Guest blog: Bankrolling climate change
There are plenty of reasons to be angry with the big 5 UK high street banks right now. Recklessness, risky spending, tax avoidance, abusing government support, continuing to award obscene bonuses to senior management to name but a few. But here’s one that might not seem immediately apparent: climate change.
The connection between your high street banks and climate change may not appear immediately obvious. When you pop into your local bank to deposit some cash you are greeted by a friendly cashier in a shiny clean enterprise, not a dirty building with a massive chimney spewing carbon dioxide into the atmosphere.
But who do you think finances the factories? Factories require large amounts of capital, and without some serious help from a bank most would not get built. Banks provide direct corporate loans as well as investment banking services (such as helping companies sell bonds and shares.)
And this damning recent study shows that UK high street banks are among the biggest culprits. The study put Barclays, RBS and HSBC in the top 20 world banks financing coal-fired electricity and coal mining since 2005.
Barclays (in fifth place) has spent a phenomenal €11,514 million. This includes providing more than €35 million in finance to Indian Mining company Vedanta Resources which has resulted in widespread illegal tree felling, intruded on local tribes and caused water scarcity and pollution. It has also provided Dynegy-LS Power with credit as they have built 12 new coal power plants in the USA — these plants will put out more than 65 million tonnes of CO2 per year!
RBS, HSBC and Barclays all participated in financing €70 billion for energy giant E-ON which, in 2008, proposed to build the first coal-fired power station in the UK for 30 years in Kingsworth, Kent, as well as announcing plans to build a further seventeen coal and gas-fired power station in Russia.
The report also points out the hypocrisy in these banks’ statements: RBS states it ensures that “As a financial services group our direct impact on the environment in terms of climate change … is limited”. Not that limited, since it spent €10,694 million financing coal since 2005, and is the UK’s biggest tar sands funder. In fact, there has been such anger about RBS’ alleged greenwashing that it has been forced to pull out as a sponsor of Climate Week.
In contrast, the Co-operative Bank’s ethical investment policy prohibits it from financing any oil, coal or gas projects.
But remember, banks use your money. You give a bank your money to keep it safe, the bank loans it to someone else to make money from interest. The more people who use a bank, the more money the bank has to turn into profit.
If we stop giving money to these banks, if we show them that we do not support dirty coal factories and tar sands, if we trust our money instead to banks that invest in clean, ethical, sustainable projects then these banks will not be able to turn a profit. So move your money — and give the coal-financing banks something to be angry about.
To find out more about banks’ dodgy dealings go to www.banktrack.org
Sarah Arnold is Co-Director (International Programmes) of UKYCC, and is currently an economics student at the University of Edinburgh.
Originally published in March 2012 at moveyourmoney.org.uk
