Mark Carney stood up at COP26, alongside Larry Fink (CEO of BlackRock) and Jane Fraser (CEO of Citigroup). Together they announced that the financial industry has pledged $130 trillion of assets to solve climate challenges. Woo-hoo! Thanks.
Trouble is that it’s a lie.
Larry Fink and Jane Fraser run two companies leading the end of Earth:
Mark Carney has been leading the charge to get financial firms to focus upon climate renewal, but the $130 trillion claim is complete hogwash.
“The $130 trillion figure, which equates to 40 per cent of global financial system assets, was made up of $57 trillion of assets controlled by the fund manager signatories along with $63 trillion from the banks and a further $10 trillion from asset owners. Yet totting up the numbers in a way that highlights total assets leaves [Carney] open to accusations of double counting.” For example, “43 of the 221 investment manager signatories issued a report showing that just over a third of the assets under their watch were managed in line with net zero targets. Critics said it was a stretch to conclude that all the investment groups would eventually manage all their assets to meet net zero targets … the Rainforest Action Network, an environmental group, said the 93 banks that had signed the pledge provided $575 billion of lending and underwriting to the fossil fuel industry in 2020. ‘The disconnect between climate commitments and boardroom decisions is staggering’, said Tom Picken, its forest and finance director.”
Meanwhile, while Carney spoke, Greenpeace International Executive Director Jennifer Morgan stood up holding a sign that said “Your task force is a scam”. Greta Thunberg’s view was equally sceptical:
#COP26: GREENWASH ALERT!
The fossil fuel industry & banks caused are among the biggest climate villains. Now @Shell @BP & @StanChart are here in Glasgow trying to scale up offsetting & give polluters a free pass to keep polluting. Their plan could trash the 1,5°C goal.
— Greta Thunberg (@GretaThunberg) November 3, 2021
During the meeting, the UN organisers usually allow thousands of NGOs (non-governmental organisations) to sit in the room. This year, they allowed just four to attend the financial stream. In fact, in the most telling statement, Global Witness contacted me. Veronica Oakeshott, Head of Forests Policy and Advocacy at Global Witness, said:
“Banks and financiers are the lifeblood of the fossil fuel companies and destructive agribusinesses fuelling the climate crisis – so it’s right that focus should be on them at COP26. However, today’s announcement by banks risks amounting to more greenwashing if it’s not legally binding.”
Their recent investigation shows that global banks and investors made an estimated $1.74 billion in income since the Paris Climate Agreement from deals with companies linked to the destruction of forests, despite signing up to be deforestation free.
“Time and time again we have seen that voluntary banking commitments are clearly not worth the paper they are written on and we don’t yet have reason to believe today’s will be any different,” Veronica added. “Global leaders can no longer trust financial institutions to regulate themselves. Banks will not stop funding deforestation unless there is strong and binding legislation that makes it illegal for them to do so.”
And as for Rishi Sunak’s statement to make the City the first global financial centre that is net zero?
Hmmm … the UK is actually home to the biggest financiers funding the destruction of the climate. Global Witness’s latest report found that British banks and investors made deals worth $16.6 billion (£12.7 billion) since the Paris Climate Agreement with agribusinesses linked to tropical deforestation, raking in $192 million (£147 million) in revenues along the way. Add to this that a European Central Bank study estimates that loans to heavy carbon emitters accounts for 14% of Eurozone lenders’ assets, and it is clear that it will be hard to wean banks off the teats of fossil fuel firms when it makes them so much money.
How can you persuade banks to stop that process of funding and, subsequently, profit? What’s the solution?
Reuters claim it is regulation. Banks need a stick, not a carrot, to change their behaviours. But what stick to use?
“Watchdogs could introduce a discount for green exposures and a penalty for fossil-fuel ones … the idea has flaws, as the Bank of England argued in a recent report. A similar effort to subsidise European small-business lending through risk weights failed to boost loan volumes meaningfully, a 2016 study found … watchdogs have other tools. Regulators routinely tell banks to hold so-called capital add-ons for fringe risks like possible legal bills or fines. Supervisors could introduce something similar for banks who drag their feet on climate change. Global-warming stress tests, as pioneered by the BoE and ECB, would help to identify the laggards.”
Thing is that these are all talks at the moment. Why are they all talking and not doing? No wonder a lot of people say that this is hyCOPrisy.