Why Banks Say One Thing About Climate Change, But Do Another
The Main Idea in a Nutshell
- The world's biggest banks are promising to help fight climate change, but they are secretly pouring trillions of dollars into the exact same oil, gas, and coal companies that are causing the problem.
The Key Takeaways
- A Huge Contradiction: Major banks joined a group called the Net-Zero Banking Alliance, promising to go green. But at the same time, they've given massive loans to fossil fuel companies, completely undermining their own promises.
- Clever Excuses and Loopholes: Banks claim they are funding polluters to help them "transition" to clean energy, but this is often just an excuse. Their rules have big loopholes, like refusing to fund a new oil pipeline but still giving a general loan to the company building it.
The Problem is Getting Worse: Instead of getting tougher, some of the biggest banks in the U.S. and Canada are now leaving the climate agreements they joined. This could cause a "domino effect" where other banks quit too.
Fun Facts & Key Numbers:
- Fact: Since 2021, the world's 65 biggest banks have pumped $3.3 trillion into fossil fuel companies.
- Fact: In 2024, 70% of the money used to expand fossil fuel projects came from banks that claimed to have policies against funding them.
Important Quotes, Explained
Quote:
"It's like trying to empty a bathtub with one hand while the tap's still running full blast."
- What it Means: This means that even if banks fund some good things, like solar farms, it doesn't help much if they are also funding bad things, like new coal mines. The damage they are causing by funding fossil fuels is way bigger than the good they are doing with green energy.
- Why it Matters: This simple image perfectly captures the problem. The banks' actions are contradictory—they are trying to solve a crisis that they are actively making worse.
Quote:
"If a company is planning to grow its fossil fuel business, banks should not be involved."
- What it Means: The author is saying the solution is simple and direct: banks should completely stop giving money to any company that is trying to expand its oil, gas, or coal business. No more excuses or loopholes.
- Why it Matters: This highlights the clear, strong action that experts believe is necessary. It cuts through all the complicated bank policies and says that if we're serious about climate change, we have to stop feeding the problem.
The Main Arguments (The 'Why')
- Here's why banks keep giving money to fossil fuel companies, even when they say they won't:
- First, the author argues that banks use the idea of "transition finance" as an excuse. They say they're helping polluters change for the better, but often they fund companies that have no real plan to go green.
- Next, they point out that banks are masters of "greenwashing." They create policies that sound good on paper but are full of loopholes. This allows them to look like they care about the climate while still making money from pollution.
- Finally, they point out that banks often ignore a huge risk called "stranded assets." This is the idea that oil wells and coal mines could become worthless as the world switches to clean energy. Banks lend money cheaply because they underestimate this risk, making it easy for polluters to get cash.
- Here's why banks keep giving money to fossil fuel companies, even when they say they won't:
Questions to Make You Think
- Q: Why can't just one big bank stop funding fossil fuels and lead the way?
A: The text says this is unlikely to work because of the "substitution effect." If one bank pulls out of a deal, another bank will likely just step in to take its place and make the profit. For it to work, all the banks have to agree to stop at the same time.
Q: What is a "stranded asset"?
A: It's something valuable (like an oil field or a coal power plant) that could suddenly become worthless. This could happen if new climate laws are passed or if clean energy becomes so cheap that nobody wants to buy fossil fuels anymore.
Q: Are banks actually getting better about this?
- A: The text says things are getting worse. Major banks from the US and Canada are starting to leave the global climate pacts they once joined. This is the opposite of what needs to happen.
Why This Matters & What's Next
- Why You Should Care: This isn't just about money and banks; it's about the future of our planet. The decisions these banks make determine whether we build more polluting projects or invest in a cleaner world. This directly impacts the air you'll breathe and the environment you'll live in for the rest of your life.
- Learn More: To see a great explanation of who is responsible for climate change and what we can do about it, check out the YouTube video by Kurzgesagt called "Who Is Responsible For Climate Change? – Who Needs To Fix It?"