Debunking The Banks Excuses
We can’t stress enough how important it is to call your bank and let them know why you plan to leave. But when you do, your bank will likely try to justify their funding choices as strategic. They might try to tell you that they invest in fossil fuel companies so that they have a say over what these companies do and influence them to be better from the inside. This is called Shareholder Engagement, and it doesn’t work.
The most important thing when talking to your bank about their climate change financing, is to trust yourself and hold firm to your argument no matter what. We know investing and lending to fossil fuels is wrong - it jeopardizes our climate, our future, and our most vulnerable communities globally. We also know that without bank support/loans fossil fuel projects can’t move forward.
Example: #STOPADANI
Divestment Case Study:
The Stop Adani activist lead campaign successfully pushed the big 4 Australian banks to refuse to finance the Adani Carmichael Coal mine, and develop exclusionary policies for financing coal. The company has been trying to build the mine for 10 years, but has not been able as they are unable to secure funding. The project cannot get any private funding, which has forced the mine company to use its own money, and as a result it has incurred over $800 million in loses. Major contractors have walked away from the project, and insurers are refusing to underwrite it, which most recently forced Adani to ask the government to insure them in May 2021.
We are seeing this happen in the Australian coal industry in particular. According to Reuters, “Australia's coal industry is suffering from dwindling access to finance and insurance that is raising the costs of doing business and threatening the longevity of the industry”. The Australian coal industry is struggling to move forward as it grows increasingly difficult for the industry to secure funding from banks and other private investors.
What is “Shareholder Engagement”?
Shareholder engagement is when shareholders in a company pressure management to make changes in the company. This could be changes in representation, policy changes, or changes in investing practices. Owning a share in a company makes you a partial owner of the company, and generally the more shares you own the more votes you get on company resolutions. Shareholder Engagement advocates maintain that by being shareholders, they can propose and vote on progressive resolutions to change the companies they invest in.
Why doesn’t shareholder engagement work?
There are a number of reasons why shareholder engagement, with fossil fuel companies in particular, doesn’t work. For one thing, the argument frequently becomes an excuse to continue business as usual and invest in companies that do harm. In this way, engagement is a form of green-washing. Furthermore, without the threat of divesting, shareholders have no stake in their demands. If a company refuses to listen to its shareholders concerns, and those shareholders continue to invest in them, the company management faces no repercussions for ignoring shareholder demands. Moreover, in the last decade of shareholder engagement with fossil fuel companies we’ve seen virtually no progress.
Go Fossil Free: Why Not Engage outlines the 5 failures of shareholder engagement as follows:
1. The timeline for engagement is too slow
2. Engagement isn’t working
3. Engagement makes no sense without the threat of divestment
4. Engagement is outsourced – which means it isn’t getting done
5. Engagement contributes to ‘greenwashing’
For an explanation of each point visit their “Why not engage” page.