Last month, New York’s Climate Action Council voted to approve a framework for meeting goals mandated in the state’s landmark 2019 Climate Leadership and Community Protection Act. The plan recommends ambitious policy changes to reduce greenhouse gas emissions by 40% in the next seven years and 85% by 2050. Now, it’s up to Gov. Hochul, the Legislature, and state agencies to implement the plan.
The act directs the council to take an economy-wide approach, but there’s one major source of greenhouse emissions missing from the plan: public deposits with commercial banks. Cities and counties across New York state deposit tens of billions of public dollars annually in big banks, which finance fossil fuels, among other destructive industries.
A recent “Carbon Bankroll Report” uncovered the previously hidden toll of cash deposits and financial investments on the environment. The report found that for every billion dollars deposited with big banks, 87 kilotons of carbon dioxide are spewed into the atmosphere, severely harming public health and compounding the climate crisis. The world’s 60 largest banks have pumped $4.6 trillion into fossil fuels since 2016, with no end in sight.
New Economy Project recently applied the Carbon Bankroll Report methodology to New York City and found that city deposits and investments in banks, effectively generate 757 kilotons of greenhouse gas emissions annually — equivalent to adding 160,000 cars to city streets each year. Five of the biggest banks that hold New York City’s public deposits provided $1.2 trillion in fossil fuel financing, from 2016 to 2021 alone.
As Black and brown New Yorkers continue to bear the brunt of climate change in New York, the governor and Legislature must take urgent action to address the role that banks play in financing fossil fuels. Fortunately, there’s a ready-made solution: public banking.
Public banks are created by governments and chartered to serve the public interest. They hold public deposits and invest in community needs, rather than propping up harmful industries. Depositing public money in local public banks will go a long way toward aligning New York’s policies with the CLCPA’s critical mandates.
Through public banking, municipalities can help finance community-owned solar projects, heat-pump installations, building electrification, and sustainable housing development, in ways that promote community ownership and a just transition in frontline communities.
But first Albany lawmakers must pave the way for local public banks by enacting the New York Public Banking Act in this latest session. The bill creates a safe and appropriate regulatory framework for chartering public banks, authorizing the state’s banking regulator to issue special purpose public bank charters to local governments that demonstrate safety and soundness, public accountability, and ethical and independent governance.
The Rochester City Council has unanimously endorsed the bill, as have more than two-thirds of the New York City Council and dozens more state and local legislators throughout New York. More than 150 labor and community groups, including many environmental organizations, have also called for passage of the bill.
Governor Hochul and legislative leaders must heed these calls, and can find many successful models of public banking around the world. In Chile, Costa Rica, and Germany, public banks are making deep investments in renewable energy and other sustainable infrastructure. That’s because public banks are chartered explicitly to provide social, economic, and environmental benefits.
The time is ripe for New York to act on public banking, with billions of federal dollars being made available to local governments through the Inflation Reduction Act. The IRA establishes a national green bank that will provide grants to boost investment in green initiatives. Local public banks can channel these dollars to frontline communities, where they are needed most. New Yorkers just need Albany to pass the New York Public Banking Act.
Will the governor and Legislature stand with working communities or with the big banks? The choice is clear, and there is no time to waste.
Will Spisak is Senior Program Associate at New Economy Project. Alÿcia Bacon is New York Organizer at Mothers Out Front. Alicé Nascimento is Policy Director at NYCC.