Greenpeace challenges banks over $ 1.4 trillion invested in fossil fuels since Paris Agreement

• New Greenpeace report reveals that 24 banks participating in Annual Meeting have financed fossil fuel industry by $ 1.4 trillion since 2015 Paris Agreement
• The international financial system is fundamentally reshaping itself around how to transition to a net-zero economy, says Bank of England Governor Mark Carney
• Politicians are lagging behind, but COP26 in Glasgow in November offers governments the chance to take leadership role
• Business leaders need to be held accountable through tougher regulations or tighter reporting metrics

Davos-Klosters, Switzerland: Since the ground-breaking Paris summit on climate change in 2015, 24 global banks have invested $ 1.4 trillion in the fossil fuel industry, according to Greenpeace International Executive Director Jennifer Morgan. 

Greenpeace’s report, ‘It’s the Finance Sector, Stupid’, published today, puts the blame for the climate emergency at the feet of the banks, insurers and pension funds that participate in Davos. The report adds that $ 1 trillion could buy 640 GW of solar power, more than the current global capacity.

However, financiers on the panel, tasked with solving the “green growth equation”, argued that the international financial system is fundamentally reshaping itself around how to transition to a net-zero economy. They are responding to the demands of their clients as well as directly feeling the heat through, for example, having to reprice the cost of insurance risk.

Bank of England Governor Mark Carney said: “With major investors, the question is: what is your plan to get to net zero?” 

Two-thirds of questions at bank AGMs are now around these issues, he said, adding: “Everyone knows they need a plan.” 

Carney acknowledged Greta Thunberg’s reference at the Annual Meeting today that on our current emissions trajectory we will – in a little over eight years – most probably breach the limit required to restrict global warming to 1.5 C. He called for a credible trajectory towards a green transition, based on an agreed timeframe and common metrics. This, along with public pressure and government policy, will determine where capital flows, he said.

Governments are lagging behind. We are in the midst of the largest civil society protests since the Iraq and Vietnam wars, Morgan said, but “it’s actually the politics that’s holding us back on this”. She called on Government leaders to take courage, sit down with experts, civil society and innovators, and put together what we know needs to be done. Carney pointed to November’s COP26 meeting in Glasgow as the opportunity to get private actors and regulators together to ensure that climate change was taken into account in every financial decision.

Speaking as a member of the board of directors for Saudi Aramco, Andrew N. Liveris agreed that governments have been slow and called for businesses to “get very serious on the financial side of KPIs”. Outcomes will only emerge if we hold people accountable to the right KPIs, he said, adding that COP26 is an opportunity to develop metrics that business will respond to.

However, governments also need to get their own houses in order, said Mariana Mazzucato, Professor of Economics of Innovation and Public Value; and Founder and Director, Institute for Innovation and Public Purpose, of University College London. 

Currently, governments steer three times more subsidies towards fossil fuels than towards climate solutions. The UK’s Department of Transport has a £ 30 billion procurement budget that is focused more on cost efficiencies than transitioning to a zero-carbon economy, she said. The German government, by contrast, has made public procurement conditional on sectors, such as the steel industry, transforming themselves. Mazzucato asked how genuine the claimed transformation of the finance sector really is. “Currently there is lots of talk, but all the walk is going in the wrong direction,” she said. What will really cause change is the way we govern businesses, she said, asking: “Why don’t we have a financial transaction tax?”

The panellists all agreed on one key issue – 2050 is far too late to achieve a net-zero economy. 

“We cannot get to 2030 and still have this conversation,” said Liveris.