Goldman Sachs Is First U.S. Big Bank to Divest From Arctic Oil and Gas
Citing the importance of the Arctic's fragile ecosystem and its importance to indigenous populations, the investing giant said it will decline investing in any oil exploration in the Arctic, including the Arctic National Wildlife Refuge.
"Oil development in the Arctic Circle is prone to harsh operating conditions, sea ice, permafrost coverage, and potential impacts to critical natural habitats for endangered species," Goldman Sachs said in its Environmental Policy Framework. "The unique and fragile ecosystems of the Arctic region also support the subsistence livelihoods of indigenous peoples groups that have populated certain areas in the region for centuries."
Goldman Sachs also said in its policy framework that it would not finance any new thermal coal mines or any mountaintop removal projects. It added that where it has already invested, it would work with companies to diversify their strategies and reduce their carbon emissions.
"Companies' diversification strategy and carbon emissions reduction initiatives will be a key consideration in our evaluation of future financings with the goal of helping their transition strategy," the Environmental Policy Framework says. "We will phase out our financing of thermal coal mining companies that do not have a diversification strategy within a reasonable timeframe."
Goldman Sachs follows a dozen global banks, based largely in Europe and Australia, that pledged not to finance Arctic oil and gas development in the arctic. Several of the policies mention Arctic National Wildlife Refuge specifically, as NPR reported. Goldman is the first U.S. headquartered bank to make the same promise, as CNN reported.
"Goldman Sachs's updated policy shows that US banks can draw red lines on oil and gas, and now other major US banks, especially JPMorgan Chase – the world's worst banker of fossil fuels by a wide margin – must improve on what Goldman has done," said Jason Opeña Disterhoft, a climate and energy campaigner at Rainforest Action Network, which helped to lobby for the change, as The Guardian reported.
The move did win praise from environmental activists, including the Sierra Club, though it did not extend to fracking, which environmentalists had campaigned for. Nevertheless, the Sierra Club, which had lobbied Goldman Sachs to stop funding Arctic exploration, praised the bank's pledge.
"The Trump administration may not care about ignoring the will of the American people or trampling Indigenous rights, but a growing number of major financial institutions are making it clear that they do," said Ben Cushing, a Sierra Club campaign representative, as The Guardian reported. "We hope other American banks will follow their lead."
BREAKING: @GoldmanSachs just became the first major American bank to prohibit financing for new Arctic oil, thermal coal mining, and coal power projects worldwide! 👏👏 #DefundClimateChange https://t.co/y023bKh2Gr— Ben Cushing (@bmcushing) December 15, 2019
The divestment movement scored another large victory last week when insurance giant Liberty Mutual announced new policies that will see the company move away from protecting the coal industry. Liberty Mutual became the 18th global insurance company to put tighter restrictions on underwriting coal, according to the trade publication Property Casualty 360.
Liberty Mutual said it will no longer underwrite risk for companies where more than a quarter of their risk comes from coal, nor will it invest in the stock of companies that have more than 25 percent of their portfolio in coal, and it will phase out its coverage and its investments in any country that does not meet that threshold, according to a company statement.
"We are committed to being a responsible global corporate citizen with a focus on environmental sustainability, supporting the transition to a low-carbon economy and investing in companies that show proven progress in this evolution," said Francis Hyatt, the company's newly appointed Chief Sustainability Officer, in the statement. "We understand the shift from coal to clean energy is a journey and we recognize the role the insurance industry plays in supporting that evolution for our customers.
Activists welcomed the commitment from Liberty Mutual, but worried about the loopholes it created for itself.
"While Liberty Mutual's new policy sets out strong restrictions on insuring coal companies, it apparently does not rule out covering new coal-fired power plants or coal mines from companies with less than a 25 per cent stake in coal," said Elana Sulkshana, Rainforest Action Network's energy finance campaigner, in a statement, as Business Green reported. "This is a major loophole because, to keep warming below 1.5C, the science is clear that the climate cannot withstand any new coal projects."
"Liberty Mutual must strengthen its policy to clearly rule out insuring any new coal mines or power plants, fully phase out coal across all insurance and investment activities in line with 1.5 C, and stop insuring the destructive tar sands sector," she added.
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What Is Ammonium Nitrate?<p>Ammonium nitrate is a white crystalline salt that can be fairly cheaply produced from ammonia and nitric acid. It is soluble and often used as fertilizer, as nitrogen is needed for healthy plant development.</p><p>Ammonium nitrate in its pure form is not dangerous. It is, however, heat sensitive. At 32.2 degrees Celsius (89.96 degrees Fahrenheit), ammonium nitrate changes its atomic structure, which in turn changes its chemical properties.</p><p>When large quantities of ammonium nitrate are stored in one place, heat is generated. If the amount is sufficiently vast, it can cause the chemical to ignite. Once a temperature of 170 C is reached, ammonium nitrate starts breaking down, emitting nitrous oxide, better known as laughing gas. Any sudden ignition causes ammonium nitrate to decompose directly into water, nitrogen and oxygen, which explains the enormous explosive power of the salt.</p>
Deadly Disasters<p>As ammonium nitrate is a highly explosive chemical, many countries strictly regulate its use. Over the past 100 years, there have been several disasters involving the chemical.</p><p>In 1921, for example, a massive blast occurred at a BASF chemical plant in Ludwigshafen in the German state of Rhineland-Palatinate. About 400 metric tons of a mixture of ammonium sulfate and ammonium nitrate exploded, killing 559 people and injuring 1,977. The plant was largely destroyed in the blast, which could be heard as far away as Munich, some 300 kilometers (186 miles) distant.</p><p>In 2015, explosions caused by ammonium nitrate ripped through the <a href="https://www.dw.com/en/china-convicts-dozens-for-last-years-giant-explosions-in-tianjin/a-36324321" target="_blank">Chinese port city of Tianjin</a>. Eight hundred metric tons of the chemical were said to have been stored along with other substances in a warehouse for hazardous materials. The blasts killed 173 people and destroyed an entire city district.</p><p>Two years earlier, in 2013, an ammonium nitrate explosion occurred at the West Fertilizer Company site in Texas, killing 14 people. And in 2001, 31 people died in Toulouse, France, in an explosion caused by the chemical.</p>
Terrorist Favorite<p>In Germany, the purchase and use of ammonium nitrate is regulated by the explosives act. This is because the cheap, highly explosive and relatively easily obtainable material has in the past been used by terrorists to carry out attacks.</p><p>For example, in 1995, U.S. conspiracy theorist and gun enthusiast Timothy McVeigh used a mixture of ammonium nitrate and other substances to bomb the Alfred P. Murrah Federal Building in Oklahoma City. Norwegian far-right extremist Anders Behring Breivik also used ammonium nitrate in a car bomb attack in Oslo in 2011.</p>
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