19 states announced an investigation of six large American banks for their involvement with the United Nations’ Net-Zero Banking Alliance (NZBA). According to lead Attorney General Eric Schmitt, this Alliance would “starve companies engaged in fossil fuel-related activities” and would “only result in the killing of American companies that don’t subscribe to the woke, climate agenda.”
This was hard to wrap my head around for two reasons. One, since when were Patagonia vest-clad finance bros chaining themselves to trees or throwing soup on paintings? Second, I haven’t binged Law & Order or really watched any of the Legally Blonde movies all the way through, so I don’t have the best grasp on the legal system—and I think many other Americans could say the same. That’s why when I heard about this subpoena, I assumed that these states had reasonable evidence of banks extinguishing the fossil fuel industry, or at least enough to investigate further. The reality is, the fossil fuel industry is nowhere near starving. The six banks being sued are the world’s number 1, 2, 3, 4, 12, and 14 financiers of the fossil fuel industry in the world, collectively giving $1.4 trillion from 2016-2021.
This subpoena is harmful beyond the possible legal implications. It misconstrues and overemphasizes the climate efforts of big banks when, in reality, they’re still conducting business as usual.
One major motive for the investigation is the belief that farmers, oil leasing companies, and other businesses vital to the American economy will be unable to get a loan because of the NZBA. I’m not going to rule this out as an invalid concern. The climate community isn’t doing a good enough job listening to coal, oil, and gas communities that fear abandonment in the energy transition. But joining the NZBA doesn’t entail that these banks are blackballing the American fossil fuel industry. In fact, they’re doing quite the opposite.
In Texas and Louisiana, two issuing states of the subpoena, nearly 20 new and expanded export facilities are currently proposed to liquefy and ship fracked gas (LNG) from the Gulf Coast to foreign markets. This number could rise to 33 in the next few years, with 25 projects located in the Gulf of Mexico alone. And who’s the piggy bank for these expansions? You guessed it—the same banks under investigation for being too green. JPMorgan Chase, Citigroup, Wells Fargo, Bank of America, Morgan Stanley, Goldman Sachs have injected $44 billion into LNG from 2016-2021.
In Virginia, another issuing state, JP Morgan Chase, Wells Fargo, and Bank of America are the primary funders of Mountain Valley Pipeline, a natural gas pipeline poised to carry 2 billion cubic feet a day, once finished. Victimizing an industry that’s clearly still being handheld by big banks diverts attention from the additional and increasing burdens of pollution and climate-driven natural disasters that especially harm the citizens the investigation is supposedly aiming to protect.
What’s worse is that this subpoena isn’t just a national problem, it’s a worldwide problem. JPMorgan Chase, Morgan Stanley, and others expressed that they may need to leave the NZBA to avoid being legally vulnerable. Following these concerns, the Net-Zero Banking Alliance told its 160 members that they can continue to fund fossil fuel projects, including coal, as long as they somehow get to net zero emissions by 2050. In other words, the mere threat of this subpoena made it so that all 160 firms from across the world could have their cake and eat it too. NZBA members get to maintain the positive public image of being part of an illustrious climate initiative while also exploring new fossil fuel investments.
Attorney General Schmitt said, “We don’t let international bodies set the standards for our businesses.” So then how is it fair that the concerns of nineteen states get to set the standards for how a worldwide network of banks operate? This subpoena just created a massive loophole for a group representing over 40% of global banking assets to continue financial habits that fuel the climate crisis.
That said, in the face of these disheartening circumstances, some banks remain committed to their original climate promises. La Banque Postale — a NZBA-committed French bank with $901 billion in assets — released a groundbreaking policy suspending support for all companies expanding oil and gas, and committing the bank to exit oil and gas financing entirely by 2030. This policy came just one day after a major International Energy Agency (IEA) report stating the necessity of halting fossil fuel expansion immediately in order to reach carbon neutrality by 2050 and limit global warming to 1.5°C. Loopholes are like those corn on the cob holders—they may exist, but you don’t have to use them. Yeah, it might be a little more work and mess, but grow up already!