At home, I have solar panels. I bike to the store. I eat less meat, and I use less water. I shun single-use plastics.
I do all this. And yet…I know it’s not enough. I know it’s important. But, it’s not enough.
Why? Stopping climate change is not just up to individuals anymore. It’s up to everyone—even people and industries the average person might not associate with protecting the planet.
That includes banks. Awareness is growing that financial institutions have a key role to play based on what they finance or don’t finance. This notion was eloquently expressed by the environmentalist Bill McKibben when he wrote for The New Yorker that, “money is the oxygen on which the fire of global warming burns.”
Simply put, the banking industry represents the nexus between people’s money and what money actually does in the world. Given this de facto position at the center of climate change, what banks don’t finance is just as important as what they do.
U.S. banks currently have $14 trillion on deposit. But that money—which is really my money, your money, businesses’ money—doesn’t just sit in a vault. It goes out into the world and finances things—including industries you or I may not want to support. Industries that accelerate global warming, for example.
For centuries, banks’ financing power has accompanied and even helped drive societal evolution via the activities they finance. Banks have played a meaningful role in the development of industries from agriculture to transportation. This is still true today when it comes to energy and climate, but with a key difference: The stakes for humanity have never been higher, which means the need for action—not just words—has never been more urgent.
Let’s Leapfrog Bridge Technologies
Since the Paris climate accord was drafted in 2015, progress on global warming has not come as fast as many would like—including at the recent COP25 summit in Madrid, where world leaders failed to agree on details for a global carbon market. But it’s not just about elected officials; the banking industry can do better, too. The Rainforest Action Network’s most recent Banking on Climate Change report found that 33 banks worldwide poured $1.9 trillion into fossil fuels between 2016 and 2018.
While the idea of quitting fossil fuels cold turkey might sound appealing, many today acknowledge that successful energy transition from non-renewable to sustainable power sources will require a long-term process that includes broad partnership, collaboration and planning. Here, the banking industry has tremendous potential to help accelerate this process—and not just for altruistic reasons. It’s also smart business.
Consider the example of tar sands mining, a sector that has received more than $50 billion in financing since 2016. Here’s what it takes to extract oil from tar sands: After clearing an area entirely of vegetation, bitumen (essentially a semi-solid form of petroleum) is removed from deep below Earth’s surface, then separated from sand and water, then transported to a facility for processing, then sent to a refinery. To fill up your SUV, two tons of tar sands must be mined!
What if that $50 billion had instead been invested in solar or wind? Not only could we be years ahead on the path toward successful energy transition—we’d likely have uncovered significant business opportunity as well.
This is what the energy transition means. Let’s move away from expensive, harmful bridge technologies tied to fossil fuels and move toward sustainable energy sources that are better for the planet and for humans.
A Time for Action, Not Empty Commitments
With this in mind, Bank of the West has policies in place to restrict or prohibit financing of certain industries harmful to the planet. We took action back in 2017 because we understood that what banks don’t finance is just as important as what they do finance.
That’s why we don’t provide financial products or services to companies whose primary business is connected to oil from tar sands or oil and gas from shale. We don’t finance Arctic drilling projects. We’ve also restricted our financing of coal-fired power plants.
The same applies to other activities we believe harm the planet, including palm oil production and big tobacco. Palm oil production is a significant cause of tropical deforestation, while micro-plastics from the 4.5 trillion cigarette butts that litter our planet each year can be found in 70 percent of seabirds and 30 percent of sea turtles.
We have the strongest environmental stance of any major U.S. bank. At a time when many companies make hollow pledges and commitments, we are taking action. Based in San Francisco, we’ve seen first-hand the devastating floods and wildfires in Northern and Southern California fueled by climate change. At the same time, conscious banking is part of our global purview as a subsidiary of BNP Paribas, which is playing a leadership role in accelerating the energy transition. Bank of the West is part of BNP Paribas’ network of like-minded banks in 72 countries. That global reach is relevant—what’s at stake here is the preservation of our planet.
The Power of Banking Meets the Power of People
Environmentally conscious financing policies and a global purview matter in today’s changing world. Bank of the West is the only major bank accepted as a member of the international environmental organization 1% for the Planet. We’re also the only major bank accepted as a member of Protect Our Winters, which is working to reverse climate change. Earning the recognition of these powerful groups is gratifying, but we know our bank is on a journey and we certainly don’t have all the answers.
The road to a sustainable future is one of action, which for us begins with our financing policies, and also involves finding products and services that will help businesses and consumers take action to protect our planet. In December, Bank of the West became the first U.S. bank to team up with the Swedish fintech company Doconomy to empower our customers to measure the CO2 impact of what they buy.
Doconomy’s cloud-based software tracks the CO2 emissions of every transaction, thus allowing consumers to better understand the impact of their purchases. The card-connected digital tool lets users review the environmental impact of their shopping on-demand. Through Bank of the West’s Doconomy collaboration, consumers will be empowered to reduce their carbon footprints thanks to increased knowledge about the environmental effects of their purchases.
This, we believe, will help leverage the power of banking to fight climate change. Our customers will be able to measure their day-to-day impact and act accordingly to use their spending power to help protect the environment—all while knowing their money is with a bank that shares their values and stewards their deposits to finance a more sustainable future.
- US Banks Total Deposits: 14.04T USD for Q2 2019. [online]. https://ycharts.com/indicators/us_banks_total_deposits.
- Rainey, James. (2018, August 27). Plastic straw ban? Cigarette butts are the greatest source of ocean trash. [online]. https://www.nbcnews.com/news/us-news/plastic-straw-ban-cigarette-butts-are-single-greatest-source-ocean-n903661.
- What does being a leader in sustainable finance mean? [online]. https://group.bnpparibas/en/news/leader-sustainable-finance-mean.
- Bank of the West BNP Paribas First U.S. Bank to Team with Doconomy To Enable Customers to Track CO2 Impact of Purchases. [online]. https://www.bankofthewest.com/about-us/press-center/press-releases/2019/2019-12-10-first-us-bank-to-team-doconomy.html.
- Doconomy AB. [online]. https://doconomy.com/en/.