Idea Lab Noteworthy
Not Neutral:
How Banks Can Help Drive Energy Transition by Ben Stuart
A
t home, I have solar panels. I bike to the store. I eat less meat, and I use less water. I shun single-use plastics.
I do all this. And yet…I know it’s not enough. I know it’s important. But, it’s not enough. Why? Stopping climate change is not just up to individuals anymore. It’s up to everyone—even people and industries the average person might not associate with protecting the planet. That includes banks. Awareness is growing that financial institutions have a key role to play based on what they finance or don’t finance. This notion was eloquently expressed by the environmentalist Bill McKibben when he wrote for The New Yorker that, “money is the oxygen on which the fire of global warming burns.” Simply put, the banking industry represents the nexus between people’s money and what money actually does in the world. Given this de facto position at the center of climate change, what banks don’t finance is just as important as what they do. U.S. banks currently have $14 trillion on deposit.1 But that money—which is really my money, your money, businesses’ money—doesn’t just sit in a vault. It goes out into the world and finances things—including industries you or I may not want to support. Industries that accelerate global warming, for example. For centuries, banks’ financing power has accompanied and even helped drive societal evolution via the activities they finance. Banks have
played a meaningful role in the development of industries from agriculture to transportation. This is still true today when it comes to energy and climate, but with a key difference: The stakes for humanity have never been higher, which means the need for action—not just words—has never been more urgent.
Let’s Leapfrog Bridge Technologies Since the Paris climate accord was drafted in 2015, progress on global warming has not come as fast as many would like—including at the recent COP25 summit in Madrid, where world leaders failed to agree on details for a global carbon market. But it’s not just about elected officials; the banking industry can do better, too. The
When you put your money in the bank it doesn’t just sit there. It goes out into the world and finances things. Credit: Bank of the West.
For centuries, banks’ financing power has accompanied and even helped drive societal evolution via the activities they finance. Rainforest Action Network’s most recent Banking on Climate Change report found that 33 banks worldwide poured $1.9 trillion into fossil fuels between 2016 and 2018. www.thesolutionsjournal.com | Winter 2020 | Solutions | 11