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opinion

Banks must green up their act, for the sake of both planet and profit

For banking to work for people and planet, there needs to be a fundamental rethink of the relationship between banks and society. Banks are the custodians of our money and we should have a voice in deciding what impact it has. Christian Aid’s new report The Big Shift urges banks to take a step towards a low-carbon world. Joe Ware of Christian Aid explains.

If you watch a TV ad for a UK high street bank these days, they are full of soft focus, half-speed footage of smiling, tanned pensioners vigorously enjoying their retirement, or shots of attractive young families surrounded by nature – all portraying vague notions of stability and future prosperity.

But a report from the charity Christian Aid reveals that high street banks are far from bastions of forward thinking. They are actually investing in some of the most polluting and environmentally damaging fossil fuel projects in the world, and missing out on genuinely sustainable financial opportunities.

The report is part of Christian Aid’s ongoing campaign to increase awareness around the environmental impact of banking, called The Big Shift.

Brian Caplen, editor of The Banker, has warned that as the global economy is decarbonised to avoid dangerous climate change, banks face some serious risks to their balance sheets. He says: “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”. He also highlights the opportunities in this sector, with the investment needed for a decarbonised economy estimated at $1,000bn globally each year.

“Four in five people say they do not want banks to use their savings to invest in projects that damage the environment, and 81 per cent hold bank chief executives responsible.”

Joe Ware, Christian Aid

Already, governments across the world are pushing forward with the decarbonisation of electricity supply, boosted by the drastic cost reductions in the likes of offshore wind.

Dates are also being set for the phase out of petrol and diesel cars. In the UK and France it is 2040, India is targeting 2030, and Norway’s is 2025.

China, beset with toxic air pollution problems, is set to announce its own date soon, with significant repercussions for the auto industry.

As banks continue to rebuild their battered reputation following the financial crisis, they would be wise to heed the public’s concern over this issue. New polling published yesterday by ComRes showed that 78 per cent of the public believed that “investing in companies which cause dangerous climate change is morally wrong, no matter how profitable it is”.

Four in five people say they do not want banks to use their savings to invest in projects that damage the environment, and 81 per cent hold bank chief executives responsible.

Christian Aid’s report shows that major banks are all funding the companies behind the Cerrejon coal mine in Colombia, the coal from which generates nearly the equivalent carbon pollution in a year as Colombia’s entire national emissions.

It is particularly noteworthy to see banks profiting from such investments in the year when communities from South Asia to the Caribbean and US have been counting the cost of extreme weather events in lives lost and a clean-up bill into the billions.

America’s National Oceanic and Atmospheric Administration said this year there had been 15 weather and climate disaster events in the US in which total financial losses exceeded $1bn each.

High street banks have all promised to support the objectives of the Paris climate agreement, but have done little to change their investment priorities since then.

But it doesn’t need to be this way. Challenger banks like Triodos demonstrate an alternative banking model, by not investing in companies that make more than five per cent of their revenue from extracting, producing, selling or generating electricity from oil, gas or coal, while 23 per cent of its loans support renewable energy projects.

Former asset manager Mark Campanale founded Carbon Tracker, which analyses the impact of global energy changes on capital markets. He says banks had a vital role to play: “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.”

That needs to change, for the sake of both UK investment and the future of the planet. It’s time for banks to step up.

Find out more about Christian Aid’s Big Shift Campaign

Joe Ware
CV

Joe Ware is a journalist and writer at Christian Aid. He is on Twitter @wareisjoe. To join the Big Shift campaign visit the website. You can also view the spoof bank TV ad that Christian Aid has produced.

 

What do you think of "Banks must green up their act, for the sake of both planet and profit"

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`Hildegard Atherton 3 months ago

Yes, indeed.please green up for the sake of our planet

`Hildegard Atherton 3 months ago

All of us must endeavour to do everything we can to protect our planet

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