Several UK universities have threatened to switch their banking providers unless they stop financing fossil fuel projects that contribute to the climate crisis. The universities, which include Cambridge, Oxford, and University College London, have written to their banks, such as Barclays, HSBC, and Lloyds, to demand that they align their lending policies with the Paris Agreement.
The universities, which collectively hold billions of pounds in deposits and investments, have said that they have a duty to fight climate change and to ensure that their financial partners share their values and commitments. The universities have also said that they are responding to the demands of their students and staff, who have been campaigning for divestment from fossil fuels and for more sustainable banking practices.
The universities have been inspired by the example of Leeds University, which switched to Lloyds last year because it had the lowest fossil fuel investments of any of the major UK banks. Leeds University said that it wanted to work with a bank that was “committed to becoming a net zero carbon business by 2050 and to halving the emissions it finances by 2030”.
Banks Are Facing Pressure to Align with Paris Goals
The banks, which are among the biggest funders of fossil fuels in the world, are facing increasing pressure from their customers, shareholders, and regulators to align their businesses with the Paris Agreement, which aims to limit global warming to well below 2°C above pre-industrial levels. The banks have made some pledges to reduce their exposure to coal, oil, and gas, but campaigners say that they are not enough and that they are still financing new projects that are incompatible with the climate goals.
Barclays, for example, has said that it will align its entire financing portfolio with the Paris Agreement by 2050 and that it will provide £100bn of green financing by 2030. However, it has also been the top European funder of fossil fuels between 2016 and 2022, according to a report by the Rainforest Action Network. Barclays has also faced a shareholder resolution, backed by more than 15% of its investors, to phase out its financing of fossil fuels.
Universities Could Switch to Greener Alternatives
The universities have given their banks a deadline of March 31, 2024, to respond to their demands and to show evidence of their progress towards net zero emissions. If the banks fail to meet the expectations of the universities, they could face losing their lucrative contracts and reputational damage. The universities could switch to greener alternatives, such as Triodos Bank, which only lends to projects that have a positive social and environmental impact.
Dr James Smith, the director of the Centre for Climate Change Mitigation at Cambridge University, said: “We are asking our banks to demonstrate that they are serious about tackling the climate emergency and that they are willing to work with us to achieve a net zero future. If they are not, we will have no choice but to look for other providers who share our vision and values.”
