The Carbon Bankroll is a new study from the Climate Safe Lending Network, the Outdoor Policy Outfit, and BankFWD that attempts to quantify the banking industry's role in contributing to carbon emissions and climate change. Specifically, it uses publicly-available corporate financial statements to loosely calculate how much money Big Tech companies have in the bank. In addition to the carbon emitted by these banks in the course of their basic business operations, these banks also lend money to other businesses that either directly or indirectly contribute to climate change. Under the accounting framework established by the World Resources Institute, the report explains, these would qualify as Scope 3 downstream emissions that are technically attributable to the original company's supply chain.
Or, as Bill McKibben explained in The New Yorker:
According to these calculations, Google's carbon emissions, in effect, would have risen a hundred and eleven per cent overnight. Meta's emissions would have increased by a hundred and twelve per cent, and Apple's by sixty-four per cent. For Microsoft in 2021, the report claims, "the emissions generated by the company's $130 billion in cash and investments were comparable to the cumulative emissions generated by the manufacturing, transporting, and use of every Microsoft product in the world." Amazon, too, has worked to cut emissions; it plans to run its delivery fleet on electric trucks, for instance. But in 2020, the report claims, its "$81 billion in cash and financial investments still generated more carbon emissions than emissions generated by the energy Amazon purchased to power all their facilities across the world—its fulfillment centers, data centers, physical stores." Also according to the report, in 2021, the annual emissions from Netflix's cash would have been ten times larger than what was produced by everyone in the world streaming their programming—which is to say, Netflix and heat.
In other words — most of these companies are actually producing more carbon emissions with the cash they have in the bank than through their direct physical suply chains. From the report:
Despite the highly publicized growth in green and environmental, social, and governance (ESG) offerings from their investment arms, many banks are still major suppliers of capital to carbon-intensive sectors and the fossil fuel industry—providing loans as well as underwriting and issuing bonds to maintain the flow of funds into these sectors. In fact, across the Group of 20 leading industrial and developing nations, banks have $13.8 trillion of exposure to carbon-intensive sectors, which constitutes 19% of on-balance sheet loans.
The lending and underwriting of carbon-intensive sectors at this rate generates a massive carbon footprint. The research featured in this report suggests that the average carbon intensity per unit of cash deployed by the US financial sector is 126.03 ktCO2e/billion USD. As context, a typical passenger vehicle emits roughly 4.6 metric tons of CO2 per year, meaning that for every $1 billion in cash a bank deploys, it generates comparable emissions to 27,398 vehicles' annual emissions.
The report is careful to point out that its calculations are not without caveats, acknowledging that:
The carbon intensity figures for the asset classes analyzed in this report are conservative estimates that constitute an indicative underestimation of the actual emissions banks generate through their financial services
…while also pointing out that those Scope 3 downstream emissions are actually probably higher once you factor in things like pension plans and insurance.
In other words, the capitalist class's exchange of capital is a major contributor to the climate change caused by the industrialization of capitalism, which is slowly ravaging the planet, costing more capital. Neat!
The Carbon Bankroll: The Climate Impact and Untapped Power of Corporate Cash [Climate Safe Lending Network, the Outdoor Policy Outfit, and BankFWD]
Could Google's carbon emissions have effectively doubled overnight? [Bill McKibben / The New Yorker]