Until recently, the green tide in capital markets was sweeping all before it. No one had a bad word to say about it, except a few who scoffed and grumbled in private, no doubt reluctant to look out of date by speaking publicly.
As any veteran of the environmental movement could tell you, it was never going to last. When the low hanging fruit are gone and green ambitions hit the hard reality of an economy powered by fossil fuels, the choices start to get difficult.
Up to now, banks have generally been anxious to look green — including some of the biggest US ones like JP Morgan, Bank of America and Citigroup.
But now the fightback from fossil fuel supporters is truly under way. The oil companies are dropping their green fig leaves. In January ExxonMobil sued activist investors to stop them proposing a climate motion at its annual general meeting. Shell is suing Greenpeace for occupying a floating oil platform.
The US political scene, however, is where the gloves are off and the fists are flying.
This week the state of West Virginia barred Citigroup, TD, HSBC and Northern Trust from handling the state’s money, because it sees them as “boycotting” energy companies. They join BlackRock, JP Morgan and three others already on the list.
Environmentalists will be falling off their bikes in astonishment — many of these firms are big stars in their cast of bogeymen too, because they do so much fossil fuel finance.
You can see West Virginia’s point, though. It gets 21% of its taxes from coal, oil and gas.
In this new climate, banks are suddenly having to issue statements pointing out how much fossil fuel finance they do, instead of how much green funding.
Faced with this kind of pressure, not necessarily from West Virginia, Bank of Montreal last November quietly dropped a policy statement that appeared to rule out financing new coal infrastructure, so it has avoided the state’s ban.
But that means it is now getting brickbats from fixed income analysts concerned about the climate.
BMO has not given up on sustainability — as its website says, it is “committed to a sustainable future”.
So it may have earned West Virginia’s approval, but it is likely still to irk some anti-woke crusaders.
What banks and other financial firms are discovering is that the only way to avoid getting pelted from both sides is to move decisively to one side — even if it means more ferocious attacks from the other. In the real world, that is difficult to do, especially for big institutions.
It would be much better for the planet and humanity if banks took the plunge and backed a fast transition to net zero carbon emissions, with help for regions like West Virginia to find new core industries.
Until banks have the courage to do that, the only place to sit will be on the fence. BMO has just shifted its perch. But it, like all other banks, is discovering that it’s an uncomfortable place to sit.