WWF UK and Greenpeace UK have published a report assessing UK banks and investors’ contributions to climate change. Collectively, they were responsible for 805 million tonnes of CO2 in 2019, meaning that if the City of London were a country, it would be ‘the 9th biggest emitter of CO2 in the world’. This figure doesn’t even include the insurance industry, making it a significant underestimation. Greenpeace say that the results show that the activity of its financial sector is ‘one of the UK’s most significant contributions to climate change.’

With attention on financial institution’s responsibility for emissions growing, it’s unsurprising that their green propaganda has recently gone into overdrive. Banks have spent the last couple of years joining the UK government and fossil fuel companies in committing to flimsy targets to be net-zero by 2050. These targets grab a quick green headline, but also expose their willingness to continue financing fossil fuels over the bulk of the next three decades.

While laundering their green reputations with unsubstantiated and distant net-zero targets, the UK’s banks continue to finance fossil fuel extraction globally. Research from Reclaim Finance shows that Barclays and HSBC each increased the number and value of deals done with fossil fuel companies like Shell and ExxonMobil in 2020 compared to 2019.

Contextualising the City of London’s contributions to emissions by comparing it with countries is telling. How did we reach a position where, particularly regarding climate change, the financial sector within one country acts with greater international consequence than many major powers? In the UK, the Thatcherite deregulation of finance let banks loose to profit in whatever recklessly speculative way they choose – regardless of risk to our homes or our climate. And amid deindustrialisation and the demise of much of the real economy, a dependency on finance was forged.

We’ve created a monster set on fuelling climate chaos so long as it provides a return. How can we now restrain its drive towards catastrophe?

Reining in the most destructive excesses of the financial sector presents extra difficulties compared to targeting governments, which might be at least partly accountable to their people, or consumer-facing corporations, which may be susceptible to boycotts or reputational damage. These opaque financial institutions, on the other hand, dominate the economy but remain largely anonymous. The public have little-to-no interaction with most investors and insurance firms; although banks like Barclays and HSBC are high-street names, the investment wing of the organisation financing fossil fuel extraction is separate from retail banking.

The question for campaigners, therefore, is how to successfully target financial institutions which most of the public have never heard of or don’t understand – and which have no recourse for democratic oversight, accountability, or retribution anyway.

In recent years, there has been a set of campaigns for fossil-free finance seeking to do just that, expanding the climate movement’s targeting of fossil fuel companies to include banks, investors, and insurance companies, too. These campaigns have mostly been NGO-led. Greenpeace have dabbled in disruptive direct actions. People & Planet mobilised students against Barclays (briefly joined by Momentum). ShareAction has mobilised shareholders to intervene at banks’ AGMs. Extinction Rebellion have recently taken up the mantel of creative direct actions from the grassroots.

The strategies of public shaming, disruptive direct action, and insider lobbying have led to some wins, with banks excluding specific projects or types of fossil fuel. Usually these have been the most egregious or those the institution already had the least exposure to, with big loopholes in the policy. Barclays, for example, ‘prohibits finance for coal projects, but allows continued corporate financing for some coal companies and companies developing new coal mines and power plants’. Lloyd’s of London published its first ever energy policy in September 2020, which included asking members to stop new insurance for thermal coal, oil sands, and Arctic energy exploration from 2022. Over 30 insurers globally have ruled out support for the widely opposed Adani Carmichael coal mine in Australia following campaigner pressure.

All of this is progress, but hardly fast or far-reaching enough. Financial institutions placate climate campaigners by throwing us breadcrumbs while grabbing easy green headlines: there’s little sign they’re prepared to exclude fossil fuels entirely, unless they’re forced to.

Initially, these NGO-led campaigns rarely made calls for a political solution or serious government regulation and reforms. However, there’s now an emergent focus on central banks, and Greenpeace’s headline demand around their recent report was ‘for legislation to align the UK finance sector with the Paris Agreement’. NGOs are beginning to appreciate the need for government intervention to rein in the financial sector from its support for fossil fuel extraction.

Despite these steps forward, the political horizon of these campaigns remains limited: content with maintaining the status quo of the financial sector as long as it can be forced to cut out fossil fuel finance. This neglects the robust class solidarity between finance capital and fossil capital; neither will accept divorce without a fight. This horizon also leaves the financial sector broadly intact, free to carry on driving inequality, recklessly speculating with our homes, and financing other underlying causes of environmental breakdown.

The City of London has for too long acted with impunity, profiting from the emissions of fossil fuel extraction and its associated violence and dispossession. Our horizon should be to transform the sector by disempowering private finance and redistributing its capital towards green reindustrialisation and global climate reparations.

Efforts to address fossil fuel finance cannot be confined to the apolitical space of the mainstream climate movement. They must also be taken up by a socialist movement prepared to advance proposals for government regulation in the context of wider transformation. We should seek to use the powers of the state to discipline the financial sector while mobilising its resources as part of a Green New Deal and for climate justice.

Pressure from a depoliticised civil society alone will not successfully sever the ties between finance capital and fossil capital, let alone more transformative ambitions. By building a mass climate movement capable of exerting popular power both through democratic politics and in the streets, we at least stand a chance of building a new economy where the interests of private finance are subordinated to social and climate justice.