Climate change activists are sharpening their campaign against Wall Street banks and top insurers, aiming to convince financial giants like JPMorgan Chase and Berkshire Hathaway to cut off the flow of money supporting investments in oil, natural gas and coal.
The targets of the new push are some of the most recognizable and well-heeled financial institutions in the world — and ones that activists contend aren’t living up to their own promises to act on climate change, including companies like Citigroup and AIG.
“We’re talking about some of the central pillars of global capital. They may be too strong for citizens to have power over. But maybe not,” activist and 350.org founder Bill McKibben told POLITICO. “We’ve gotten to this point now because too many people have gotten on trying to make money off of the end of the world.”
Several major national environmental groups, including Sierra Club, the Union of Concerned Scientists and 350.org, unveiled the new campaign dubbed “Stop the Money Pipeline” in Washington on Friday. They describe it as an evolution of campaigns that have scored some successes in prodding university endowments, religious groups and philanthropies to divest from fossil fuels.
Green activists say the stakes are significant: Since January 2017, Citigroup and JPMorgan Chase have underwritten $8.8 billion and $6.2 billion, respectively, for building new coal-fired power plants, according to a report released last month by German environmental organization Urgewald and Dutch sustainability group BankTrack.
JPMorgan Chase is a main target of the emerging environmental effort. The environmental advocacy group Rainforest Action Network and Sierra Club, citing data from Bloomberg Finance LP, said the bank has spent $196 billion financing fossil fuel projects since the creation of the U.N.'s 2015 Paris climate accord, which aims to prevent world temperatures from rising 2 degrees Celsius above pre-industrial levels.
Eli Kasargod-Staub, executive director with Majority Action, a liberal group that works with institutional investors, said investors can be more active in voicing their disapproval of corporate policies through shareholder resolutions.
“What we need to see is banks committing themselves to aligning their lending portfolios to the goals of the Paris agreement,” he said. “We need to see a clear reckoning from them of what that means for their lending behaviors.”
Andrew Gray, a spokesperson for JPMorgan Chase, said the bank supports the Paris agreement, and that it has set a goal of facilitating $200 billion in clean finance by 2023.
“We have a significant amount of work underway to further build upon our efforts on climate-related risk and opportunity and we look forward to sharing more in the coming year,” he said in an email.
Berkshire Hathaway declined to comment, while AIG and Citigroup directed POLITICO to publicly available statements on their companies' sustainability efforts. BlackRock, an asset manager that's also drawn criticism from the environmental push, on Thursday joined Climate Action 100+, an initiative pushing private investors to disclose their emissions and reduce fossil fuel holdings.
The new climate effort comes as Congress and presidential candidates have increasingly trained their sights on the financial sector’s role in driving climate change and the threats rising temperatures pose to the global financial system.
Democratic presidential hopeful Sen. Elizabeth Warren (D-Mass.) reintroduced a bill last year that would force companies to disclose their risks from climate change in their Securities and Exchange Commission filings, while her rival Sen. Bernie Sanders (I-Vt.) has publicly criticized financial actors’ role in funding fossil fuels. And Sen. Brian Schatz (D-Hawaii) has floated legislation to prod the Federal Reserve to include climate effects in stress tests of the financial system, much as the Bank of England recently began doing.
Schatz joined Senate Minority Leader Chuck Schumer and Democratic Sens. Sheldon Whitehouse of Rhode Island, Tina Smith of Minnesota, Tammy Baldwin of Wisconsin and Jeff Merkley of Oregon in September for climate meetings with Citigroup, credit rating agencies Moody’s and Standard & Poor’s and financial services and insurance firm TIAA-CREF. Schatz also has met with Fed governors from Dallas and San Francisco and said he’s encouraged by work at the regional level.
U.S. financial regulators are slowly beginning to take the concerns on board. In November, the San Francisco Federal Reserve held the Fed’s first-ever climate change workshop, and the Commodities Futures Trading Commission announced members for its Climate-Related Market Risk Subcommittee.
The Fed also has signaled it would join a group of foreign central banks in an initiative called Network for Greening the Financial System, which includes bank governors and supervisors who are considering pursuing climate stress tests. Those tests would gauge financial institutions’ capacity to withstand increasingly frequent and severe natural disasters, as well as massive capital shifts as economies transition away from fossil fuels.
“This is about the rights of investors to get a full picture of what’s actually happening in the world,” Schatz told POLITICO. “And now that climate change is not a future event or a political football but a fact of life, the regulatory agencies don’t have the luxury of allowing the institutions they oversee to ignore it just because it’s inconvenient.”
The United Nations last month elevated global finance as a key part of its plan for climate change action by naming as its new U.N. special climate envoy former Bank of England Gov. Mark Carney, a vocal advocate of assessing the systemic financial risk posed by rising temperatures. And this year’s upcoming U.N. climate change conference set to be held in the United Kingdom is already being labeled a “finance” conference.
The links between banks and financing exploration for fossil fuels has drawn the attention of Democratic members of the Senate Banking Committee, including ranking member Sen. Sherrod Brown of Ohio, Schatz and Warren, said Moira Birss, campaign director with Amazon Watch, who has met with Senate staff for Sanders and Warren. And the topic has sparked some discussions at the House Financial Services Committee.
“Folks are starting to understand more and more that climate change poses risks not just to the planet and the people who live on it but that it also poses a risk of a financial crisis equal to or even greater than the one we saw in 2008,” Birss said.
Environmental organizers plan to draw from the playbook to hit financial actors with tactics they’ve used in previous fights: public demonstrations, shareholder resolutions, Capitol Hill advocacy and policy changes in large, liberal cities.
McKibben said the activists may use attention-grabbing events like protests at bank branches to attempt to show a connection between the fees that people pay on their bank account or credit card transactions and the financial support those banks give to fossil fuels.
“My guess is most people haven’t thought of it yet in those terms,” he said. “There’s a lot of things that are hard to switch that we’re going to have to do on climate change. Switching credit cards is not that hard.”
Activists point to victories such as investment banking firm Goldman Sachs’ decision last month to eschew funding of oil drilling in the Arctic National Wildlife Refuge as a sign that pressure over climate change can influence financial giants. President Donald Trump overturned a ban in drilling in the refuge in 2018 after decades of political skirmishes over the sensitive ecosystem.
And insurance companies are increasingly rejecting coverage for coal and oil sands projects, with four U.S. firms adopting policies limiting their support for those fuels last year. Those insurers have grown more concerned about the risks climate change poses to their insured assets, an acknowledgment of the conflicts between underwriting projects contributing to higher temperatures and paying out losses from climate-enhanced weather disasters.
And campaigners are hoping to build moves like San Francisco’s July 2018 resolution that gave preference to insurers who divest from fossil fuels. The Sunrise Project, which aims to get insurers to cut ties with fossil fuel companies, is in talks with Silicon Valley firms and city governments in New York City, Los Angeles and Seattle to follow the Bay City’s example, said senior strategist Ross Hammond.
“We’re raising the cost of capital, we’re shrinking the amount of insurers,” Hammond said. “We’re just getting started in exploring the possibilities.”