Sen. Jeff Merkley (D-Ore.) yesterday introduced two bills to limit fossil fuel investing by financial institutions.
The “Protecting America’s Economy From the Carbon Bubble Act” would ban banks and other financial companies from making new loans for or investments in fossil fuel companies and from financing new fossil fuel projects.
The bill is a drastic step that Merkley said would help prevent economic devastation if fossil asset prices collapse amid the energy transition.
It also goes well beyond the kinds of proposals other Democrats have made for the financial industry on Capitol Hill, which mostly involve requiring better transparency about fossil fuel investing and climate impacts.
The other bill Merkley announced yesterday — the “Sustainable International Financial Institutions Act” — would require the United States to use its position in international financial institutions, such as the International Bank for Reconstruction and Development, to push for fossil fuel divestment.
“How we invest our money reflects our values today and will drive our future tomorrow,” Merkley said in a statement. “Fossil fuel investments play a key role in accelerating climate chaos, which continues to spiral further and further out of control and claim lives and livelihoods in the process.”
Together, the bills amount to one of the most aggressive proposals yet to mitigate climate risk to the financial sector, an increasingly prominent concern among lawmakers and investor advocacy groups.
They came after a landmark report from the Commodity Futures Trading Commission, a federal regulator, that found climate change could devastate the financial system, as sea-level rise and other effects put coastal property at risk and fossil fuels lose value in the energy transition