An industry group backed by Shell sought to block US banks’ efforts to tackle climate change even as the oil company drew up plans for ‘carbon neutrality’, SourceMaterial has learned.
Shell this month won praise from climate campaigners when it said it would aim to reduce its net emissions to zero by 2050. But just weeks previously, in the final days of the Trump administration, a Shell-backed industry association successfully lobbied for a controversial banking rule that opponents say was designed to hamper greener lending.
The new regulation, which requires banks to be “objective” and “impartial” in choosing borrowers, is widely viewed as an attempt to make it harder for US lenders to introduce climate-friendly policies like banning loans for oil drilling in the Arctic or coal mines.
All six major US banks—Goldman Sachs, JPMorgan Chase, Wells Fargo, Citi, Bank of America and Morgan Stanley—have ruled out financing for Arctic oil and gas development, the Sierra Club, an environmental advocacy group, said in December.
Currently frozen by President Biden along with all pending Trump-era regulations, the rule could still be revived by the incoming Comptroller of the Currency, an independent financial watchdog yet to be appointed by the new administration.
Shell’s support for the rule shows an “obvious disconnect between fossil fuel companies’ actions and their words”, said Graham Steele, director of the Corporations and Society Initiative at Stanford Graduate School of Business.
"There is an obvious disconnect between fossil fuel companies' actions and their words"
In comments on the rule submitted to the Office of the Comptroller of the Currency in December, the Independent Petroleum Association of America, of which Shell is a member, said banks had responded to “political pressure to limit capital to an essential energy industry”.
Environmental groups had “distorted” the damage caused by methane emissions, “trying to suggest it poses an unreasonable threat”, the IPAA said.
Shell’s own website, meanwhile, calls methane “a potent greenhouse gas” which when released into the atmosphere “has a much higher global warming impact than CO2”. The company also says it works to ensure its memberships of industry associations support the Paris Agreement on climate change.
A spokesperson for Shell told SourceMaterial the company does not have a position on the rule and did not “directly consult with IPAA on its correspondence to the comptroller”. The company does not expect trade associations to be “monolithic” and it clearly expresses its position on methane to the lobby groups it backs, they said.
The IPAA does not disclose its affiliates but a partial list obtained in 2018 by the Western Values Project shows that members alongside Shell include major American oil companies such as Chesapeake Energy, QEP Resources, Ovintiv and SM Energy.
The rule itself proved extremely controversial, with major banks, consumer groups, environmentalists and Democratic lawmakers uniting against it.
“When you see proposals that have condemnation among a number of stakeholders that don’t usually get along, that says something about the proposal,” said John Geiringer, a partner at law firm Barack Ferrazzano and a former banking regulator.