How Wall Street enables the fossil fuel companies cooking our planet

Many big banks try to present a green image, but the largest banks in the world are the ones abetting polluters

By Matthew Rozsa

Staff Writer

Published June 3, 2024 5:30AM (EDT)

Power Station | Wall Street sign (Photo illustration by Salon/Getty Images)
Power Station | Wall Street sign (Photo illustration by Salon/Getty Images)

Stevie O'Hanlon may not be a celebrity, but her organization makes a lot of headlines. Sunrise Movement is well-known for its creative protests aimed at raising awareness about climate change, such as interrupting a campaign stop for Florida Gov. Ron DeSantis in January during his brief presidential bid.

Overwhelming scientific evidence suggests we are heading toward a future of more intensified extreme weather events like tropical storms, droughts, floods, wildfires and heat waves because of burning fossil fuels. Political figures and fossil fuel companies often take the spotlight for not doing enough to get us off this path. But O'Hanlon says there is another, often overlooked culprit behind these mechanisms: Wall Street.

"Essentially banks are betting against us stopping the climate crisis and our generation having a livable future."

"Banks continue to fund oil and gas development in the U.S. and around the world, even as it's crystal clear that these kind of projects are incompatible with a stable climate and a safe future," O'Hanlon, who works as Sunrise Movement's communications director, told Salon. "Essentially banks are betting against us stopping the climate crisis and our generation having a livable future."

Other activists who say Wall Street bears much of the burden for the current climate crisis argue that the finance industry threatens to accelerate our descent into an overheating world.

"It is certainly true that the banking and finance industry bear some of the blame for funding fossil fuel infrastructure," said Dr. Michael E. Mann, a professor of earth and environmental science at the University of Pennsylvania. "Some are now distancing themselves from fossil fuel investment, and they should get credit for that, while pressure needs to be placed on those that still fund new fossil fuel infrastructure, especially since we now know that stabilizing warming below catastrophic levels is incompatible with any additional fossil fuel infrastructure."

Adèle Shraiman understands the difficulty of opposing the fossil fuel industrial complex. She is the senior campaign strategist at the Sierra Club's Fossil-Free Finance campaign. The Sierra Club was founded in 1892 by conservationist John Muir and is one of the oldest and most successful environmentalist nonprofits in America. The organization has a long history of researching power structures that reinforce bad environmental practices, and Shraiman broke it down.

"Banks can play a key role in driving the climate crisis through their financing activities," Shraiman said. "Many of the world’s largest banks, including the top banks on Wall Street, lend billions of dollars to fossil fuel companies, enabling the buildout of the deadly and destructive industry that is most responsible for the greenhouse gas emissions causing climate change."

"The International Energy Agency, among numerous other globally recognized expert bodies, has repeatedly affirmed the need to end fossil fuel expansion in order to prevent catastrophic climate change," Shraiman continued. "Banks have a central role in reaching this goal by ending financing for companies expanding fossil fuel production and instead deploying financing toward renewable energy and other much-needed climate solutions." She recommended that consumers learn about their bank's own responsibility in climate change by visiting a website that exists for that purpose.

"The Banking on Climate Chaos report is the preeminent annual report tracking the fossil fuel financing of the world’s 60 largest banks, including financing for the most polluting sectors from coal mining to Arctic oil and gas," said Shraiman. "The most recent edition of the report found that in 2023 alone, these banks poured over $700 billion into fossil fuels."

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These factors create a massive financial disincentive to actually solve our planetary crisis.

Salon reached out to six major American banks, including four — JPMorgan Chase, Citigroup Inc, Wells Fargo, and Bank of America — identified as being most responsible for causing climate change. Citigroup, Morgan Stanley and Goldman Sachs did not respond. Wells Fargo declined to comment, only sharing sources to its sustainability practices.

A spokesperson for J. P. Morgan said, “We provide financing across the energy sector: supporting energy security, helping clients accelerate their low carbon transitions and providing clean energy financing with a target of $1 trillion for climate action by the end of 2030."

And a spokesperson for Bank of America said, “We are supporting clients across the energy sector, to help drive the innovation taking place in both traditional energy and the clean energy sectors." After claiming that BloombergNEF shows their bank has "the highest clean energy supply financing ratio among U.S. peers," the spokesperson said the bank is "engaged with clients across the energy spectrum to help them with their energy transition goals.”

While these claims of eco-consciousness many seem sufficient, many activists and experts wrinkle their noses and characterize them as "greenwashing," a practice in which companies emphasize sustainable practices, but realistically it adds up to little more than marketing. It's not uncommon across industries, with everyone from chain restaurants to universities to even fossil fuel companies making "pledges" or highlighting recycling programs while doing little to nothing to stop emissions — far and away the main factor in global heating and climate change.

Dr. Richard Wolff, a University of Massachusetts Amherst professor of economics emeritus, told Salon that fossil fuel companies rely on bank loans to supplement their investments into risky projects, with producers similarly leveraging their capital by supplementing it with bank loans. Fossil fuel producers will also issue bonds that are then marketed by the banks for profit. These factors create a massive financial disincentive to actually solve our planetary crisis.

"Those banks seek safety of principle plus interest and are not interested in or wiling to forego either in the interest of dealing with the climate crisis," Wolff said. "If any bank did that it would suffer competitively because other banks did not follow suit. Since larger banks now compete globally, the problem is one of banks' general disinterest in anything that might damage their fossil fuel borrowers' capacities to service their loans, market their bond issues and so on. Now of course, if government were to tax banks' interest income from loans to fossil fuel producing borrowers, that would change the competitive equation. Banks might favor the tax exempt (because they are non-fossil fuel) borrowers much as banks now favor tax-exempt municipal borrowers."

Fortunately, ordinary citizens are not helpless in addressing this crisis. Dr. Peter Kalmus, a NASA climate scientist who emphasized to Salon he speaks only for himself, said that "these evil banks that are killing the planet are headquartered on Wall Street." As a result, various climate groups plan on organizing a campaign known as Summer of Heat to shed light on how these banks are providing fossil fuel companies with the financial lifeblood they need to continue overheating the planet. "The more people who join in the protests, the more we will get done! We're planning a protest party that should last for most of the summer."

Mann also said that, in general, stronger banking regulations are required.

"The federal reserve has a role in regulating climate exposure in investment practices," Mann said. "The current Fed chair Jerome Powell has commented on this recently."

"Banks need to understand, and appropriately manage, their material risks, including the financial risks of climate change," Powell wrote in October, but stopped short of telling banks whether or not financially backing oil companies is prudent. "It is not the Fed's role to tell banks which businesses they can and cannot lend to, and this guidance is not intended to do so."

Until banks start changing their tune, activists like O'Hanlon are going to criticize them as harshly as they criticize the other major players in the climate crisis.

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"We are holding politicians and Big Oil accountable for the lives lost and homes destroyed by disasters," said O'Hanlon. "We want people around the country to understand that these are not natural disasters — they are climate disasters. And they are going to get worse if we don't take bold action. We want to send a message to politicians like Greg Abbott and Ron Desantis who are banning water breaks and the mere mention of climate change — if you continue to care more about pleasing your oil and gas donors than the lives of people in your state, you are gonna be out of a job." 

She urged the federal government to sue Big Oil and declare a climate emergency. Kalmus argued that, if these reforms are not implemented, something more radical may eventually come along.

"Short of a full revolution, the only thing that will get [fossil fuel companies] to stop are laws preventing the funding of new fossil fuel projects, or for these projects to no longer make financial sense," Kalmus said. "Protest, civil disobedience and even disruption of new fossil fuel infrastructure could make those projects harder to insure, more financially risky, and possibly lead to new laws that give preferential treatment to new solar and wind projects."

By Matthew Rozsa

Matthew Rozsa is a staff writer at Salon. He received a Master's Degree in History from Rutgers-Newark in 2012 and was awarded a science journalism fellowship from the Metcalf Institute in 2022.

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