Johan Frijns will tell you that on his best days, he takes to the streets in the morning in jeans and a T-shirt to protest climate change, then in the afternoon dons a suit to visit a bank, where he tells executives they must do more to combat global warming. For the better part of two decades, Frijns has sought to rein in carbon emissions by hitting fossil fuel producers where it hurts most: their cash pipeline. The way to do that, the 55-year-old Dutchman says, is pressing lenders to cut off funding to coal, oil, gas, and industrial polluters. “Banks have great leverage over their clients,” says Frijns, a founder of BankTrack, a nonprofit that focuses on the role the finance industry plays in climate change.
Financing Extended to the Fossil Fuel Industry
2016 to 2019
Data: Rainforest Action Network
Frijns is a pioneer of a fast-growing environmental movement insisting that without restricting the flow of cash to fossil fuel producers, there’s little chance the world community can meet the climate goals of the 2015 Paris Agreement. And he’s had some notable successes, forcing bankers to recognize that lending to oil explorers, arranging share offerings for coal miners, or underwriting bonds for pipeline operators makes them complicit in global warming. After pressure from BankTrack and others, Dutch bank ING Groep NV and France’s Crédit Agricole SA stopped financing some coal projects.
But for the people whose fortunes depend on providing that money, it’s tough to walk away. In the four years after the Paris accord, major banks arranged $2.7 trillion in financing for legacy energy companies, according to a report co-authored by BankTrack. Fees those clients paid to the top 12 global financial houses doubled last year, to $4.2 billion, consulting firm Coalition Development Ltd. estimates. “If you keep funding fossil fuels, you’re building up a climate problem,” says Louise Rouse, a former banking lawyer who advises environmental groups such as Greenpeace.
Rouse compares today’s financing of traditional energy to the complex mortgage-backed securities that banks cobbled together 15 years ago. Just as lenders helped inflate the bubble that triggered the 2008 global financial crisis, she says, the money they provide to oil and gas producers today is a primary cause of global warming. “You will have increased the systemic climate risk of not meeting the Paris goals,” she says.