Hi and welcome back to the Climate Nexus finance newsletter – a regular update that looks at the big stories and players at the intersection of climate change, finance, regulation, and energy, with tips for the week ahead.
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BlackRock flips bird to UK, still scolded by Missouri
BlackRock and Vanguard told the UK government they are not planning to halt the financing of new fossil fuel projects. While both have reiterated this position in the past, BlackRock – to our knowledge – for the first time explicitly stated that it does not support the IEA's net-zero scenario, which calls for no new investments in fossil fuels.
The UK government, which was sued by citizens over its lack of a detailed net zero plan, asked financial firms to explain how they’re incorporating science-based requirements to phase out the financing of new fossil fuels. NYC Comptroller Brad Lander tweeted: “BlackRock (and other asset managers) can't have it both ways: Climate change is a systemic investment risk. Keeping fossil fuels in the ground must be central to any plan to mitigate that risk to our portfolio and our planet.”
Elsewhere, Missouri officials announced the removal of $500 million in pension funds from BlackRock, the latest Republican-led state to punish the asset manager for supposed excesses in sustainable investing. A coalition of state treasurers and comptrollers previously released a statement rebuking the attacks on private investment firms, questioning the rationale, cost to taxpayers, and adherence to fiduciary duty. Let us know if you want to chat with any of them.
Dead in the water
Total damage and economic loss caused from the Mississippi River drought is estimated at around $20 billion, as historically low water levels continue to fall and create supply chain havoc.
In the midst of peak harvest season, farmers are struggling to move their crops to market and are forced to put less cargo in barges – creating delays as barges become far behind schedule and ports set restrictions. These delays are expected to impact both the domestic and world commodities markets, including fuel and food prices, as roughly 60% of all US grain exports travel down the Mississippi.
Banks tap out
The UN’s Net-Zero Banking Alliance told its 119 members they can continue to fund fossil fuel projects — even for coal. Essentially, the new guidelines allow major banks to continue to reap the reputational benefits of being able to say they are a member of the alliance without needing to actually divest from any of the polluting industries causing the climate crisis. In turn, the alliance avoids the embarrassment of many of its most notable members following through on threats to leave the group en masse.
”By freeing its members from accountability to science, the NZBA has undermined its own value to the global climate effort and removed all assurance that banks will do their part to achieve a net-zero world,” BankFwd, a coalition pushing for stronger bank action, said in a statement.
The alliances’ letter to its members — which include Deutsche Bank AG, Goldman Sachs Group Inc., UBS Group AG, JPMorgan Chase, Morgan Stanley, and Bank of America, among others — came after the UN-backed Race to Zero campaign tightened requirements for its members’ decarbonization targets. It also set off calls for the Glasgow Financial Alliance for Net Zero, the world’s biggest zero-carbon finance club, to explain how its members will reach the net-zero targets to which they have committed.
From the opposition camp, Missouri Attorney General Eric Schmitt announced his office, along with 18 other attorneys general, is launching an investigation into six big banks with demands for documents relating to the companies’ involvement with the Net Zero Banking Alliance – fearing banks ceding authority to the UN will result in “the killing of American companies that don’t subscribe to the woke, climate agenda.”
In other bank news, the chief executives of world's biggest lenders will be largely absent from COP27 in Egypt this November. And US Congressmen Casten, Schatz and 14 colleagues penned a letter to the CEOs of JPMorgan Chase and Wells Fargo urging them to end their State Financial Officers Foundation sponsorship – the dark money coalition of US officials weaponizing lawmakers and state treasurers against ESG investing and climate-related financial risk management.
On our radar
The EPA is seeking input on how to design its $27 billion green bank program – money from the Inflation Reduction Act designed to fund low-carbon projects, especially in underserved communities. The agency will need to strike the right balance of providing adequate oversight of the cash without being too prescriptive over who has access to it.
Parsing all the comments submitted to the Commodity Futures Trading Commission over its proposal to regulate the voluntary carbon market, which would be the first for a federal agency.
Reports and releases
The Sierra Club, Rainforest Action Network & community partners including the Carrizo Comecrudo Tribe and Save RGV released a report on the risks to the Rio Grande Valley from two proposed LNG export terminals — Texas LNG and Rio Grande LNG — which have seen renewed interested due to the war in Ukraine.
IEEFA's new report explores the financial, legal, and regulatory risk associated with the fossil fuels sector and the case for divestment.
Insure Our Future’s report on insurance companies starting to phase out policies for oil and gas after souring on the coal sector.
Net Zero Tracker’s analysis on how privately-held companies are far behind their publicly-traded peers in setting emission targets.
