You’re at risk of contributing to the climate crisis just by having a bank account.
The world’s 60 biggest private banks have funnelled nearly £2.8 trillion into fossil fuels since the Paris Agreement to reduce greenhouse gas emissions was struck in 2015. UK banks’ backing of the coal industry has increased by 40 per cent since the same year.
Banks can use your money – whether held in an account, pension or other investments – to loan to or invest in businesses around the world. That can mean your money goes to building an oil pipeline, or deforesting projects which displace vulnerable communities.
Campaign group Reclaim Finance warned the UK’s financial sector was “actively undermining” efforts to reach net-zero carbon emissions and called for banks to divest from fossil fuels urgently. The City of London was the biggest investor in coal of all Europe’s financial centres, the campaigners said, and the third biggest in the world.
It’s not always easy to find out how banks invest their cash, but a new tool from Bank.Green means you can investigate your own bank for free.
“The City of London isn’t lifting a finger to end its deadly coal addiction,” said Lucie Pinson, founder and executive director of Reclaim Finance. “Even if that means wrecking the UK’s reputation on climate.
“On the international stage the UK Government has sought to lead a global exit from coal, but the financial sector clearly hasn’t got the memo.”
How much do banks invest in fossil fuels?
The UK’s five biggest banks – Barclays, HSBC, Natwest, Lloyds Banking Group and Standard Chartered – invested nearly £40.4bn into the coal industry alone between 2018 and 2020, according to campaigners Urgewald and Reclaim Finance.
Barclays put the most money into companies planning to expand the use of fossil fuels, investing more than £20bn.
HSBC invested nearly £11bn into coal companies over the two year period, including direct support for coal infrastructure in Bangladesh.
Less than one per cent of the money in the world’s largest 100 pension funds were put towards low-carbon efforts in 2018, according to research by ShareAction. Cash held in current and savings accounts is unlikely to link directly to greenhouse gas emissions because the law means retail banking and investment banking must be kept separate. But that doesn’t mean the bank you use to manage your money isn’t financing schemes which are bad for the planet.
How can I find out if my bank invests in fossil fuels?
Eight in ten UK customers at Barclays and HSBC did not know their banks funded fossil fuels, a survey published in January showed.
Navigating the financial system can be tricky at the best of times and is made more difficult by a lack of transparency from banks, which is why Bank.Green’s free tool also provides resources for finding greener ways to store your cash and contribute to the global effort to keep temperature rise under 1.5ºC.
Enter your country and the bank you use, and it will provide a report on your bank’s fossil fuel record.
Banks which see customers moving their business elsewhere because of climate concerns are more likely to cut down on fossil fuel investments, the experts said. And removing funds such as your pension from banks which contribute to the climate crisis means stopping their supply of cash to loan out and invest in fossil fuels.
💸 5 leading UK banks provided $56bn of support to coal companies!
👉@Barclays tops the list with over $27bn of support to coal companies
👉With @HSBC and @StanChart, the terrible trio provided $10.7 bln of financing to companies planning to expand coal power in 2 years.
— Reclaim Finance (@ReclaimFinance) May 4, 2021
“In addition to campaign groups, banks also need to hear directly from their customers,” said Zak Gottlieb, a Bank.Green campaign coordinator.
“It’s one thing to ignore a campaign group, but if your customers are unhappy, your business is in trouble.”
Changing your bank account may take a few hours, Bank.Green said, but it could make a serious difference to the future of the planet.
What are banks doing to phase out fossil fuel investment?
Too little, according to the campaigners. While finance sectors in other countries are taking steps to remove cash from emission-heavy industries – such as in France, where 19 of the biggest banks have developed bold anti-coal policies – none of the UK’s financial institutions have created similar frameworks.
And while 26 French banks have committed to removing coal mine developers from their plans, only M&G has in the UK.
Most UK banks and investors have already joined a net-zero initiative requiring a commitment to the UK’s climate efforts, but Reclaim Finance said the figures “called into question” the impact of the Net-Zero Banking Alliance as “not a single bank or investor meets the criteria of a robust coal policy”.