and guidance for that transformation. It may not be top of mind as the world faces a growing pandemic. However, it includes research that legislators should bear in mind as they consider economic stimulus measures, potentially including aid to banks and fossil fuel companies that are behind the climate crisis which still looms. Behind the COVID-19 threat, our climate emergency continues to require swift and deep emissions reductions to ensure a stable climate.Here are a few key takeaways:
Fossil fuel financing continues to rise
The report, Banking on Climate Change 2020, was produced by Rainforest Action Network (RAN), BankTrack, Indigenous Environmental Network, Oil Change International, Reclaim Finance, and Sierra Club. It found that 35 private sector banks have collectively financed the fossil fuel industry to the tune of $2.7 trillion since the Paris Agreement was signed in 2015.
Total fossil fuel financing—including lending and underwriting of debt and equity issuance—has increased every year, reaching $736 billion in 2019. If it continued to rise at this rate, it would reach $1 trillion annually by 2030.
There will undoubtedly be vast economic disruption wrought by the coronavirus pandemic—the question is whether we will rebuild the same unjust and unhealthy system, or choose to redirect this funding toward renewable and sustainable energy sources.
Biggest fossil fuel banker closely tied to climate deception
Four banks based in the United States have the dubious distinction of providing the most financing for fossil fuels globally since 2016. JP Morgan Chase, with more than a quarter trillion in fossil finance, is first by a wide margin—36 percent more than second-place Wells Fargo.
JPMorgan Chase’s “lead independent director” is Lee Raymond, the architect of climate deception campaigns by ExxonMobil and its predecessor Exxon during his tenure as the fossil fuel companies’ Chair and CEO from 1993 to 2005. It’s hard to see the bank making substantial changes in its financing decisions with a leading climate disinformation artist at its helm.
That’s one reason UCS has joined Stop the Money Pipeline calling on JPMorgan Chase to align its business model with the Paris agreement, starting with no new loans for fossil fuel expansion and an end to funding projects that violate human rights. And our friends at Majority Action are leading a campaign urging JPMorgan Chase shareholders to oppose Raymond’s re-nomination to the company’s board and support renewed efforts to separate the Chair and CEO positions.
Corporate policies fall short
In addition to calculating the banks’ 2019 fossil fuel financing, the report examines their policies related to coal, oil, and gas. Faced with mounting public pressure over their role in fueling the climate crisis and growing expectations within the financial sector to disclose and manage climate-related risks, banks are increasingly adopting restrictions on lending and underwriting for fossil fuel projects and companies.
To evaluate fossil fuel lending and underwriting policies, the report defines banks’ alignment with the Paris Agreement in terms of the P1 pathway set out in the Intergovernmental Panel on Climate Change’s Special Report on Global Warming of 1.5˚ Celsius; it then articulates criteria for banks to ensure that the projects and companies they support are themselves aligned with 1.5˚C.
At UCS, we have our own science-based metrics for assessing fossil fuel companies’ compliance with the science of meeting the Paris Agreement targets. For more, read our 2018 Climate Accountability Scorecard and this article I coauthored in the Bulletin of the Atomic Scientists with Myles Allen of the University of Oxford and my UCS colleague Peter Frumhoff.
The banks that scored highest in terms of fossil fuel policies in Banking on Climate Change 2020 are all European—yet even they are far from meeting the report’s criteria for alignment with the Paris Agreement. US-based banks Goldman Sachs and JPMorgan Chase made headlines recently with new policies ruling out some fossil financing—but even with those improvements, they are in the middle of the pack.
The report sets out three steps for banks to take to assess and address their climate risk and impact: 1) measure and disclose climate risk to their assets; 2) measure and disclose their climate impact on the planet; and 3) set targets to phase out this climate impact. We should also demand that major financial institutions take a leadership role in advocating for science-based climate policy.
Progress in all of these areas is necessary for investors and consumers to evaluate and compare banks’ business plans in a world with a finite and rapidly dwindling carbon budget.
Decisions are already being made in Congress that will influence how we rebuild our economy during and after the current pandemic. Government support must focus on people, not polluters.
Giveaways to banks and fossil fuel companies to continue business as usual would make us fall further behind the Paris Agreement goals—and further into climate damage. When the long process of fighting the COVID-19 pandemic is over and the economy begins to recover, the last thing we’ll need is a financial sector pumping funds into climate-destroying fossil fuel projects.
Updated 4-20-2020 – corrects Lee Raymond´s tenure at ExxonMobil
Posted in: Global Warming
Tags: #ExxonKnew, #PeopleNotPolluters, #StoptheMoneyPipeline, climate accountability, climate deception, climate scorecard, climate-change, COVID-19, COVID-19 and the Coronavirus Pandemic, Paris Climate Agreement
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