Oil patch insider: Enforcer or banker? Some banks defy pressure from climate activists
Following Goldman Sachs mid-December announcement that it would stop financing new Arctic drilling, the big U.S. investment bank began to back-peddle.
On Jan. 21 at the World Economic Forum in Davos, Switzerland David Solomon, CEO of Goldman Sachs, told the meeting of business and world leaders that his bank would continue to raise funds for oil and gas companies, per a report in Daily on Energy.
“If you’re looking for a line, there’s not a line. There’s a transition that’s going on, and my view is this is going to be a multi-decade transition where we see changes in the way people allocate capital,” Solomon said in a panel discussion. “Should we not raise money for a company that is a carbon company or a fossil fuel company? The answer is no, we’re not going to (stop doing) that.”
The backlash from banks, Daily on Energy reported, came after climate activists, including 16 year old Greta Thunberg, demanded at Davos that companies, banks, and governments “immediately” halt investments in fossil fuel exploration and production, and divest from fossil fuels. (The theme of this year’s World Economic Forum: Stakeholders for a Cohesive and Sustainable World.)
Mike Corbat, CEO of Citibank, said Jan. 21 in Davos that it is not the role of banks to choose winners and losers.
“I don’t want to be the sharp end of the spear, meaning I don’t want to have to be the one telling (companies) or enforcing standards in an industry or business. … We don’t want to find ourselves being the person that dictates winners and losers,” Corbat said, according to a Financial Times report. “A bank’s job is to support the communities in which it operates. It is not to dictate outcomes.”
According to the FT report, Brian Duperreault, CEO of AIG, “echoed Mr. Solomon’s line: while he stressed that AIG is embracing sustainability (partly under pressure of its own employees), he also said that he is not ready to impose a blanket ban on offering insurance to coal companies yet.”
A week before the Davos conference, BlackRock, the world’s largest asset manager, promised to make climate change central to its investment strategy. BlackRock CEO Larry Fink met with government and finance officials in Davos to explain the company’s new approach, per press reports.
“Climate change has become a defining factor in companies’ long-term prospects,” he was reported as saying. “Climate change is almost invariably the top issue that clients around the world raise with BlackRock. From Europe to Australia, South America to China, Florida to Oregon, investors are asking how they should modify their portfolios.”
Following the money?A third major financial institution also appeared to cave to pressure from climate activists: Bank of America, but its decision reflected more of a “follow the money” philosophy.
Per a report in Oil and Gas 360, “Bank of America has committed $300 billion to sustainable investments over the next decade. Since 2007, when the company issued its first Environmental Business Initiative, Bank of America has deployed more than $126 billion to environmental business efforts.”
“There is a huge opportunity, whether it is green bonds or different types of financing for solar installations or wind installations,” Bank of America CEO Brian Moynihan said, noting that as more companies seek carbon neutrality, it will drive demand for new technology, though it will require power companies, above all, to make real progress, per the Oil and Gas 360 report.
“What we’re trying to say is, you deliver profits and success for customers, employees and shareholders. What managers like Larry Fink are saying is, success is along these dimensions. … The key is to think about the balance and let industry and owners drive it,” Moynihan was quoted as saying in the Oil and Gas 360 report.
Moynihan rejected skepticism about the effort as being more public relations than substantive. “People say, ‘Isn’t this greenwash?’ Which part of $300 billion do you understand is not greenwash? This is not some small process; it is a business force.”
Is the American dream in trouble?
The results of the new Edelman Trust Barometer set the stage for the opening of the forum, per The Hill.
The poll found that a majority of people around the world believe capitalism is doing more harm than good. In the U.S. 47% of those polled believe that capitalism does more harm than good.
Alaska’s reactionWhen Goldman Sachs said in mid-December that it was no longer financing new Arctic drilling, Alaska Gov. Mike Dunleavy said the state was going to reassess its relationship with Goldman Sachs.
“I think it’s unfortunate,” Dunleavy said in an interview on FOX Business’ Varney & Co. “We do a lot of business with Goldman Sachs. We’re going have to reevaluate that, have a discussion with them.”
So, what is the status of this reevaluation?
Deputy director of communications for the governor’s office, Jeff Turner, told Petroleum News Jan. 21 that “a meeting between the governor’s office and the leadership of Goldman-Sachs will take place to continue the discussion.”
- KAY CASHMAN