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?
SPONSORED FEATURES
iJobs Job Widget
iJobs General

Recruitment Genius: Project Assistant

£17000 per annum: Recruitment Genius: They are a leading company in the field ...

Recruitment Genius: DBA Developer - SQL Server

£30000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Office Manager

£26041 - £34876 per annum: Recruitment Genius: There has never been a more exc...

Recruitment Genius: Travel Customer Service and Experience Manager

£14000 - £17000 per annum: Recruitment Genius: The fastest growing travel comp...

Day In a Page

Read Next
A pack of seagulls squabble over discarded food left on the beach at St Ives on July 28, 2015  

Number of urban seagulls in Britain nearly quadruples: Hide food and avoid chicks to stay in gulls’ good books

Tom Bawden
 

Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice
Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice: Inside Westminster

Blairites be warned, this could be the moment Labour turns into Syriza
HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

The mystery of Britain's worst naval disaster is finally solved - 271 years later

Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

'I saw people so injured you couldn't tell if they were dead or alive'

Nagasaki survivors on why Japan must not abandon its post-war pacifism
Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

The voter Obama tried hardest to keep onside

Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen
RuPaul interview: The drag star on being inspired by Bowie, never fitting in, and saying the first thing that comes into your head

RuPaul interview

The drag star on being inspired by Bowie, never fitting in, and saying the first thing that comes into your head
Secrets of comedy couples: What's it like when both you and your partner are stand-ups?

Secrets of comedy couples

What's it like when both you and your partner are stand-ups?
Satya Nadella: As Windows 10 is launched can he return Microsoft to its former glory?

Satya Nadella: The man to clean up for Windows?

While Microsoft's founders spend their billions, the once-invincible tech company's new boss is trying to save it
The best swimwear for men: From trunks to shorts, make a splash this summer

The best swimwear for men

From trunks to shorts, make a splash this summer
Mark Hix recipes: Our chef tries his hand at a spot of summer foraging

Mark Hix goes summer foraging

 A dinner party doesn't have to mean a trip to the supermarket
Ashes 2015: With an audacious flourish, home hero Ian Bell ends all debate

With an audacious flourish, the home hero ends all debate

Ian Bell advances to Trent Bridge next week almost as undroppable as Alastair Cook and Joe Root, a cornerstone of England's new thinking, says Kevin Garside
Aaron Ramsey interview: Wales midfielder determined to be centre of attention for Arsenal this season

Aaron Ramsey interview

Wales midfielder determined to be centre of attention for Arsenal this season
Community Shield: Arsene Wenger needs to strike first blow in rivalry with Jose Mourinho

Community Shield gives Wenger chance to strike first blow in rivalry with Mourinho

As long as the Arsenal manager's run of games without a win over his Chelsea counterpart continues it will continue to dominate the narrative around the two men
The unlikely rise of AFC Bournemouth - and what it says about English life

Unlikely rise of AFC Bournemouth

Bournemouth’s elevation to football’s top tier is one of the most improbable of recent times. But it’s illustrative of deeper and wider changes in English life
A Very British Coup, part two: New novel in pipeline as Jeremy Corbyn's rise inspires sequel

A Very British Coup, part two

New novel in pipeline as Jeremy Corbyn's rise inspires sequel
Philae lander data show comets could have brought 'building blocks of life' to Earth

Philae lander data show comets could have brought 'building blocks of life' to Earth

Icy dust layer holds organic compounds similar to those found in living organisms