When it comes to efforts to tackle climate change, there’s not a lot of love flowing to bankers these days. In March, the Securities and Exchange Commission proposed a new rule requiring banks to disclose the carbon footprint of their loans — so called “financed emissions.” A bank that loans money to a coal mine developer, for example, would be required to report on the resulting emissions. Environmental groups such as Rainforest Action Network and 350.org have expanded campaigns targeting Chase, Citi, Wells Fargo, and Bank of America, among others, for financing tar sands and other fossil fuels. And in May, a report called “The Carbon Bankroll” showed that climate-concerned businesses like Google, Meta, Microsoft, and Salesforce are effectively misstating their carbon footprints, failing to account for cash holdings that banks repurpose, at least in part, to fund fossil fuel development.
How Businesses Can Hold Their Banks Accountable on Climate Change
Companies are under scrutiny for how major banks that they partner with are financing carbon-intensive projects. How can companies wishing to be “green” respond? One solution is to switch to a low-carbon bank if possible. But a better hope is that scrutiny on how even traditional financing is part of a global economic system heading toward catastrophe will convince business leaders to take drastic, holistic action to fight climate change. This perspective could create a world where CEOs show up for climate on Capitol Hill and in the editorial pages of newspapers, where corporate dollars fund climate advocacy and not the oppositional Chamber of Commerce, and where managers buy employees bus tickets to climate marches. Daylighting big finance’s role in the climate crisis can be incredibly valuable. But only if business leaders learn the right lessons from it.