Chapter 9 Climate Finance – Stop the Money Pipeline

See index to all the chapters for Putting Out the Planetary Fire

– Investor Led Efforts to Deal with Climate Change
– Financial Overview of the Fossil Fuel Industry
– Financial Disclosure of Climate Risk

Money is the lifeblood of the fossil fuel industry. They make enormous profits but also need enormous amounts of money to pay for the infrastructure and to continue to search for new sources of fossil fuels as the easiest to find and extract become rapidly depleted (remember the worry a few decades ago that we had passed the point of peak oil).

The first major public challenge to the financing of the fossil fuel industry came when Bill McKibben and launched the campaign to get college and church endowments to divest from fossil fuels. McKibben’s Do the Math Tour showed that to keep global warming at manageable levels we need to leave 80% of the existing fossil fuels in the ground. Divestment was a conscious effort both to duplicate the campaign successfully used against Apartheid in South Africa and to give groups local targets that they could mobilize around (think globally, act locally). It was a tremendous success in launching a grassroots movement.

I jumped in to help coordinate the successful efforts to divest both the New York City and New York State public pension funds from fossil fuels since I understood the legislative process from decades of working with the state legislature, first for the New York Public Interest Research Group (NYPIRG) and then Hunger Action Network. I was surprised however, by how difficult it was to convince lawmakers to divest from fossil fuels, especially when they were the worst performing sector on Wall Street for more than a decade. And while both campaigns eventually were largely successful, the investment advisors within the funds continue to oppose divestment, saying that moral issues (like saving life on the planet) should have no role in financial decisions.

While the call for divestment has been spectacularly successful on many levels, with more than $40 trillion in assets now committed to some level of divestment, the excitement level waned as the campaign turned into a long slog. Many activists and groups decided to move on to the next level to confront the banks, private equity firms, and insurance companies that continue to provide financial support to the fossil fuel industry even after the Paris Climate Accords.

Throughout my organizing career I have fought against the power of banks, “the money changers,” the financial institutions that use their power and discriminatory practices to extract whatever meager resources low-income and communities of color have been able to cobble together.

At NYPIRG, some former organizers from United Farm Workers launched Bank on Brooklyn to confront the practice of redlining by banks (and others like insurance companies). Banks and their allies in the real estate industry break down low-income and communities of color by refusing to lend there, forcing the few working-class homeowners to flee as the neighborhood suffers from disinvestment and a lack of repairs. Once broken, they often seek to extract even more profits through the process of gentrification.

At the Association of Community Organizations for Reform Now (ACORN), we would often organize protests at banks and utility companies, changing the lyrics of traditional songs to enliven our protests. We would pay our heating bills with wheelbarrows of pennies, saying not one penny more in another rate hike. Some songs didn’t need much reworking, such as Sixteen Tons by Tennessee Ernie Ford: “You load 16 tons, what do you get? /Another day older and deeper in debt / St. Peter, don’t you call me ‘cause I can’t go / I owe my soul to the company store.”

At Hunger Action Network, we fought back when Cong. Newt Gingrich and what we called his “contract on America” joined up with President Bill Clinton to repeal (the admittedly inadequate) Aid to Dependent Children, the main anti-poverty program from the New Deal for children. The new Temporary Assistance for Needy Families (TANF) welfare program claimed to be job oriented, but failed to create any new jobs, especially ones with living wages, instead imposing unpaid work requirements on young mothers. Hunger Action Network called instead for the overhaul of the real ADC program – Aid to Dependent Corporations – which lavished corporate welfare on politically-connected businesses in the name of economic development which invariably failed to produce the promised jobs.

The Battle of Seattle in 1999 was the most visible protest against Clinton’s push for corporate globalization (including the North American Free Trade Agreement or NAFTA), which gave corporations the power to sue sovereign nations if they passed environmental and labor laws that conflicted with the drive to maximize profits through “free trade.” The initial Green New Deal that emerged in Europe in 2008 was in response to the global financial meltdown caused by the banks and speculation in housing prices. In addition to climate action and an Economic Bill of Rights, the Green New Deal called for fundamental reforms in the financial system. The Occupy Wall Street encampments in 2011 confronted economic inequality – the 1% vs. the 99%. The Green Party and others in the U.S. have campaigned for public banks and for monetary reforms that give the government, not private banks, the central role in creating and controlling the monetary supply.

 Stop the Money Pipeline – Financing the Fossil Fuel Industry

“Money is the Oxygen on Which the Fire of Global Warming Burns,” Bill McKibben, one of the co-founders of, wrote in The New Yorker.[1]

Wall Street banks provide hundreds of billions of dollars in loans to the fossil fuel industry. Asset managers, which invest money for individuals, are the world’s largest investors in fossil fuels. Insurance companies both invest in fossil fuel companies and provide the essential insurance for their projects.

One of my first climate campaigns was working with 350NYC and to successfully divest the New York City and New York State pension funds – the second and third largest in the U.S. – from fossil fuels. This was part of the international effort launched by in 2012 to get public pensions, college and church endowments, and other investments funds to stop seeking to profit from fossil fuels and divest from such companies. It was a conscious effort to replicate the successful campaign which contributed to the demise of apartheid in South Africa. (See more info at the end of Chapter 14, The Art of Protest.)

The divestment campaign has been incredibly successful, with more than 1,500 institutions globally, representing over $40 trillion in assets, having committed to some level of fossil fuel divestment as of February 2022.[2]

The success of the divestment campaign led to an expanded effort to address the financing of the fossil fuel industry and its projects, targeting Wall Street financiers and insurance companies. Although asset owners such as public pension funds manage trillions of dollars on behalf of their members and retirees, they are among the slowest financial actors when it comes to divestment from fossil fuels, representing only 12% of divestment commitments worldwide. For a comprehensive list of divestment commitments, see[3]

In January 2020, various divestment campaigns united to form Stop the Money Pipeline (STMP), which states:

“Since the Paris Agreement was adopted, Wall Street banks have provided $1.4 trillion to the fossil fuel industry. Big asset managers are the world’s largest investors in coal, oil, and gas. Insurance companies provide insurance for new fossil fuel projects without which they could not be built.

The fossil fuel corporations driving the climate crisis depend on this support of the financial sector.

That is why we are pushing banks, insurance companies and asset managers to end fossil financing. If we stop the flow of money, we stop the flow of oil.

We demand that banks, asset managers, insurance companies and institutional investors stop funding, insuring, and investing in climate destruction.

They need to stop funding fossil fuels and deforestation and start respecting human rights and Indigenous sovereignty.”[4]

According to a report by Banking on Climate Chaos, JPMorgan Chase is the largest bank financier of fossil fuels, having provided them with $268 billion since the Paris agreement, which is greater than the value of BP, Shell and Chevron combined and more than the annual GDP of over 140 countries. Since the Paris Agreement, Wells Fargo has lent over $151 billion to the fossil fuel industry, Citibank over $129 billion, and Bank of America over $106 billion. These four banks are the largest fossil fuel financiers in the world. The three biggest asset managers financing fossil fuels are Blackrock, Vanguard, and State Street.[5]

The U.S. Government’s trade and development finance institutions provided $51.6 billion in support for fossil fuels from 2010 to 2021, five times as much support as for renewables ($10.9 billion). The Biden Administration has said it plans to end this international public financing of fossil fuels, including joining 38 other countries and institutions as signatories to the Glasgow Statement commitment to end new direct public support for unabated fossil fuel use by the end of 2022, although details have not been finalized.[6]

The U.S. Government has provided more than $9 billion for oil and gas projects in Africa since the 2015 Paris climate agreement, while only committing $682 million to clean energy developments such as wind and solar over the same period. This is two-thirds of all the money the U.S. has provided globally to fossil fuels in this time. Africa is a continent rich in various minerals, but where 600 million people live without electricity and where floods,[7] severe heatwaves,[8] and droughts[9] have inflicted an increasingly devastating toll.[10]

The World Bank has provided $15 billion of finance directly to fossil fuel projects since the Paris Agreement and is likely to have spurred far greater investment indirectly.[11]

The G20 countries from 2019 to 2021 invested at least $55 billion per year in oil, gas, and coal projects. While this is a 35% drop compared to 2016-2018), it was nearly twice the funding for clean energy, which averaged $29 billion per year.[12]

The Royal Bank of Canada provided $9.2 billion of financing and underwriting to top fossil fuel expansionists like Enbridge, ExxonMobil, Chevron, TC Energy and Saudi Aramco from 2016 to September 30, 2022.[13]

Private equity firms — a subset of asset managers, a more secretive class of investors hyper-focused on maximizing profits — have invested at least $1.1 trillion into the energy sector since 2010 — double the combined market value of three of the world’s largest energy companies, Exxon, Chevron, and Royal Dutch Shell. The overwhelming majority of those investments were in fossil fuels, with only about 12% put into renewable energy. As public pressure over climate change prompted some oil companies to begin shedding some of their dirtiest assets, private equity firms have been buying them up. The NY Times reported that “By bottom-fishing for bargain prices — looking to pick up riskier, less desirable assets on the cheap — the buyers are keeping some of the most polluting wells, coal-burning plants and other inefficient properties in operation.”[14]

Insurance companies support the fossil fuel industry in several ways, including providing insurance to dangerous fossil fuel infrastructure like tar sands pipelines and fracking wells; and investing billions of their customers’ premiums in fossil fuel companies. Fossil fuel companies cannot build new pipelines, extraction sites, or other infrastructure without insurance. Insurers also often seek to deny insurance for people living in climate-vulnerable areas, while continuing to support the fossil fuel industry.

Wall Street in recent years has been investing almost equally in green energy and fossil fuels. The amount of funds raised through bonds and loans for green projects and by oil and gas companies was nearly identical at about $570 billion in 2021. Investors predict that oil and gas companies will make money for years to come and will control emerging energy technologies. They argue that fully avoiding fossil fuel investments is impractical since oil, gas and coal still account for about 80% of the world’s energy. Energy and food shortages driven by the war in Ukraine[15] have highlighted how much of world, starting with Europe, is still dependent on fossil fuels. Wall Street defends its actions by pointing to the “all of the above” energy strategy openly pursued by the Obama Administration and which the Democrats largely embraced in the recent Inflation Reduction Act. The Act is seen as a boon for the largest fossil-fuel companies, banks and investment firms that have the money to back all types of energy projects.[16]

Wall Street and insurance companies could certainly halt the future use of fossil fuels if they decided it was too great a risk to their financial future – a decision that they have clearly not yet made.

Swiss Re, a major player in the insurance industry, reported in 2021 that rising temperatures are likely to reduce global wealth significantly by 2050, as crop yields fall, disease spreads and rising seas consume coastal cities. They estimated that climate change could reduce global economic output by 11 to 14% by 2050, as much as $23 trillion. They predicted that losses would be minimal (5% or under) if warming was kept below 2 degrees Celsius. However, for poorer nations, which tend to have warmer temperatures but less ability to adapt their infrastructure and economies, the consequences would be far more dire.[17]

Loss of life and extinction of species are seldom factored into such financial studies.

Investor Led Efforts to Deal with Climate Change

The Paris Aligned Investment Initiative (PAII) was established in May 2019 to explore how investors can align their portfolios with the goals of the Paris Agreement to keep warming below 1.5 degrees C. The Net Zero Investment Framework is a guide for investors to “decarbonize investment portfolios and increase investment in climate solutions.” Investors are urged to adopt a “net zero investment strategy” based on five components: objectives and targets, strategic asset allocation and asset class alignment, policy advocacy and, investor engagement activity and governance.[18]

These initiatives are part of the United Nations Race to Net Zero campaign, described as “a global campaign to rally leadership and support from businesses, cities, regions, investors for a healthy, resilient, zero carbon recovery that prevents future threats, creates decent jobs, and unlocks inclusive, sustainable growth.”[19]

The Glasgow Financial Alliance for Net Zero (GFANZ), co-chaired by UN climate envoys Mark Carney and Michael Bloomberg, was launched in 2021 prior to COP26. Composed of major financial institutions committed to accelerating the decarbonization of the economy, its goals are to expand the number of net zero-committed financial institutions and to address sector-wide challenges with the net-zero transition.[20]

Stop the Money Pipeline reported in September 2021, “JPMorgan Chase & Co., Morgan Stanley, Bank of America, and other unnamed U.S. banks were threatening to leave the GFANZ over it strengthened criteria that would restrict their fossil fuel financing.”[21] Banks have begun to worry that GFANZ requirements for decarbonization would make them legally vulnerable. Republican politicians and state officials in the U.S. are targeting Environmental, Social, and Governance (ESG) guidance for investments as an extension of liberal overreach. For instance, GFANZ says that members should not support any new coal projects, leading some banks to worry that they could face legal challenges from some U.S. states that effectively require lenders to finance coal.[22] This partisan divide has also been evident in the divestment effort.

Outside observers have numerous concerns with the approaches taken by such investor groups. The net-zero framework is very weak when it comes to scaling down fossil fuel production and provides giant loopholes for investors to continue to support fossil fuel. Needed changes to the framework include: Recommending divestment from companies that plan any new fossil fuel project; Targeting the whole coal chain and all unconventional fossil fuels (e.g., the framework leaves out coal mining and coal-related infrastructures); and requiring Paris Agreement-aligned phase-out dates for each fossil fuel. Other concerns are that the framework allows targets to be set on carbon intensity only – not absolute emissions – and it prioritizes engagement without linking it to a clear escalation strategy. Investors could meet PAII’s engagement goals by merely reaching out to companies or becoming members of collective engagement groups. It also fails to require its members to act against companies that engage in anti-climate lobbying.[23]

Financial Overview of the Fossil Fuel Industry

The divestment campaign started with the argument that it was morally wrong – especially for religious groups, schools, and governments (public pension funds) – to seek to profit by investing in fossil fuel companies that were threatening future life on the planet. Divestment seeks to accelerate the adoption of the renewable energy transition through the stigmatization of fossil fuel companies while increasing the cost of raising financing for fossil fuel companies.[24]

As the campaigns went on, it also became clear that fossil fuels were a bad investment, especially as the world governments began to commit to ending their future use. For much of the prior decade, fossil fuels have been the worst performing sector of Wall Street. For instance, in 2018 the New York State Common Retirement Fund would have an estimated $22.2 billion more in value had it divested its fossil fuel stocks 10 years previously, according to an analysis performed by Corporate Knights.[25]

Even though the performance of fossil fuel stocks has reversed in the last year due to the post-pandemic rebound in oil prices combined with price gouging and the impact of the war in Ukraine on gas supplies, fossil fuels are still a bad long-term investment.[26]

The likelihood of stranded assets – assets that can no longer be used – are a major risk for fossil fuels. To avert the worst impacts of climate change, most of the world’s known fossil fuel reserves must remain untapped rather than burnt and converted to greenhouse gas emissions.’s divestment campaign was launched with Bill McKibben’s 2012 Do the Math Tour, where he highlighted that to keep global warming below 2 degrees Celsius the world would have to keep 80% of the known fossil fuels in the ground.[27]

A more recent study found that 90% of coal and nearly 60% of oil and natural gas must be kept in the ground to maintain a 50% chance that global warming will not exceed 1.5 degrees Celsius. One study by MIT estimated the value of such stranded assets as being between $21,5 trillion and 430.6 trillion.[28]

Despite the need to keep fossil fuels in the ground, fossil fuel companies are continuing to invest in finding new reserves. Twenty of the world’s biggest oil and gas companies, including Shell, Exxon, and Gazprom (Russia), are projected to spend $932 billion by the end of 2030 developing new oil and gas fields.[29] This despite the warning by the International Energy Agency in 2021 that the use and development of new oil and gas fields must immediately stop, and no new coal-fired power stations can be built. Unfortunately, only a few governments have committed to halt new exploration for fossil fuels.[30]

There is also a significant difference in the strategies between European and American energy companies. BP, Royal Dutch Shell, and other European energy companies are selling off some oil fields, planning a sharp reduction in emissions, and investing billions in renewable energy. Chevron and Exxon Mobil are doubling down on oil and natural gas while making investments in speculative technology such as small nuclear power plants and carbon capture. Major U.S. oil companies continue to invest in a long-term future for oil and gas, while European companies seek a future as electricity providers anticipating a future world with stronger environmental safeguards.[31]

Financial Disclosure of Climate Risk

In May 2021 President Biden issued a “Climate-Related Financial Risk” Executive Order (#14030), that among other things directed his climate staff to develop, within 120 days, “a comprehensive government-wide climate-risk strategy to identify and disclose climate-related financial risk to government programs, assets, and liabilities. This strategy will identify the public and private financing needed to reach economy wide net-zero emissions by 2050.” While climate groups welcomed the order, they worried that the term net-zero would allow false solutions, such as offsets, to be used as examples of minimizing risk, rather than stopping the actual expansion of fossil fuels.[32]

The groups also worried that the Biden Administration would primarily study the issue rather than take concrete action, a concern they expressed after the Secretary of Treasury released a follow-up report in October 2021. They said the report, “while laying out preliminary steps to make the financial industry more transparent and accountable for their growing climate risks, was a missed opportunity to recommend actions that actually reduce climate risk and limit Wall Street’s toxic investments in fossil fuels.”[33]

In contrast, in November 2021 the United Kingdom announced that there will be new requirements for U.K. financial institutions and companies to publish net zero transition plans that detail how they will decarbonize as the U.K. moves towards a net zero economy by 2050.[34]

For insurance companies, the climate risks include: physical risk due to financial losses from damages from climate change, such as sea level rise or increased extreme weather events; risk due to losses in the value of assets they have invested in as government policies and private actions shift toward a low-carbon economy; and liability risk resulting from climate related litigation. However, the extent of such risks is unknown due to a lack of data.

The various federal and state insurance regulators have taken initial steps to increase the disclosure about such risks and assess the extent of the climate-related financial risk. New York’s Department of Financial Services recently issued guidance to companies on disclosing climate-related risks.[35] The Federal Insurance Office of the Department of Treasury issued a request in 2021 for information on climate risk; and in April 2021, the National Association of Insurance Commissioners (NAIC) updated its survey for disclosing climate risks.[36]






















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