Illustration for article titled Why the Climate Movements Next Big Target Is Wall Street
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Climate activists are taking on a new pipeline: The one that funnels money from Wall Street into planetary destruction.

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A coalition of climate, environmental, youth, and indigenous organizations unveiled Stop the Money Pipeline, a campaign to “pressure banks, insurance companies and asset managers to stop financing fossil fuels and deforestation and start respecting human rights and Indigenous sovereignty,” late last week.

Banks, asset managers, and insurance companies may seem like less obvious targets than going directly after, say, oil and gas companies or the Trump administration. But Wall Street plays an essential role in the fossil fuel industry’s expansion. Staunching the flow of money could be an effective way to prevent more oil, gas, and coal from being dug up, which is exactly what has to happen (and then some) to avoid catastrophic climate change.

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Though many banking institutions have branded themselves as green, the world’s top 33 largest banks collectively provided $1.9 trillion in financing for coal, oil, and gas companies since countries put forth the Paris Climate Agreement in 2015.

“There are only a few major companies like Exxon Mobil, who can self-finance a project and put up all the money themselves,” Jamie Henn, 350.org co-founder, told Earther.

And even oil majors like Exxon rely on capital from investment firms like BlackRock and insurance from companies like Liberty Mutual (that have also both adopted green branding), said Henn. “If we can knock out this pillar of financing for the fossil fuel industry, we can take out the entire industry itself,” he said.

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There’s precedent for successful public pressure campaigns going after money that finances fossil fuel exploitation. The divestment movement led by 350.org has seen colleges and universities, cities, religious institutions, and pension funds to withdraw their investments from fossil fuel corporations. The climate divestment movement itself is modeled after the successful efforts to divest from apartheid South Africa in the 1970s and 1980s.

“When we launched that campaign, we were actually saying, ‘we’re not really looking to make a financial impact,’ we want to make a political impact with this work,” he said. “What surprised us is how much of a financial impact it actually made.”

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In late 2018, the movement hit a milestone with 1,000 groups agreeing to divest from fossil fuels. The number has since risen to nearly 1,160 groups managing $12 trillion (though not all of it is in fossil fuels).

Henn said he realized the financial potential of the movement in 2016, when Peabody, the world’s biggest coal company, announced it was going bankrupt and listed divestment as one of the reasons why. A 2018 Goldman Sachs report shows it’s not just Peabody, noting that the “divestment movement has been a key driver of the coal sector’s 60% de-rating over the past five years.”

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There are other recent successes beyond divestment as well. Due at least in part to public pressure, Goldman Sachs became the first major U.S. bank to stop funding oil drilling in the Arctic National Wildlife Refuge last month. An in July, Chubb announced it will be the first U.S. insurer to phase out its coal investments and insurance policies within the next three years. The four largest European insurance firms no longer cover coal power-related projects.

“So what we’re doing now is sort of taking this to the next level and going to the banks and insurance [companies] and the asset managers themselves,” said Henn, “to demand that they take action... against all fossil fuels.”

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That action can’t come soon enough. The United Nations’ (UN) recent Production Gap Report shows that within a decade, planned fossil fuel production will “more than double what’s allowable to avoid 1.5 degrees Celsius of global warming.” This year’s UN climate talks in November will also focus specifically on the role of finance in furthering the climate crisis. By that time, the campaign hopes to see firm commitments from banks and insurers to not finance projects that worsen climate change, and to instead fund renewable energy and reforestation.

The organizations running the campaign—which launched at the last Fire Drill Friday protest hosted by Jane Fonda in Washington, DC—have identified three initial primary targets. One, JPMorgan Chase, is the top global financer of fossil fuels. It has poured $196 billion in financing to fossil fuel companies since 2016, roughly 10 percent of all fossil fuel financing from major global banks. And Lee Raymond, Exxon’s former CEO, is on their board. Despite such a seemingly large investment in fossil fuels, shifting away from financing projects wouldn’t kill Chase. Janet Redman, Greenpeace’s climate campaign director, told Earther that fossil fuels roughly seven percent of Chase’s business.

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“So while that is an incredible amount of money and it means a lot to the planet,” she said, “some of these institutions can make small shifts in their portfolio—really less than 10 percent effectiveness—and accomplish a lot for the planet.”

Another, Liberty Mutual, is a top insurer of and investor in energy mega-projects like the Trans Mountain pipeline. The company invests over $8.9 billion in fossil fuel companies and utilities. They’ve also withdrawn coverage from and increased the costs of insurance for longtime customers in areas at risk of climate change impacts, such as wildfire-affected areas in California.

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And then there’s BlackRock, the world’s largest asset management firm with nearly $7 trillion in assets worldwide. It’s also the largest investor in commodities linked to fossil fuels and deforestation. BlackRock CEO Larry Fink frequently calls on corporations to take on a “social purpose.” But his company is the world’s top investor in public oil, gas and coal companies, and is among the world’s top shareholders in companies that deforest the Amazon to produce and trade soy, beef, palm oil, pulp and paper, rubber and timber.

Stopping these investments would not only be good for the climate, but also for indigenous communities and other vulnerable people worldwide. The Liberty Mutual-backed Trans Mountain pipeline, for instance is routed through First Nations territories. And deforestation in the Amazon, such as that undertaken by BlackRock’s clients, has caused a human rights emergency for indigenous people. Those human rights violations are not only ethically unconscionable, but they could also leave investors open to legal action down the road.

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Last Thursday, BlackRock announced that it’s joining the Climate Action 100+, a group of investors that manage assets worth over $35 trillion worth, which pressures the world’s biggest polluters to show how they will reduce their greenhouse gas emissions.

In the coming months, the Stop the Money Pipeline campaign will demand each of these targets divest from coal, oil, gas, and deforestation, while pressuring the federal government to strictly regulate the energy industry. Next Thursday, the campaign will be targeting Wells Fargo in Washington, DC for their fossil fuel finance and human rights violations, and on February 13, they’ll hold a nationwide day of action targeting college campuses and state pension funds urging divestment from fossil fuels.

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They might not have to wait long to see results. After Blackrock’s shift last week, the firm’s CEO said in his annual letter that the world is “on the edge of a fundamental reshaping of finance,” and announced that the company will no longer invest in thermal coal.

But the firm and others have a lot of work left to do, so activists will be reminding them of that in the coming weeks.

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Staff writer, Earther

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