One question keeps tripping me up as I follow the saga surrounding proposed oil and gas leases in the Arctic National Wildlife Refuge (ANWR).
Who is going to finance this?
I believe what banks finance today will define tomorrow. So who would finance the degradation of one of our last pristine natural habitats in the name of extracting fossil fuels?
One thing that’s certain is there are fewer financing options than there used to be for such projects. We at Bank of the West, along with our parent BNP Paribas, have had a policy in place since 2017 prohibiting financing of oil projects in the Arctic. And this year, we’ve been encouraged to see other large U.S. banks and financial institutions follow our lead and stop lending to oil projects in the Arctic. We’ve known since 2017, that’s the right thing to do.
“What banks finance today will define tomorrow. ”
But it’s also not enough. Banks have a role to play protecting our planet beyond the Arctic circle. That’s why we also prohibit or restrict financing of other sectors harmful to the environment, including oil and gas from shale and tar sands, coal-fired power plants, palm oil, wood pulp, and big tobacco. At the same time, we are increasing our financing of sustainable energy sources.
Here, I’m reminded of a line from a recent documentary that I’d recommend you watch. Our Planet: Too Big To Fail explores the intersection of finance and sustainability. It’s backed by the World Wildlife Fund, features luminaries including Sir David Attenborough, and is available to stream online. Here is the key line from narrator Jennifer Saayeng:
“No sector is better placed to drive the transition to a sustainable economy and stable future than the finance sector itself.”
Which brings me back to the Arctic National Wildlife Refuge saga. Just because a government or administration allows or encourages a questionable activity, doesn’t mean it should happen. Banks and other financial institutions are at the center of a sustainable future. At Bank of the West and BNP Paribas, we call this practice positive banking.
Like I said before, what we finance today will define tomorrow. And what we don’t finance today will also define tomorrow.
Good or Bad, Finance Always Has an Impact
For centuries, banks have helped society evolve through the projects they finance — from construction of a water supply for New York City at the turn of the 19th century, to the railroads, farming, and electric vehicles. Banks have played a role pushing society forward and improving humans’ quality of life in too many ways to count. But when it comes to fossil fuels, the past 120 years of building and consumption are a major reason why we are in today’s climate emergency.
“These policies hold us accountable. ”
This is why since 2017, Bank of the West has had policies that prohibit and restrict our financing of several sectors. These policies hold us accountable. There are activities that we simply won’t finance because the potential societal harm is too great. We believe we are doing the right thing for the future. As environmentalist Bill McKibben wrote recently for The New Yorker, Bank of the West “stands out” among major U.S. banks for our policies around ecological sustainability.
According to the Rainforest Action Network’s 2020 report analyzing 35 major banks’ financing of fossil fuels, Bank of the West and BNP Paribas have the number-one-ranked policy score worldwide for oil and gas, Arctic oil, tar sands, fracking, and liquefied natural gas. We are the only major bank accepted as a member by the leading environmental organizations Protect Our Winters, The Conservation Alliance, the Sustainable Ocean Alliance, and 1% for the Planet.
While that recognition from places like Protect Our Winters and The New Yorker is gratifying and encouraging, it also serves as motivation to keep evolving and improving. We know we still have room for improvement, and we are on a continuous journey to get better.
In Our Planet: Too Big To Fail, ShareAction CEO Catherine Howarth says something I think is worth passing on: “Every decision made in the finance industry results in real-world impact of some nature, in nature.”
This is the exact reason we made decisions going back several years to prohibit and restrict financing of certain harmful activities. And it is why we’ve been so glad to see other banks saying no to Arctic drilling. The coming year represents an incredible opportunity for the finance sector to take a central role in building a post-pandemic society that can provide sustainability for generations to come.