Some Wealthy Philanthropists Are Pressuring Their Banks to Stop Financing Fossil Fuels

ilbozza/shutterstock

ilbozza/shutterstock

Over the past decade, a growing number of philanthropists has moved beyond grantmaking in search of ways to confront climate change.

Many have dropped their fossil fuel investments, contributing to a more than 22,000% increase in divested assets, which rose from the low billions in the early 2010s to nearly $15 trillion today. Impact investing has exploded, influencing Wall Street and pushing such options increasingly into the mainstream.

And in just the past year-plus, several philanthropic efforts have sprung up on a new front in this effort: lobbying banks to stop financing fossil fuel companies.

Following in the footsteps of activists, philanthropists are starting to ask how the banks that manage their cash are contributing to climate change—and the answer is staggering. U.S. banks are responsible for more than two-thirds, or $1.9 trillion, of all fossil fuel investments since the Paris Agreement was signed. 

Here are three efforts that are organizing philanthropists—individual and institutional—to pressure their banks on this front, making the case that there’s financial and reputational risk for continuing business as usual. 

Decarbonizing Bank Lending Initiative

While the other two initiatives profiled in this post focus on individual philanthropists, this effort, a project of Confluence Philanthropy’s Climate Solutions Collaborative, is equally concerned with institutional philanthropy, reflecting the affinity group’s mix of members, nearly half of which are foundations. 

Seeded by a two-year, $235,000 grant from the William and Flora Hewlett Foundation in 2019, the initiative kicked off with a survey of Confluence’s membership. With a 43% response rate from the group’s 220-some members—who control over $3.5 trillion in assets—the survey gives some fascinating (if not wholly representative) insight into where foundations do their banking and where there are potential pressure points. 

Perhaps the most striking finding is the sheer dominance of one bank: JPMorgan Chase, the world’s biggest lender to the fossil fuel industry. The bank held 188 times more assets than the next largest holder of Confluence members’ assets, with more than $10.9 trillion versus just $58 billion for the runner-up. About twice as many Confluence members bank at JPMorgan Chase versus the next most popular institution. Many other members are clients of Bank of America and Wells Fargo, each of which are among the world’s five largest fossil fuel lenders.

“We heard again and again, ‘We don’t love being at this bank,’” said Dana Lanza, president, CEO and co-founder of Confluence. “We just heard that again, and again, and again.”

Yet various factors, from the complex services many foundations require to the need for international money transfers, leave many larger philanthropies saying smaller banks aren’t a viable option. It becomes a catch-22 in favor of the biggest banks. “They kind of have control and a monopoly over this marketplace,” Lanza told me. “Because there’s nowhere for these large clients to go, there’s no pressure for these banks to pivot.”

Personal connections, too, can prevent changes. “The relationship between banks and philanthropy is a deep one. It’s not just the foundation' relationship, but it is often the family’s relationship, too, and it can go back generations and generations,” including legacy ownership of the banks in some cases, Lanza said.

At the same time, about half of Confluence’s members bank at smaller and/or climate-friendly banks, a practice the group has long encouraged. The three prominent examples include Amalgamated Bank, Aspiration Bank and Beneficial State Bank, all three of which are aligned with the Paris Agreement and have pledged to monitor and disclose their institutions’ financed emissions. Many others work with local banks, credit unions and other funds, collectively known as community development financial institutions, or CDFIs, that often have similar practices.

Big banks have also made climate-conscious moves. Some refused to finance oil and gas development in Alaska’s Arctic National Wildlife Refuge. Several have put out statements in support of international agreements or carefully worded pledges to move toward net-zero emissions, but timelines are often unclear and the commitments vague. The major banks “are really not leading the way. There’s a lot of talk out of both sides of their mouth,” Lanza said. 

Lanza is optimistic that pressure—including small group meetings, proxy voting, activism in the streets and institutions switching banks—will lead one of the major institutions to position itself as what she calls the “bank of the future” by aligning with the Paris Agreement and taking other significant measures. She sees a strong business case for doing so. The first bank to take these steps, she predicts, will “mop up all these clients.”

The affinity group has made it easy for members to join the push. To help members make the case to their boards, Confluence created slide decks (one for each of the three major fossil fuel financiers). To facilitate the first contact with banks, it created a letter template for clients to customize. To educate members, it is holding webinars and putting out resources. And to flex members’ collective power, it is helping to bring together small groups to hold meetings with their bank managers, as many members reported individual meetings did not feel effective.

Lanza notes that investors guided by their values, particularly within philanthropy, have put a lot of effort into ensuring their assets support positive change through what is commonly known as impact investing. And financial institutions have responded—in some cases with greenwashing, but also with genuinely transformative products. Yet those same investors have had a blind spot when it comes to their banking—and consequently, banks have had little incentive to change. With mounting risk that new government policy could leave fossil fuel financiers facing losses, she’s hopeful these actions can be part of what tips the balance.

“We keep hearing, again and again, ‘the big banks probably aren’t going to change,’” she said. “That’s shocking to me. They have to change.”

BankFWD

Launched by Rockefeller family members, this initiative hopes to leverage the famed oil family’s 300-plus members and their networks of wealthy connections to push banks to stop lending to fossil fuel companies.

The irresistible narrative of oil tycoon John D. Rockefeller’s descendants taking on the industry that made their family fabulously wealthy has helped make this the most prominent effort by far, with coverage in Politico, CNBC, and “MarketWatch,” as well as op-eds in the New York Times and on Bloomberg

Chaired by fifth-generation family members Danny Growald, Valerie Rockefeller and Peter Gill Case, the effort is centered on a pledge for individuals and institutions. Signatories promise to lobby their banks to end fossil fuel financing and align with the Paris Agreement’s 1.5 degree Celsius goal, as well as participate in climate policy advocacy and commit to moving their assets if necessary. 

The list is not public, so it’s hard to evaluate how successful it’s been since launching late last year. However, according to press reports, at least one big family-linked institution has signed on: the $1.3 billion Rockefeller Brothers Fund, which, in 2014, became one of the largest foundations at the time to divest from fossil fuels.

For now, the initiative is particularly focused on JPMorgan Chase. The bank is far and away the largest fossil fuel lender, providing roughly $268 billion in financing to the industry over the past four years, according to a report by Rainforest Action Network. 

There’s also a family connection. JPMorgan Chase was once known as the “Rockefeller Bank,” and it is the product of a 2000 merger with Chase Manhattan bank, which was once led by David Rockefeller, who was Growald’s grandfather. The group’s founders, in their New York Times op-ed, note that they are also clients.

The trio have argued that beyond the moral case for ceasing to finance fossil fuels, it is the right financial decision. It protects banks from the “reputational risk” of being associated with fossil fuels, positions them to benefit from the massive intergenerational wealth transfer to a more environmentally minded generation of heirs, and at a more fundamental level, is the only viable financial path forward on a planet facing the threat of catastrophic climate change.

“There’s a very direct economic connection. If banks such as JPMorgan don’t change their practices, ultimately, it’s very poor business over the longer term,” Growald told CNBC.

Banking for Climate

The most nascent effort of the three, this initiative is a project of Our Part, a foundation founded by Aspen-based philanthropist Jill Soffer, one of the children of the Florida hotel and real estate magnate Don Soffer

Soffer, who serves on the board of the Sierra Club Foundation, put her focus on banking after slow progress on other fronts left her jaded about the potential for policy advocacy, divestment and personal choices to “move the needle.” 

She was inspired in part by climate activist and writer Bill McKibben’s influential New Yorker essay on climate finance, “Money is the Oxygen on Which the Fire of Global Warming Burns,” and by the prospect of bringing new people into climate activism, particularly the high-net-worth people she knows who have not yet joined the climate fight.

“There’s a lot of wealthy people who didn’t know how to get engaged,” she told me. “The focus on the carbon footprint—that excludes a lot of wealthy people. Really fighting a global fight is out of their wheelhouse, especially if they’re made to feel bad.”

Soffer is working to develop the project with Rebecca Mirsky, her philanthropic partner at Our Part, which made nearly $1.7 million in charitable donations in 2020, as well as almost $1 million in 501(c)(4) gifts. The pair has contracted with Arabella Advisors to develop a long-term strategy and plans to formally launch the initiative at the end of March. 

But the basic thrust is clear: a drive to get individual philanthropists—many of whom are already supporting these causes through their giving or even direct action—to make sure they’re pushing for change through their financial relationships as well.

“You’ve got philanthropists out there marching and supporting the Native Americans… but at the same time, they’re banking at Chase or they’re banking at Bank of America, like myself,” Soffer said. “Where is your real power? Is it in the $1 million you grant or is your power at the bank where your $20 million sits?”

The initiative plans to focus on one-on-one outreach and education with people they know, using simple language that steers clear of the wonkiness that can predominate in climate circles. The effort is similar to BankFWD, with whom they’ve coordinated, but Soffer believes each project can “cast different nets.” Ultimately, the aim is the same: mobilize rich folks to leverage the deep social ties they have with the caretakers of their cash.

“We came to realize that wealthy people that we’re surrounded by have relationships with their bankers, they go to dinner with their bankers,” Soffer said. “At the end of the day, institutions, whether foundations or financial, they’re actually made of people. You’ve got to change people’s minds.”

Can philanthropists influence the financial sector?

Even the world’s largest philanthropies are tiny in comparison to other large financial players, like university systems, pension funds, investment firms and multinational corporations. As such, both critics and supporters of this effort say philanthropy has modest leverage to change financial practice. Yet this effort is less about the impact of any one foundation, or even the impact of the sector as a whole, but as adding one more factor for banks to weigh in choosing whether to continue business as usual.

A range of organizations have already emerged to pressure the finance sector. The founder of one such organization, Lucie Pinson of the think tank Reclaim Finance, was one of the winners of the prestigious Goldman Environmental Prize last year. Philanthropy has been key in funding these organizations, but as these efforts make clear, it can also step up as advocates. 

And there may be a lot of untapped energy out there for action. Eighty-five percent of respondents to Confluence’s survey said they felt strongly or very strongly about their banks’ lending practices with fossil fuel companies.

With the clock ticking, philanthropy needs to start pulling every lever it can. The science says that to prevent catastrophic impacts, the world must nearly halve emissions by 2030 from 2010 levels. Expanding fossil fuel extraction and burning up our reserves—the very activities these banks are financing—almost certainly make that goal impossible. 

Moreover, a recent U.N. analysis finds that current pledges by nations will only reduce emissions by 0.5%. Yes, you read that right. We need to reduce emissions by 90 times our current goals. Hard conversations between climate-conscious philanthropists and their bank managers won’t get us there alone, but given the scale of the transformation required, they can’t afford not to have them.