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

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

Recruitment Genius: Senior Digital Marketing Consultant

£28000 - £45000 per annum: Recruitment Genius: A Senior Digital Marketing Cons...

Recruitment Genius: Assistant Stores Keeper

£16640 - £18500 per annum: Recruitment Genius: An Assistant Stores Keeper is r...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Software Developer - C# / ASP.NET / SQL

£17000 - £30000 per annum: Recruitment Genius: Developer required to join a bu...

Day In a Page

Read Next
Mosul falls: Talk of Iraq retaking the town, held by IS since June, is unconvincing  

Isis on the run? The US portrayal is very far from the truth

Patrick Cockburn
Harvey Proctor's home was raided by the Met under a warrant investigating historical child sexual abuse  

Harvey Proctor: A gay sex ring in Westminster? I don't believe it

Harvey Proctor
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk