11-30-2021 — On November 29th, First Republic Bank became the first large US bank to announce a commitment to ending all lending to fossil fuel companies, the only one of the US’ 25 largest banks to do so. This commitment marks a watershed moment for large banks’ climate action and establishes the important precedent that fossil fuels can and must be phased out of banks’ lending – and all – financing activities. BankFWD applauds this commitment as an essential step towards ending all financing (lending, investing and underwriting) for fossil fuel expansion and phasing out all existing fossil fuel financing on a 1.5℃-aligned timeline.
Peter Gill Case, Co-founder and Co-chair of BankFWD, says “This is the first major bank to recognize that you can’t solve the climate crisis without first halting the expansion of fossil fuels. BankFWD’s work will continue until all major banks recognize that continued fossil fuel financing is both a financially and ecologically unsustainable business model.”
Earlier this month, COP26 put a global spotlight on financial institutions and their disproportionate impact on global climate outcomes. Even as banks announced widespread commitments to achieving net zero emissions by 2050, not a single large US bank backed up that commitment with the necessary actions to make those commitments fully credible – specifically with a commitment to end new fossil fuel financing. First Republic’s restriction on lending to fossil fuels raises the bar for all large banks.
Specifically, First Republic’s announcement committed it to ending lending for the following industries:
- Fossil fuel extraction
- Fossil fuel pipelines
- Natural gas distribution
- Fossil fuel electric generation
- Nuclear electric power generation
- Hydroelectric power generation
- Mining and quarrying
- Commercial fishing
Still, there is room for improvement.
While First Republic’s commitment establishes an essential precedent for US banks, First Republic is (1) not yet fully aligned with the demands of a 1.5℃ pathway, as its ban on fossil fuel loans does not yet extend to all assets held by its wealth management arm, nor is it (2) a participant in the financial sectors’ emerging transparency and accountability infrastructure to standardize climate goals, measurement, and reporting, specifically associations such as GFANZ, PCAF, UNPRB, and PACTA¹.
Globally, First Republic is the second large-tier bank to make such a commitment, following only La Banque Postale, which announced its intention last month to exit all of its oil and gas commitments by 2030.
Quotes from BankFWD partners and allies:
“Wallace Global Fund welcomes the decision by First Republic to officially end financial lending to the destructive fossil fuel sector. It has become morally unacceptable and financially irresponsible for financial institutions to continue investing in fossil fuel projects. In order for the world to adequately address climate change and remain under 1.5°C of warming, all financial institutions must divest all of their assets from all fossil fuels.” – Ellen Dorsey, Executive Director, Wallace Global Fund
¹ Glasgow Financial Alliance for Net Zero, Partnership for Carbon Accounting Financials, UN Principles for Responsible Banking, Paris Agreement Capital Transition Assessment