Source: United States Senator for Massachusetts Ed Markey
Legislation will require the country’s largest banks to better protect consumers and the climate from risk by winding down emissions-intensive financing
Washington (November 4, 2021) – Senator Edward J. Markey (D-Mass), Chair of the Climate Change, Clean Air, and Nuclear Safety Subcommittee of the Environment and Public Works Committee, and Senator Jeff Merkley (D-Ore.) today introduced the Fossil Free Finance Act, legislation that would require the Federal Reserve (Fed) to mandate that major banks and other Systemically Important Financial Institutions (SIFIs) reduce and stop the financing of projects and activities that emit greenhouse gas emissions. The legislation requires the Fed and big banks to acknowledge and act on the threat that climate change poses to our financial system and the planet. The legislation specifically mandates that all bank holding companies with more than $50 billion in assets and all nonbank SIFIs reduce financed emissions by 50 percent by 2030 and 100 percent by 2050, in line with the reductions necessary to avoid the most dangerous levels of warming.
“In order to reduce emissions and combat climate change, we need to stop throwing money at dirty fossil fuel projects,” said Senator Markey. “It makes no sense for us to let big banks finance investments that will make the climate crisis worse as we work to provide financing for clean energy, adaptation, and loss and damage to the world. The Fossil Free Finance Act will ensure we hold our financial institutions accountable for contributing to our country’s fossil fuel addiction, and for both their direct and indirect contributions to the fossil fuel industry.”
“As climate chaos continues to threaten Americans—endangering livelihoods and putting our future at risk—the role of big financial institutions in accelerating this crisis must be addressed,” said Senator Merkley.“Big banks can either be part of the problem or part of the solution, and it’s time to make sure their leverage is used to decrease rather than drive fossil fuel production. Cutting off the financial spigot for harmful fossil fuel projects is a key to accelerating toward a clean energy future.”
“U.S. financial regulators have fallen behind our global counterparts— failing to act as big banks funnel trillions of dollars into the fossil fuel industry,” said Congressman Mondaire Jones (NY-17). “The Fossil Free Finance Act is essential legislation in stopping the flow of capital into the industries posing the biggest threat to our planet and our economy. I was proud to introduce this legislation in the House alongside Congresswomen Pressley and Tlaib, and I’m thrilled that Senator Markey is with us in this fight.”
The Fossil Free Finance Act will:
- Prohibit the financing of new or expanded fossil fuel projects by 2022;
- Prohibit the financing of all fossil fuel projects by 2030;
- Prohibit thermal coal financing by 2025;
- Incorporate financing of emission guidance into the SIFI designation process and add financed emission to the list of criteria for nonbank financial institutions;
- Require the Fed to report to Congress commitments made by banks and nonbank SIFIs to reduce financed emissions and progress on those targets;
- and Require the Fed to report to Congress recommendations to Congress and other Federal agencies on how to facilitate a reduction in financed emissions and how to support an equitable transition.
The Fossil Free Finance Act was introduced in the House of Representatives by Congressman Mondaire Jones, Congresswoman Rashida Tlaib (MI-13), and Congresswoman Ayanna Pressley (MA-07). The legislation is cosponsored by Representatives Adriano Espaillat (NY-13), Marie Newman (IL-03), Ritchie Torres (NY-15), Jesús G. “Chuy” García (IL-04), Jared Huffman (CA-02), Alexandria Ocasio-Cortez (NY-14), Emanuel Cleaver, II (MO-05), Jamaal Bowman, Ed.D. (NY-16), Cori Bush (MO-01), Jerrold Nadler (NY-10), Mark Takano (CA-41), Grace Meng (NY-06), Pramila Jayapal (WA-07), James P. McGovern (MA-02), Bonnie Watson Coleman (NJ-12), Barbara Lee (CA-13), Jamie Raskin (MD-08) and Ro Khanna (CA-17).
The Fossil Free Finance Act is endorsed by Public Citizen, the Sierra Club, Evergreen, Future Coalition, 350, Americans for Financial Reform, the Sunrise Movement, Action on Race and the Economy, and Positive Money US.
“The Fossil Free Finance Act sends a powerful message that Congress won’t accept the Federal Reserve’s failure to do its job,” said Yevgeny Shrago, Policy Counsel at Public Citizen’s Climate Program. “The rest of the world is waking up to the magnitude of the threat that the climate crisis poses to the financial system. In the lead up to COP26, regulators in both the European Union and the United Kingdom recognized that net zero transition plans for banks are a critical component of stopping both a financial crisis and the climate crisis. The White House has recognized that the climate crisis is a systemic risk to financial markets. But the Fed is still analyzing whether to consider supervisory guidance and scenario analysis. By introducing this bill, Senator Markey joins climate leaders in the House in recognizing that the Fed is falling behind and that it needs leadership who will use its powers to deflate the carbon bubble in a way that protects our economy and vulnerable frontline communities.”
“The Federal Reserve’s mandate includes protecting our communities and economy, and no longer propping up the culprits of climate chaos,” said Brooke Harper of 350.org. “The historic Fossil Free Finance Act will blaze a trail in addressing the climate crisis at scale, and we thank climate champion Senator Markey for his visionary leadership. It’s time for a Fossil Free Federal Reserve that steers our economy away from investment in high-risk fossil fuels, incorporates climate risk across policies and lending, and prioritizes racial justice, including through full employment, ahead of COP26 this November.”
“Wall Street banks have made it clear that, without strong federal oversight and regulation, they plan to continue pouring money into the fossil fuels that are driving the climate crisis and pushing us toward another financial crisis,” said Sierra Club Fossil-Free Finance Campaign Manager Ben Cushing. “The Federal Reserve has long failed to use its existing tools to adequately rein in Wall Street’s risky fossil fuel investments. We applaud Senator Markey for his leadership in pushing the Fed to do its job and protect our financial system from a climate-driven crash.”
“Regulators’ refusal to rein in Wall Street’s reckless risk-taking drove our economy off a cliff in 2008, and now, Wall Street’s climate-risky behavior could lead to an even bigger financial disaster if financial regulators don’t act,” said Evergreen Action Campaigns Director Lena Moffitt. “The Fed must fulfill its mandate to protect the American economy from a climate-fueled crash by using every available tool to limit climate risk in our market, but so far, it hasn’t done nearly enough. The Fossil Free Financing Act will bring us one step closer to sound financial regulation by ordering the Fed to do something it already has the authority to be doing—limiting how much greenhouse gas pollution a bank can finance, which is absolutely essential to reducing the climate risks that the financial sector, and all of us, face. We applaud Senator Markey for his work on this important legislation, and we look forward to their continued work to protect working Americans from Wall Street’s short-sighted greed.”
“Right now, a future free from the shackles of the fossil fuel industry is at stake because big banks continue to fund carbon polluters like Exxon, with no oversight or repercussions,” said Sunrise Movement Advocacy Director Lauren Maunus. “As banks make billions funding climate polluters, one in three Americans are facing a climate catastrophe right now. We must hold bad actors accountable by passing the Fossil Free Finance Act so we can finally put a stop to the endless funding of fossil fuel companies who pollute the air we breathe and the water we drink.”
“Addressing our global climate catastrophe requires an all-of-government, all-of-society approach that creatively pulls every available lever, and this legislation is a critical step in that direction,” said Katie Eder, Co-founder and Executive Director of Future Coalition. “By holding accountable the financial institutions underwriting the destruction of our planet, we can win a significant battle in the fight against climate change and show how collective action and climate justice can create a more sustainable economy that benefits everyone.”
“The Fossil Free Finance Act would mandate quick and meaningful progress to reduce financed emissions and climate risk within the U.S. financial system,” said Alex Martin, Senior Policy Analyst at Americans for Financial Reform. “So far, Fed Chair Powell has been unwilling to take even the most basic initial steps on climate supervision for banks. The result: the U.S. banking system is not taking the decarbonization transition steps needed for the nation to achieve its climate goals while ensuring financial stability. It’s time for the Fed to step up and hold banks accountable to their lofty net zero commitments, which will mean quickly ramping down their absolute financed emissions, including by withdrawing support for damaging fossil fuel industries as necessary to hit those goals.”
“Black, Brown, and Indigenous frontline communities have long been demanding that Wall Street banks stop pumping money into fossil fuel projects and pipelines that are ravaging our planet and communities, but Wall Street banks have made clear they intend to keep putting profit before people if left to self-regulate. The Federal Reserve has failed BIPOC communities and the planet by allowing Wall Street to keep investing in harmful fossil fuel corporations. Senator Markey’s Fossil Free Finance Act is an important initial step toward pushing the Fed to protect us from climate-crisis driven financial crash that will harm millions of people and disproportionately hurt BIPOC communities,” said Erika Thi Patterson, Campaign Director for the Action Center on Race and the Economy.
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