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Six largest US banks call for strong COP21 deal and policy that recognizes cost of carbon
The six largest U.S. banking institutions on Monday called for a “strong global climate agreement” and policies that “recognize the cost of carbon.”
JP Morgan Chase Bank, Bank of America Corp., Wells Fargo, and Citibank — the four largest commercial banks with assets of $6.5 trillion according to Federal Reserve data — along with Goldman Sachs and Morgan Stanley, the largest and second largest investment banks with $1.1 trillion in managed mergers and acquisitions — also committed to provide “significant resources” to finance climate solutions.
At a press conference in New York, CEOs from these banks issued their open letter, timed to coincide with the start of the United Nations General Assembly's new session for which climate change and sustainable development dominate the agenda.
The banks described a “business opportunity” in financing a low-carbon economy and minced no words that they also view global warming as indeed happening and as a threat to prosperity.
“Scientific research finds that an increasing concentration of greenhouse gases in our atmosphere is warming the planet, posing significant risks to the prosperity and growth of the global economy,” the banks wrote and released at a meeting organized by the CERES investment network.
“As major financial institutions, working with clients and customers around the globe, we have the business opportunity to build a more sustainable, low-carbon economy and the ability to help manage and mitigate these climate-related risks,” they wrote.
Their strong, unequivocal words ring out against the backdrop of a presidential campaign in which candidates of one party have said in national debate that trying to stem global warming and reduce carbon emissions would hurt the economy. And in Congress, climate change is still a political football, with Senate Majority Leader Mitch McConnell vowing to prevent the U.S. from committing to a UN Climate Convention agreement to reduce carbon emissions.
It is the banks’ call for “policies that recognize the cost of carbon” that is most startling and noteworthy. They are calling for carbon pricing regulations, such as cap and trade system or a carbon tax.
Scientists — and an increasing number of companies — have called for putting a price on carbon, with 437 companies pricing carbon use in their internal operations. But few politicians from either party have been willing to call for national policy that price carbon, such as a cap and trade system or tax would do.
Many scientists have argued that no appreciable dent in carbon emissions will happen until some economic cost is assigned to carbon emissions – and therefore economic value assigned to carbon reductions.
The banks are agreeing, saying that investment in innovations and possible solutions needs the driving power of value.
“Policy frameworks that recognize the costs of carbon are among many important instruments needed to provide greater market certainty, accelerate investment, drive innovation in low carbon energy, and create jobs,” the banks said.
Despite a history in the banking industry of being against regulation, these banks want a solid pact from the COP21 UN Conference of Parties negotiations.
“We call for leadership and cooperation among governments for commitments leading to a strong global climate agreement," they wrote.
The sustainability directors of the six banks spoke Monday morning of the transition underway in the economy, as well as the responsibility their institutions senese to facilitate it.
"We we are seeting clients move reqlly quickly to transition," to cleaner power and low carbon innovations, said Valerie C. Smith, Citi director and head of corporate sustainability. Citi also believes it has a role "to accelerate the transition."