Bankers should link arms, at least figuratively, with oil protestors

Since June 10, I have been arrested four times by the New York Police Department. My crime? Blockading the doors of the headquarters of the world's biggest funder of oil and gas expansion since the Paris Agreement: Citigroup.

The ongoing protests against Citi and other financial institutions will continue for the rest of the summer as part of a sustained effort to pressure them to stop funding new fossil fuel projects and the companies building them. Across the world similar pressure against banks is mounting: In the U.K., music festivals and Wimbledon came under fire because of sponsorship by Barclays, Europe's biggest fossil fuel funder; Indigenous leaders in the Amazon are pressuring global banks to stop funding Petroperú, the state oil company accused of oil spills and human rights violations; in Japan shareholder resolutions have sought to hold the boards of the major banks to account over climate failings.

Much has been written in this publication and elsewhere questioning the effectiveness of this form of activism, with the argument being made that divestment pressure simply causes financial institutions to dig their heels in and that targeting sponsors deprives the arts and sports of vital funding.

When it comes to banks, however, there is ample evidence that this type of campaigning has succeeded in the past.

The key point is that bank financing is "real money": When banks decide not to fund the oil and gas sector they are reducing the pool of available lenders, which results in a higher cost of capital for a fossil fuel company that is looking to develop new reserves. 

The push to get banks off coal funding 10 years ago shows how effective pressure can work. Most banks in Europe and North America now have policies that at the very least exclude direct funding for coal projects. Many European banks have policies that also ban financing of coal companies. This has resulted in a dramatic falloff in coal financing from some major banks: Between 2016 and 2023 there was a 50% drop in coal funding from Citi, a 38% drop from JPMorgan Chase, a 32% drop from Barclays and a 67% drop from BNP Paribas, according to a report by the group Urgewald. The result? "Coal power plants owned by firms exposed to bank exit policies are more likely to be retired, translating into lower CO2 emissions," states research by Harvard Business School.

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By Carter Pape

July 10

What really strikes me when I link arms with my colleagues to shut down a bank headquarters is why the bankers waiting patiently outside don't join us in pushing for their employer to stop funding fossil fuels. I don't expect them to join us in blocking the doors but as employees at other large companies have shown there is plenty they can do. In 2019, thousands of Amazon employees publicly called for their employer to do more on climate and 1,800 workers walked off of the job for a day. The day before the planned walkout, then-Amazon CEO, Jeff Bezos, announced a slate of climate promises, including that the company would achieve carbon neutrality by 2040.

Preventing the extreme heat, smoke events, droughts and other impacts of global warming should be enough for bank workers to join the push to end fossil fuels. But if it isn't, it's also increasingly clear that it's in banks' own interests to do so.

"The financial impacts that result from the economic effects of climate change and the transition to a lower carbon economy pose an emerging risk to the safety and soundness of financial institutions and the financial stability of the United States," concluded the Board of Governors of the Federal Reserve System in a recent report. The European Central Bank has gone even further, actively promoting the energy transition and warning that failure to do so increases credit risk for banks.

Many in the financial world may continue to roll their eyes at us climate activists getting arrested in financial districts around the world, dismissing us as dreamers who don't understand how the world really works. But what actually determines how the world really works is physics ― and the physics of our climate are crystal clear: We need to stop funding fossil fuel expansion immediately. 

The real question is whether banks will leave it until it's too late to change their ways before disruption much greater than that caused by activists — the physical and economic disruption caused by climate breakdown ― kicks in.