Banks must stop funding climate change, says former Archbishop

Written by Rebecca O'Connor on 2nd November 2017

The former Archbishop of Canterbury, Rowan Williams, has questioned the morality of British banks that profit from projects which cause climate change, calling for them to shift investments away from fossil fuels.

The UK’s biggest high street banks continue to profit from dirty coal mines, despite the majority of their customers believing it is morally wrong for banks to profit from polluting activities.

As banks report rising profits, a new Christian Aid report reveals the extent of their investment in fossil fuels.

In a separate report, BankTrack, the NGO that monitors banks’ investment in fossil fuels, reveals that commercial banks continue to finance the tar sands sector at levels that do not align with the Paris Agreement 1.5° to 2° target.

The report, released by Rainforest Action Network (RAN) and 11 organisations from around the world, finds that tar sands financing for producers and pipeline companies so far in 2017 is already at levels 50 per cent greater than all of the financing committed in 2016.

Last week Barclays announced profit for the year to September of £3.4bn, up 31 per cent compared to last year. Lloyds announced profit for the same period of £4.5bn, up 38 per cent, while RBS announced a profit of £1.3bn for the same period. On Tuesday HSBC reported profits for the year to date of £11.3bn, a rise of 40 per cent.

According to a survey on behalf of Triodos bank, which offers a sustainable current account, 80 per cent of people say they do not want banks to use their savings to invest in projects that damage the environment.

British investors, including banks, continue to count profits from just those fossil fuel investments that contribute to climate chaos.

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Dr Williams, chair of Christian Aid, said: “This year we have seen extreme weather displacing millions of people in South Asia and bringing death and destruction in the Caribbean and the United States. These communities count the cost in lives lost. But British investors, including banks, continue to count profits from just those fossil fuel investments that contribute to climate chaos.

“The latest surveys make it plain that an overwhelming majority of the British public do not want their savings invested in holdings that damage our global future – and that they expect bank CEOs to take personal responsibility for making sure that their investments are ethically and environmentally responsible.

“Our call today is for the chief executives of our major banks to make clear and time-specific commitments to reducing and ultimately replacing fossil fuel investment, and to shift towards climate solutions. The moral case is clear, and the public increasingly recognise this.  The urgency is mounting.”

The new report published by Christian Aid, shows how the UK’s high street banks are profiting from some of the dirtiest fossil fuel projects around the world, while communities in South Asia, the Caribbean and USA are still paying the price for this summer’s extreme weather events.

The report reveals that Barclays, HSBC, Lloyds and RBS are all funding the companies behind the Cerrejón coal mine in Colombia, the coal from which generates nearly the equivalent carbon pollution in a year as Colombia’s entire national emissions.

This is despite the four banks all committing to deliver the Paris Agreement goals of limiting global warming to well below two degrees. Two years on from Paris, there has been “no substantive change in the banks’ lending policies or actions”, according to Triodos.

Despite the falling costs of renewables and the increasingly promising investment opportunities they provide, the world is still investing over three times more in fossil fuels than renewables.

If this trajectory continues the global economy will have ploughed a staggering $23 trillion into fossil fuels by 2050. This would sink the Paris Agreement’s targets and cause untold misery to people around the world who are suffering from the impacts of climate change, with the poorest already bearing the brunt.

The pressure on the world’s biggest banks to switch energy investments continues to grow.

According to the International Energy Agency, private banks have a key role to play in reversing the needed investment gap and making the shift to renewables. It concludes its 2017 World Energy Investment report by saying: “Investment in new low-carbon generation needs to increase just to keep pace with growth in electricity demand growth, and there is considerable scope for more clean energy innovation spending by governments and, in particular, the private sector.”

The International Energy Agency recently released a report showing that renewables will give more people in the developing world access to electricity than coal.

In September, the editor of The Banker Magazine, Brian Caplen, warned that banks faced an existential crisis if they kept burying their heads in the sand: “Under clean-energy scenarios, oil majors become rather less blue-chip to lend to than those engaged in the technologies of the future – for example renewable energy, electric cars and insulation.

“In these sectors, there are big opportunities with one estimate putting the investment needed to transition to a lower carbon economy at $1,000bn each year for the foreseeable future. This figure is not something dreamed up by an idealistically green organisation – it comes from the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, chaired by Michael Bloomberg.”

Christiana Figueres, the former General Secretary of the United Nations Convention on Climate Change (NFCCC), last month called on banks to invest a ratio of 2:1 in favour of green investments over “brown” investments to avoid an economic cliff edge.

The Archbishop of Cape Town, Most Reverend Thabo Makgoba, leads the Province of Southern Africa, which recently decided to divest all its fossil fuel investments on climate change grounds. Responding to the Christian Aid report he said: “Climate change is hurting people in the developing world first and worst. In response to this we are divesting  from fossil fuels and can no longer profit from pollution. But in Britain UK banks are still propping up coal mines which are driving the climate change we suffer from. This is morally questionable and they have a responsibility to clean up their act.”

Bevis Watts, Managing Director of Triodos Bank UK, said:  “Where you spend, save or invest your money is a vote for your values. In that sense, money is actually a very powerful form of democracy. Individuals, institutions and businesses can all choose not to invest in dirty fossil fuels and to support the transition to a low-carbon economy.

“At Triodos we have backed more than 300 renewable energy projects across Europe over the past 20 years. We have long understood that what we do as a bank with money can have a positive impact on people and the planet. That is why we report our activities in terms of the Sustainable Development Goal and are 100 per cent transparent about who we lend to – only organisations that deliver positive environmental, social or cultural change.”

Mark Campanale, founder and executive director of Carbon Tracker: “We are in the throes of a global energy transition. Rapid advances in technology are driving renewables to be cost competitive thereby undermining accepted fossil fuel business models. However, banks are still failing to price in fossil-fuel risks and biasing brown investments over green despite the huge opportunities the latter present.”

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