Twelve years ago, the BP Deepwater Horizon oil spill devastated the Gulf Coast. The spill caused serious health issues in cleanup workers and coastal communities, cost billions of dollars in economic losses and fundamentally disrupted the Gulf of Mexico’s marine ecology.
Deepwater Horizon was an awful chapter in the toxic nightmare that oil, gas and petrochemical operations have long imposed on the region and its residents. Though it has widely been known as “Cancer Alley,” the stretch of land along the Mississippi River between Baton Rouge and New Orleans is now often referred to by residents as “Death Alley.”
Instead of attempting to right its horrific legacy, the oil and gas industry is only doubling down. It has plans to build 20 new and expanded export facilities to liquify and ship fracked gas (what the industry calls LNG) in the Gulf Coast. Such fossil fuel development would make it significantly more difficult for the world to keep global warming under 1.5 degrees — 18 of the proposed plants would have emissions equivalent to 320 million cars. And for the Gulf region, the terminals would be toxic, with yet more noxious flares poisoning the air and high risks of watershed and soil damage from flooding.
This LNG plant expansion isn’t possible without financing from major American banks. Oil and gas companies don’t have the capital to build dozens of new facilities on their own — it has to come from financial institutions.
The capital-intensive nature of fossil fuel operations may prove to be a fatal flaw for the oil, gas and coal industries. As the future of the fossil fuel economy becomes more uncertain with climate impacts intensifying, the initial investment will look a lot more risky to the institutions providing the funding. That is why the climate movement is doubling down on targeting major banks, asset managers and insurers. With federal and international climate action largely stalled, one approach to making systematic progress is by driving a wedge between fossil fuel companies and their funders. But it has to happen fast. As The Guardian recently reported, oil and gas companies are hurriedly building out new projects that would send humanity far beyond global climate targets.
Climate finance campaigns have been gaining momentum for years, with nationwide street protests, bank branch occupations and civil disobedience actions at bank headquarters becoming social media staples. But the movement is now entering a new phase of finance campaigning. Fossil finance campaigners are engaging directly with companies, working to organize employees, rallying customers to engage with their banks and disrupting banks’ recruitment efforts.
This spring, socially responsible investors with ties to the climate movement filed shareholder resolutions at the six largest U.S. banks — Chase, Bank of America, Citi, Wells Fargo, Goldman Sachs and Morgan Stanley — demanding that they stop providing financing for companies expanding fossil fuel operations. Resolutions were also filed at several banks calling for no financing of projects that have not received Free, Prior, and Informed consent from the Indigenous people whose land the projects are being built upon. These resolutions particularly target the financing of pipelines through Indigenous land and watersheds, such as the Dakota Access Pipeline, Keystone XL and Line 3.
Shareholder resolutions are non-binding, but they send a clear signal to the banks about how their investors think they should be conducting their business. It’s a new but promising front in the campaign to get financial institutions to walk their own talk on climate.
And banks talk a lot about it. Most large U.S. banks have joined the Net Zero Banking Alliance, for instance, committing to align their lending and investment portfolios with net-zero emissions by 2050. They’ve hired sustainability officers and built LEED-certified branches. They want the public to think they’re “green” because it helps bolster their image and bottom line. But they also want investors and regulators to know they understand the real financial risks they face from climate change. Now we have to push them to actually follow through.
Despite their climate promises, banks continue to finance the industries that are driving the climate crisis. The six largest American banks have provided a total of $1.4 trillion in financing for fossil fuel companies since the Paris Agreement was adopted in 2015. They provided over $220 billion in financing in 2021 alone, and several banks have set 2030 targets that allow them to continue to finance fossil fuel expansion for the rest of the decade.
This type of action is wildly out of line with the global scientific consensus on how the world must address the climate crisis. According to the International Energy Agency, the world’s most respected energy forecaster, in order to meet global climate goals of limiting global warming to 1.5 degrees Celsius, “There is no need for investment in new fossil fuel supply.” That is, in order to comply with the Paris Agreement and a 1.5℃ pathway, the world cannot afford to extract any new fossil fuels, starting immediately — and banks can’t provide financing for that extraction.
We know what exceeding 1.5 degrees of global warming means for our planet: more extreme weather events, drastic sea-level rise, food shortages and human devastation. And we know that people of color are already experiencing the worst impacts. Of course, environmental racism is not new for major American banks. Redlining, a practice of banks denying home loans to people living in Black neighborhoods, has meant that many Black families now live in areas more susceptible to urban heat impacts and flooding. The “natural” gas facilities, oil refineries, and pipelines that banks continue to finance are poisoning the land, air and water of communities of color, causing sickness, violence and multi-generational disasters such as what is occurring in Death Alley.
There’s another reason to target the big banks: by continuing to support fossil fuel expansion, banks are putting the entire economy at significant risk. If we do succeed at limiting global warming to livable parameters, all of the new fossil fuel projects that banks are supporting will be forced to come offline before the end of their planned economic life, causing the carbon bubble to pop, potentially precipitating an economic loss three times the size of the 2008 financial crisis.
Still, fossil fuel companies make up only a moderate share of the major bank’s business. They could end their financing of fossil fuel expansion next week and experience only a minor financial bump. We in the climate movement aren’t naive enough to think that it will happen next week, of course. But that shouldn’t stop banks from laying out clear and concrete plans to start exiting fossil fuels and ending their support of fossil fuel expansion.
The resolutions that were put in front of shareholders this spring are a major step in holding the big banks accountable to their climate promises. Shareholder votes aren’t elections — you don’t need to break 50 percent to have an impact. Experts say that anything over 10 percent is enough to make companies sit up and take notice. The resolutions received 11 percent at Chase, Bank of America, Wells Fargo and Goldman Sachs, and nearly 13 percent at Citibank. And climate resolutions made up the plurality of an unprecedented number of shareholder proposals in 2022, accounting for 20 percent of over 560 resolutions introduced — a marked increase over previous years. Combined with the growing external pressure from climate groups, banks are certainly paying attention.
The movement to end financial support for the climate crisis is only growing — it’s time for the banks to get on board.
Arielle Swernoff is US Banks Campaigner.