March 18, 2014

Emissions from Investments: Measurement and Accountability

The following post was authored by Laura Mistretta, a fourth-year student at Duke University.

It may be the most inconvenient truth of all: many of our actions, including those deeply embedded in our lifestyles, produce greenhouse gas emissions.  The most obvious sources of greenhouse gas emissions are those associated with transportation and electricity use.  If we look a bit further we can see greenhouse gas emissions lurking behind the milk in our refrigerators, woven into the fabric of our clothing, and stained with ink in our newspapers. 

Thanks to increasing environmental awareness, more and more people understand the merits of buying groceries at local farmers market over a chain supermarket, and consider energy efficiency when buying appliances.  It has become apparent that the products we buy matter, what we spend our money on matters.  

If we can agree that the financial decisions of individual consumers make a difference in greenhouse gas emissions; it is not a stretch to see that the financial decisions that larger institutions, such as banks, universities, governments and the like have a huge impact on the climate.

In the case of banks, the potential to abet or hinder massive greenhouse gas emissions is magnified. Banks have tremendous financial influence and have the power to decide whether to lend money to a business… or not.  In practical terms this means that banks can decide if they will finance a coal mine or a wind farm. 

So, if we as consumers can be held responsible for the greenhouse gas emissions stemming from the products that we purchase, then banks should be held responsible for the emissions that their investments make possible.

Fortunately, collaboration between NGOs and research groups has resulted in the development of a number of tools to calculate financed emissions. NGOs like Rainforest Action Network are advocating major financial institutions to include financed emissions when they calculate their carbon footprints and make pledges to reduce them. 

Bank of America and Citibank have already agreed to do so, thanks to pressure put on them by students at dozens of universities and colleges across the country.  Once a significant number of banks agree to this sort of greenhouse gas emission analysis, and work with NGOs to perfect the calculations, the possibilities for holding these institutions, and others, accountable really start to open up.     

I am currently involved in a campaign at Duke University to divest the endowment from the top 200 fossil fuel companies.  Divestment has become a hot topic around the nation as student groups at some of the country’s most prestigious schools demand change.  Thus far the resounding response from administrators and university presidents has been “No.” 

We at Duke met with our university president for a preliminary meeting and were met with firm opposition.  Among the various concerns and questions Duke’s president raised, was an underlying skepticism that divesting from fossil fuels could even impact climate change and truly be a viable mitigation strategy.  I have come across this same doubt in my conversations with students, alumni, and faculty as well. 

The reality is, responsibility for greenhouse gas emissions produced by one’s investments is inescapable and necessary.  As Bank of America and Citibank’s recent commitments to measure financed emissions show, the moment of accountability is coming for investing institutions, including universities.  Once a tool is established to calculate financed emissions, student groups around the country will be able to back up their claims with solid numbers and make it much more difficult for administrators and university presidents to cast abstract doubts on their efforts.     

There is a long way to go before that becomes a reality, but the wheels have already started turning with Citibank and Bank of America, and they will continue to turn as NGOs keep up the pressure and work to hold banks accountable for investing in climate change and threatening the future of us all. 

Click here to join Duke Universities in demanding that big banks stop financing the coal industry.