UCSF Sustainability Stories


Ana Toepel, Green Impact, March 2020


Big Banks Fuel Climate Change with Fossil Fuels Investments

Image Source: iStock

According to a January article in the The New York Times by members of StopTheMoneyPipeline.com, major banks and asset managers—such as JP Morgan Chase, Wells Fargo, Citibank, and Blackrock—are some of the biggest investors in the fossil fuels industry. The article makes the case that, with investments in the hundreds of billions, these institutions are essentially funding the climate crisis. The authors’ message to readers is: “If you want to stop climate change, follow the money.” 

Banking on Climate Change, a 2019 publication by several large environmental organizations, including Sierra Club and Rainforest Action Network, makes the same case, and details the lending and underwriting from 33 global banks to the fossil fuel industry as a whole. The report claims that these 33 banks (including those listed above and several other large American banks) financed fossil fuels with $1.9 trillion since the Paris Agreement, which is more than all the currency in circulation in the U.S.! The report also explains that most of these banks are not taking action to phase out fossil fuels investment and are even funding the expansion into new fossil fuels sources in many cases.

Fortunately, some financial institutions are making the shift away from fossil fuels. In January the world’s largest asset manager, BlackRock, announced it will now make climate change central to its investment considerations. To this end, it is removing companies that generate more than 25 percent of their revenues from coal production from its actively managed portfolios and requiring companies it invests in to disclose plans for operating under the Paris Agreement’s goals to limit global warming to less than 2 degrees Celsius. Last fall the European Investment Bank (EIB), the lending institution for the EU, decided it will end all lending to fossil fuels by the end of 2021 and align all financing decisions with the Paris Climate Agreement. The EIB was the first multilateral development bank to commit to this, which may send “an unequivocal signal into the financial system to encourage other multilateral lenders to follow suit.” A recent GreenBiz article suggests that companies considering the impact investments have on the planet and society may indeed be a recent trend. 

What the UCSF Community Can Do

As we reported in a story last June, over the past several years the University of California has been working to make their financial investments more sustainable. It has been investing large sums in renewable energy and other sustainable companies—and made the bold move in September 2019 to divest its $13.4 billion endowment and $80 billion pension fund from fossil fuel companies, the largest divestment of any public university ever. Last February UCSF spearheaded the divestment process, being the first UC campus to urge the UC Regents to divest its endowment portfolio of all investments in the fossil fuel companies with the greatest carbon reserves. 

UCSF faculty, staff, and students can also make a difference with their banking, investing sustainably and choosing banks whose lending practices support climate action instead of fossil fuels. Look for institutions that practice socially-responsible investing (SRI), which aligns investments with values of sustainability and justice. SRI considers environmental, social, and corporate governance (ESG) criteria in investment analysis and portfolio construction to avoid investing in companies that negatively impact the environment and/or society. UCSF faculty and staff have access to Fidelity’s ESG and social investing options, such as women’s leadership bonds and sustainable bonds. For your banking needs, local credit unions and community development banks are great choices for moving your money away from fossil fuels. 

Resources

Hip Investor’s “Investing in a Better World in 2020”

Fidelity’s “Investing Based on Your Principles”

“Get a Better Bank” guide from Green America

Portfolio, bank, and credit union options from Sierra Club

“3 Steps to a Socially Conscious Portfolio,” New York Times