Goldman Sachs Is The First Major U.S. Bank To Reject Financing Arctic Oil Drilling

Goldman Sachs has announced it will no longer be financing new oil drilling or exploration for oil in the Arctic. It has also pledged to stop investing in thermal coal mines or coal-fired projects anywhere in the world.

The statement was made as part of a new environmental policy published on Sunday, which also pledged $750 billion toward “sustainable development in climate transition and inclusive growth finance” over the next 10 years.

Goldman Sachs is not the only bank to rule out Arctic drilling, the Royal Bank of Scotland and Barclays, for example, have also adopted similar policies this year. But it is the first big U.S. bank to make the pledge.

As the COP25 climate talks in Madrid drew to a close with a whimper on Sunday, dashing hopes of concrete actions with watered-down language on previous climate agreements, Goldman Sachs’ news is being seized on by some environmentalists as a sign of hope.

“Goldman Sachs becomes first big American bank to rule out financing Arctic drilling, and also coal. That leaves a lot to do, but it’s a big start,” tweeted Bill McKibben, founder of the environmental group 350.org.

“By ruling out direct finance for Arctic oil exploration and production, Goldman has established the first no-go zone for a major U.S. bank in the oil and gas sector,” said Jason Opeña Disterhoft, climate and energy senior campaigner at environmental nonprofit, Rainforest Action Network (RAN). “Goldman Sachs’s updated policy shows that U.S. banks can draw red lines on oil and gas, and now other major U.S. banks, especially JPMorgan Chase ― the world’s worst banker of fossil fuels by a wide margin ― must improve on what Goldman has done.”

The continued quest for new sources of fossil fuels to burn is incompatible with attempts to keep global temperatures from rising above levels at which catastrophic climate change becomes much more likely. The world must slash emissions by 55% by 2030, according to the United Nations’ Emissions Gap report published in November.

Goldman Sachs’ decision also stands in contrast to the priorities of the Trump administration, which has been pushing to open up the pristine, 19 million-acre Arctic National Wildlife Refuge to oil companies, despite the potential for environmental devastation, including the risk of oil spills and threats to the refuge’s rich wildlife, which includes polar bears and caribou.

The bank’s new policy may have been motivated both by an increased awareness of the risks of not transitioning to a zero-carbon economy but also by the practical realities of looking for oil in remote places. “The risk of funding operations in the melting Arctic, In the middle of the climate crisis, is a very difficult place for oil companies to operate,” said Ben Ayliffe, a senior strategist at Greenpeace.

RAN credited the bank’s move to “tireless Indigenous-led resistance, including crucial advocacy by the Gwich’in Steering Committee.” The group represents Indigenous communities in Alaska and Canada, and has been meeting with major banks to explain the threat of oil drilling to the Arctic refuge.

But while Goldman Sachs has the strongest fossil fuel restriction of any of the U.S. banks, RAN warned that the financial company “still lags behind its leading global competitors. It also remains far from alignment with what is needed to limit climate change to 1.5 degrees Celsius.” Warming above this temperature makes the chances of preventing catastrophic climate change a lot slimmer.

Goldman Sachs was the 12th biggest banker for the fossil fuel industry investing $59 billion between 2016 and 2018, according to RAN’s annual Banking on Climate Change report, which ranks the banks investing most heavily in fossil fuels.

And the environmental nonprofit the Sierra Club said the bank has not made similar commitments around fracking or tar sands exploration, both of which carry a heavy climate cost.

Still, the announcement creates an important new benchmark according to the organization. “The Trump administration may not care about ignoring the will of the American people or trampling Indigenous rights,” said Sierra Club campaign representative Ben Cushing, “but a growing number of major financial institutions are making it clear that they do.”