Renewables top fossil fuels in big bank funding… but only barely
So far this year, big banks have arranged roughly $463 billion into green bonds and loans, while arranging about $459 billion in similar funding mechanisms for the fossil fuel industry.
The data, compiled by Bloomberg, shows how difficult it is for the world to kick its fossil fuel habit.
Scientists have said that the nations of the world are running out of time to prevent more catastrophic climate changes as a result of the reliance on fossil fuels.
Indeed, a report from the United Nations published today, revealed that given current trajectories, temperatures on Earth are expected to rise by 2.7 degrees.
The changes to global climate resulting from that level of warming would be disastrous.
Under those conditions the kinds of heatwaves that killed over one hundred people in the Pacific Northwest would happen about 14 times as frequently. Droughts would be twice as likely and rising sea levels would continue to subsume coastal areas and threaten cities around the world.
Against this backdrop an increasing number of voices are calling for banks to end fossil fuel funding as soon as possible.
“What banks need to do is extremely clear,” Miguel Nogales, co-chief investment officer at Generation Investment Management LLP, the $36 billion fund manager co-founded by former U.S. Vice President Al Gore, told Bloomberg. “No financing for new coal plants, no financing for new oil fields.”
Banks, like other corporations who are attending the COP26 summit in Glasgow have to do more, according to advocates and sustainability experts.
“At the top of many big banks, there is a realization that they will have to step back from financing certain fossil-fuel projects, but many are only just beginning this journey,” Jessica Ground, the London-based global head of environmental, social and governance at Capital Group, which has $2.6 trillion of assets under management, told Bloomberg.
Some startups have argued that the largest banks have too much invested in the existing energy business to unwind their commitments. These are businesses like Ando, Atmos, and FootPrint Coalition portfolio company Aspiration, which are all offering investors more sustainable financial alternatives which do not invest in fossil fuel companies.
“We believe there’s a compelling need for innovation and advancement in the financial industry,” said Gardiner Garrard, co-founder and managing partner at TTV Capital and an investor in Ando. “Ando’s Sustainable Banking solution provides customers with modern banking features including, for the first time ever, the ability to direct 100 percent of their bank balance to fund sustainable investments. No other banking institution offers this, and we’re excited about partnering with Ando to bring Sustainable Banking to millions of customers.”
