I’ve come and I’m surprised that anyone will be frightened by proposals that large financial companies will take action to stop or limit climate change. Most models (someone might argue wrongly) show the major economic shocks that will happen more than 30 years later. Once the cash flow is discounted to the present, the effect is practically zero.

But ESG (“Environmental, Social and Governance”) investing is a new big scam… If one tries to be a fully compliant investor, there is nothing to buy. But it is great for enriching consultants and NGOs, as well as for making board members who do nothing like CalPERS board members look useful.

Author: Michael Northrop, Director of the Sustainable Development Program at the Rockefeller Brothers Foundation.Original poster Environmental finance

Carbon Tracker, a London financial analysis store, introduced us to this financing record in 2019. Perhaps it is because Covid-19 has intervened and we have not fully absorbed it.

We have already funded a warming of 1.5 ? C. What does this mean? In short, the cumulative impact of fossil fuel projects funded by banks and investors will be a warming of 1.5 degrees Celsius. In other words, if all these projects are completed and run within their expected life cycle, we will fund us through the remaining 1.5¡C carbon budget.

In fact, according to Carbon Tracker, funding for warming of more than 1.5 degrees Celsius has been provided. We are on the road to 2 ? C and higher.

This means that if we are serious about keeping the global warming at 1.5 degrees Celsius, we will need to close some of these projects that have already been financed before their expected operating life is completed.

Need to stop financing new oil and gas projects

This also means that we need to immediately stop financing any additional new oil and gas projects, because every point of it needs to be rolled back, which is obviously becoming more and more difficult in the real world.

Private sector financial participants with total assets of US$130 trillion began to recognize that they are part of the problem and play a role in formulating solutions. They collectively came to COP26 to sign a pledge that the former Governor of the Bank of England, Mark Carney, With its assistance, the Glasgow Net Zero Financial Alliance (GFANZ) is called the “Glasgow Financial Alliance”. It promised banks and investors to decarbonize their portfolios by 2050.

Unfortunately, none of the immediate plans, deadlines or promises announced by the Alliance or any of its banker or investor members did anything practical.

In the eyes of cynical observers, this is an empty ship designed to relieve the pressure on participants in the private financial industry and postpone any actual actions to an uncertain future. Each signatory has two to three years to develop a plan, and no member is required to reduce the carbon in their loans and investment portfolios by 2050.

We learned from a report called Banking On Climate Chaos that since the Paris Agreement was reached at the end of 2015, the 60 largest commercial banks in the world have provided US$3.8 trillion in funding for fossil fuel development. This is equivalent to providing approximately US$750 billion in fossil fuel financing each year.

Another recent related report stated that since 2010, private equity has provided fossil fuels with another $1.1 trillion in funding.

All this shows that a large amount of private money has been racing to increase a large amount of carbon emissions in the future without paying attention to the brake pedal.

Considering the impact and importance of the Paris Agreement on most economic sectors, these figures are staggering. It points to one of the main shortcomings of our global efforts to stabilize atmospheric emissions: finance is not a party to the Paris Agreement. (The fossil fuel industry is no exception.) They are not at all bound by the United Nations Framework Convention on Climate Change and the Paris Climate Agreement, and they obviously do not take any climate science or the need to protect the planet seriously. This is a spectacular and tragic gap in the global climate governance system.

At this year’s COP, Wednesday, November 3 is called the Financial Day, and the GFANZ Alliance is the featured project of that day.

Given the buildup, you would think that this will be the most far-reaching international financial agreement since the Breton Forest Conference. Before, during, and in the days after that, the headlines were flooded with messages like this: “US$130 trillion in private financial assets agreed to solve the climate change problem.”

In Glasgow, I’m not alone, because it’s hard for me to see anything in the detailed rules that seems to contribute to preventing the development of fossil fuel projects-this is exactly what the International Energy Agency said in March last year, if we Limit the temperature rise to 1.5 °C.

None of the 60 major commercial banks has a “decarbonization leadership”

However, the trend line of fossil fuel bank financing is rising and not falling. No large commercial bank has announced a plan to stop financing for new fossil fuels.

Surprisingly, unlike any other sector related to accelerating global warming, none of the 60 major commercial banks has a leading position in decarbonization.

In other days of the COP, government, private sector participants, and think tanks made various interesting mashups and provided a series of creative announcements about their determination to establish ambitions for one thing or another. In contrast, on the private financing day, the only announcement was related to GFANZ. Banks and investors have not even tried to launch more good ideas. Everyone shrouded themselves in the penumbra of GFANZ, and then fell silent.

According to insider reports, Mark Carney expects certain institutions to announce credible plans before Glasgow, and he hopes that banks and investors will announce a wave of additional concrete plans, which will begin a series of serious commitments to the industry. . He didn’t get a meaningful one.

Irony: Does the “cocoon” of financial conglomerates prevent banks from leading positions?

Some people in Glasgow speculate that GFANZ is actually a psychological deterrent to the leadership of banks, because these banks and large investors are safely hiding in cocoons that support GFANZ. There, they are having very interesting conversations, discussing various very technical issues related to difficult economic sectors such as steel, cement, shipping and aviation, which actually makes it even more difficult for any single institution to take a leadership role. It’s ironic.

An observer in Glasgow compared it to a large group of bankers in the Titanic banquet hall, with cocktails in their hands, bands playing, and fascinating conversations, but nothing was done to eliminate the urgency of catching up with the life raft. feel.

For those who are really interested in finding ways to cut off fossil fuel financing, what is more interesting are several other commitments that occurred during or before the COP, including China’s decision to stop all overseas coal public financing; the G20 weekend before the COP Announced that its members will also give up public overseas coal financing; more than 20 countries on the COP have agreed to stop all overseas development financing for all fossil fuel projects; including Denmark, Costa Rica, France, Sweden, California, Quebec, Ireland, Greenland, Wales, Portugal, Twelve governments, including New Zealand and Italy, have pledged to completely phase out fossil fuels.

Before these announcements, the October 26 report stated that 1,500 investment institutions overseeing a total of US$39 trillion in assets under management had made some form of fossil fuel divestment decisions on their investment portfolios.

It is commendable that many banks have participated in a series of very commendable forest protection commitments by promising to stop funding deforestation. It is not clear how this will happen, but surprisingly, these banks agreed to stop doing some particularly bad things.

A lot of “chest beating”…but profit on earth

The GFANZ announcement did not include these contents. There is general agreement to increase clean energy financing. Yes, there is more and more important support for clean energy financing around the world, but if these banks continue to provide large amounts of funds for new fossil fuel development, let us go further and further, then It doesn’t matter. It further exceeds the 1.5 × C threshold.

Banks and investors must do better. The stark difference between their beating but surprisingly empty GFANZ announcement and the reality of continuing to invest large amounts of new dollars into new fossil fuels that undermine the carbon budget is unethical and unacceptable.

Just imagine what it means if financial institutions promise to terminate financing for the development of new fossil fuels. This will be one of the most powerful levers anyone on the planet can use to solve climate problems.

Finance is in a unique position to save the planet. Although science and daily reality show that the climate has changed in terrible ways, choosing the earth over profit has not yet become a priority.

As a senior banker said to me not long ago: “It is not our responsibility to address climate change; it is the government’s role.”

For the children and grandchildren of bankers and investors, please immediately insist that your father and grandfather-most of them male-take immediate responsibility for their actions and withdraw from new fossil fuel exploration and development.

They should do this for you—their children and grandchildren—and everyone else.