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In a new environmental policy announcement, Goldman Sachs has ruled out any future financing for oil drilling or exploration activities in the Arctic, citing the scientific consensus on the climate crisis as their key reason. Currently, the banking industry at large continues to underwrite global warming. Environmentalists are hoping that the move will pressure other banking institutions to follow suit. Faced with our climate emergency, ending investments and funding of the fossil fuel industry is crucial in order to bring about the necessary rapid shift towards a zero-carbon world economy.
Multinational investment bank and financial services firm Goldman Sachs has just updated their policy to rule out all future financing of oil drilling activities in the Arctic, including the Arctic National Wildlife Refuge, and will end investments in new thermal coal mines everywhere in the world. In addition to recognising the scientific consensus over the climate crisis and the need to step up to face the environmental challenges of the 21st century, the statement also pledged to invest US$750 billion towards sustainable development in climate transition finance over the next decade, and sell weather-related catastrophe bonds.
While the policy change, which marks the first American bank to create a “no-go” zone for the oil and gas sector, has been applauded by environmentalists, many warn that it doesn’t cover enough ground as it does not make any commitments to end fracking. In addition, these measures are insufficient if they are only implemented in one single institution – it relies on other banks to follow Goldman’s suit to end coal financing if we are to stand a chance against the most urgent issue facing our planet and human civilisation.
Read: 20 Fossil Fuel Companies Generate One Third Of All Global Emissions
“Goldman Sachs’ updated policy shows that US banks can draw red lines on coal and gas, and now other major US banks, especially JP Morgan Chase – the world’s worst banker of fossil fuels by a wide margin – must improve on what Goldman has done,” said Jason Opeña Disterhoft, a Rainforest Action Network (RAN) campaigner who helped lobby for the change.
In an investigation by the Guardian published earlier this year, journalists revealed that the world’s biggest investment banks provided about US$700 billion in funding for the most aggressive fossil fuel companies since the beginning of the Paris Climate Agreement, despite the divestment model having somewhat taken off in Europe and in some US-based institutions.
As uncovered by Green Queen, the fact of the matter is worse in Asia – even as Beijing has committed to the Paris Agreement, Chinese banks have become lenders of “last resort” for many coal projects in Asia, Africa and the Balkans. Some of the biggest fossil fuel funding culprits included the Bank of China, financing over US$55.5 million and HSBC’s US$57.8 million in funding within just two years.
Read: We Can’t Stop Climate Change If The Banking Industry Keeps Funding Fossil Fuels
While Goldman cites environmental concerns as a key motivator for the move, there is a financial incentive to end funding for the fossil fuel industry. According to an analysis published in November this year by the world’s 8th largest bank, BNP Paribas, the big oil industry is now in “relentless and irreversible” decline within less than one decade, driven by the accessibility and availability of renewable energy alternatives in recent years. In a comment by American environmental organisation the Sierra Club, “most people see the writing on the wall for fossil fuels and the oil industry in the coming decades.”
Lead image courtesy of Sergey Anisimov / Anadolu Agency / Getty Images.