How the financial sector fuels climate change, and what we can do about it
February 24, 2020
Fighting climate change can start with our wallets. One of the most powerful — and overlooked — drivers of climate change is finance.
Huge investing firms fund the fossil fuel industry, making it nearly impossible to make a sustainable shift in our economy at the pace required to avoid a climate catastrophe. As Bill McKibben, author and environmental activist, wrote recently in The New York Times, “If you want to stop climate change, follow the money.”
Environmental groups have slowly shifted their attention to insurers, banks and asset managers. Although the financial titans of the world are powerful, environmental groups like Insure our Future have already scored major successes. Insure our Future recently pressured Liberty Mutual, a major United States insurance agency, to announce it will no longer aid firms heavily involved in coal projects.
But insurance companies aren’t the only organizations rolling out more sustainable policies. Goldman Sachs said it plans to spend $750 billion on sustainable projects over the next decade. Goldman Sachs was also the first major investor to declare it will restrict financing to new oil production and exploration projects in the Arctic.
But to date, the biggest win for environmental groups came last month, when BlackRock, the world’s largest asset managing firm, announced that environmental sustainability will be a major goal in its future investment decisions.
These reports hopefully mark a new trend. But it shouldn’t let these financial firms completely off the hook — the firms only announced divestments from fossil fuels after growing public pressure. For decades, they have profited from environmental destruction.
Additionally, while divestment strategies generally succeed in pressuring the fossil fuel industry, they have a crucial weakness: immoral investors. When one company divests from fossil fuels, another investor may fill the gap. For divestment to be effective, all major financial actors must be on board. And because fossil fuel companies don’t plan to divest from their carbon-intensive business models anytime soon, we must keep up public pressure.
Which brings us to our last point: Can we, as individuals, do anything to stop these multibillion-dollar investments from flowing into the fossil fuel industry?
Our influence may seem small, but there is power in collective action. In January, Bill McKibben and a group of protesters occupied a JPMorgan Chase, the world’s largest investor in fossil fuels.
Research all companies you invest in and know which major banks are involved in fossil fuel investments. Should you find that your bank is investing in fossil fuels, tell the bank your concerns. And if you decide to switch banks, nonprofit organizations like Green America, Green Alpha and Fossil Free Funds offer searches for banks and funds that don’t invest in harmful industries.
Earth Day marks its 50th anniversary this year — find an Earth Day event near you or register one yourself. Additionally, Earth Day 2020 — Wednesday, April 22 — will kick off three days of action, with Thursday, April 23, targeting financial institutions. Learn more at Strike With Us.
With enough public pressure, the financial sector can finally become sustainable.