Acoalition of NGOs and environmental groups have called on financial institutions to stop “propping up” the war in Ukraine by cutting ties with Russia’s fossil fuel industry. In a letter to CEOs, they call on insurers, banks and asset managers to end financing, investment, insurance coverage and other financial services to companies in the Russian industry, and divest from existing assets.
Oil and gas sales made up 36% of Russia’s budget last year and have allowed the country to build up US$470bn in foreign reserves. In addition, Morningstar estimates that 14% of ESG investment funds are exposed to Russia.
The NGO coalition – which includes Greenpeace, Rainforest Action Network and Sierra Club – has listed 60 major oil, gas, and coal companies either headquartered or active in Russia, which it believes should be excluded. “The war that Putin has begun by invading Ukraine is a stark reminder of the connection between justice, peace and climate change,” the letter states. “As the Ukrainian climate scientist and IPCC [Intergovernmental Panel on Climate Change] report co-author Svitlana Krakovska said, ‘human-induced climate change and the war on Ukraine have the same roots – fossil fuels – and our dependence on them,’ and the intensification of climate change will increase international tensions and conflicts.”
There are signs that national governments will look to increase fossil fuel production following Russian import bans. The UAE has indicated it will encourage fellow OPEC members to increase oil production after prices jumped by more than 30%, while several US oil majors have also signalled their intention raise output. Prime minister Boris Johnson has said that the
UK may have to increase its domestic gas and oil production, potentially opening the door to more drilling in the North Sea.