Morgan Stanley, which promised $250 billion in low-carbon financing three years ago, tripled that goal this month while also increasing other social-development goals. And Citigroup extended its environmental-finance target to $500 billion by 2030 from $250 billion by 2025. An additional $500 billion will go to “investments in education, affordable housing, health care, economic inclusion, community finance, international-development finance, racial and ethnic diversity, and gender equality.” The banks declined to comment.
The promises on clean energy are the flip side of the industry’s other major role in the climate crisis. Banks extended more than $3.9 trillion of loans and underwriting services to fossil-fuel companies since the start of 2016, according to data compiled by Bloomberg. JPMorgan, Wells Fargo & Co. and Citigroup were the industry’s top three, the data show, lending and underwriting a combined $638 billion.
Citigroup and Morgan Stanley were among more than 40 global banks that signed a pledge to cut pollution from portfolios and reach net-zero emissions by 2050. The announcement Wednesday from the Glasgow Financial Alliance for Net Zero, led by former Bank of England Governor Mark Carney, came ahead of President Joe Biden’s global summit on the climate. Earlier this month, investors managing $11 trillion called on the world’s biggest banks to phase out financing of fossil-fuel companies and back the goals of the Paris climate agreement.
Brett Fleishman, who runs fossil-finance campaigns for the nonprofit 350.org, said that’s where Wall Street should turn its attention, rather than the raft of trillion-dollar pledges in recent months.
“The single most important thing banks and other financial institutions can do to address climate change and advance sustainable development is to phase out its fossil and deforestation financing—starting immediately,” Fleishman said. “Wall Street is driving the climate crisis.”
Justin Guay, who directs global climate strategy at the Sunrise Project, will be watching how the banks use the money they've pledged.
“Everyone has a different definition of what is sustainable,” Guay said. “Given how much money they invest in fossil fuels, I think the onus is on them to prove that none of these investments in any way, shape or form are just repackaged, green-washed fossil-fuel investments.”
“I can assure you,” she said, “whether it’s the drive to net zero, or the other important parts of our ESG agenda—including closing the gender pay gap and promoting racial equity—we are backing up our commitments with real action and measurable results.’’
—With assistance from Laura Davison and Alastair Marsh.
This article was provided by Bloomberg News.