Vince Cable must force the banks to come clean about their dirty investments

While millions of people in developing countries pay the price of inaction on climate change, the UK's financial sector gets away with pouring billions into dirty energy

Share

Austerity doesn’t apply to the fossil fuel energy sector. While ordinary families in the UK struggle to make ends meet, and millions of people in developing countries pay the price of inaction on climate change, money is pouring into dirty energy like there’s no tomorrow.

The sad truth is that despite all the talk about promoting green investment and corporate social responsibility, the UK financial sector is addicted to fossil fuels and leading the way are the banks. They plough billions of pounds into fossil fuels through corporate loans and then help oil, gas and coal companies further increase their revenue by underwriting their bond and share issues. The top five UK banks alone helped fossil fuel companies raise £170 billion through bonds and shares over the last three years.

Then there are the institutional investors who manage our pension money and invest heavily in dirty energy. Prudential, Legal & General and Aviva collectively hold £6 billion of shares in BP alone. It is almost impossible to find a pension scheme which doesn’t involve some level of investment in oil and gas. Even so-called ‘ethical’ pension schemes often involve some degree of exposure to fossil fuels.

Outside of banking and investment, the wider financial services industry also has a big stake in the high carbon economy. Large accountancy firms like KPMG and Deloitte have dedicated teams working to help oil and gas firms minimise their tax bills. Corporate lawyers make millions from defending fossil fuel firms in court. Like it or not, the City of London as a whole is hooked on carbon.

As the world fast approaches the point of no return on climate change, you would think the government would want to do something to prevent all of this money flowing into dirty energy. At the very least, you would expect that investors would be forced to disclose the carbon footprint of their investment portfolios and their services to fossil fuel companies.

Alas, this is not the case. The coalition is taking the positive step of introducing mandatory carbon reporting for listed companies from October. But it has let the City off the hook. Firms will only have to report direct emissions and the carbon footprint of electricity consumed (so-called scope I and scope II emissions), and not the ‘financed emissions’ arising from their investments. So we will have the ludicrous situation in which banks and other investors will have to report on the carbon footprint of the lightbulbs used in their swanky London offices, but not on the emissions resulting from the billions of pounds they pour into bankrolling oil and gas companies like BP and Shell.

Transparency is essential, but alone it is not enough. To stem the flow of cash to dirty energy, we need to rediscover the lost art of regulation. The current free for all, in which banks suck up free public money in the form of quantitative easing only to plough investment into destructive energy projects, must end.

Persuading the Government to act may not be easy. As the World Development Movement has revealed, we have a government in which one third of ministers have links to either the fossil fuel or finance industries. We have a foreign secretary, William Hague, who reportedly lobbied for Tullow Oil to be exempted from paying a £175 million tax bill in Uganda. We have a climate change minister, Gregory Barker, who cut his teeth working for Russian oil companies. And we have many other ministers who have received donations from or have past experience of working for the banks, hedge funds and big accountancy giants dependent on the polluting status quo for their profitability.

Former Shell chief economist Vince Cable, the cabinet minister in charge of the UK Companies Act, has the power to introduce mandatory carbon reporting of financed emissions. By forcing banks and City investors to be upfront about their fossil fuel funding habits, he could help rain on the banks’ dirty energy parade. But will he dare to undermine the relationship with his former employers, who lovingly called him the “contact minister for Shell” in a memo last year? For the sake of the millions of people in the developing world already seeing the disastrous effects of climate change, we should certainly hope so.

Alex Scrivener is a campaigner at the World Development Movement

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Telesales & Customer Service Executive - Call Centre Jobs

£7 - £9 per hour: Recruitment Genius: Are you outgoing? Do you want to work in...

Ashdown Group: Finance Manager - Covent Garden, central London - £45k - £55k

£45000 - £55000 per annum + 30 days holiday: Ashdown Group: Finance Manager - ...

Ashdown Group: Systems Administrator - Lancashire - £30,000

£28000 - £30000 per annum: Ashdown Group: 3rd Line Support Engineer / Network ...

Recruitment Genius: Graduate Web Developer

£26000 - £33000 per annum: Recruitment Genius: A Web Developer is required to ...

Day In a Page

Read Next
David Cameron met with Ukrainian President Petro Poroshenko prior to the start of the European Council Summit in Brussels last month  

David Cameron talks big but is waving a small stick at the Russian bear

Kim Sengupta
 

Isis in Iraq: Even if Iraqi troops take back Saddam’s city of Tikrit they will face bombs and booby traps

Patrick Cockburn
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003