Big banks failing to quit fossil fuel, despite climate pledges

The world’s top banks pumped US$742 billion into fossil fuels in 2021, only slightly less than 2020, analysis shows.

Tar sands oil projects financing
A report by the Rainforest Alliance Network said that there had been an “alarming” increase in the financing of tar sands oil projects, which jumped 50 per cent between 2020 and 2021 to US$23.3bn. Image: LouGold/flickr

Global banks provided US$742 billion in financing to coal, oil and gas companies last year, despite a plethora of climate pledges made to an industry alliance claiming to be making efforts towards achieving net-zero greenhouse gas emissions, according to analysis by an environmental group.  

The world’s largest 60 lenders provided slightly less money for fossil fuels in 2021 than the year before, when US$750 billion was pumped into dirty energy, according to the annual report produced by a coalition of campaign groups under the umbrella of the Rainforest Action Network (RAN). 

Four American banks dominate the financing of fossil fuels with JPMorgan Chase, Citi, Wells Fargo, and Bank of America together accounting for one quarter of all fossil fuel financing identified over the past six years, according to RAN’s report. 

JPMorgan’s funding of fossil fuels companies in 2021 stood at US$61.7 billion, up about US$10 billion from the previous year. 

The bank said in an emailed statement that it was “taking pragmatic steps” to meet its emission reduction targets “while helping the world meet its energy needs securely and affordably”.

The lender was also the biggest western financier of the Russian state energy company Gazprom over the past six years, according to RAN’s analysis. 

Wells Fargo and Bank of America did not respond to requests for comment. 

“With Wall Street banks leading the charge, these financial institutions are directly complicit in undermining a climate stable future for us all and must immediately end their support of any further fossil fuel infrastructure expansion,” said Alison Kirsch, research and policy manager at RAN. 

The top four are members of the Net-Zero Banking Alliance, which last April, committed to transitioning all portfolios to “align with pathways to net-zero by 2050 or sooner”. The group pledged at the United Nations climate summit in Glasgow in November that US$130 trillion of private sector assets was committed to achieving net zero greenhouse gas emissions.  

Signatories of the alliance including Citi, BNP Paribas and Barclays subsequently took part in multi-billion dollar deals with state oil firms, Abu Dhabi National Oil Company and Saudi Aramco. 

This is despite firm calls by the International Energy Agency, which said in May 2021 that no new oil and gas fields should be developed to help the planet stem greenhouse gas emissions and rising global temperatures. 

Citi said that it “continues to strengthen” its policies and expectations for clients in thermal coal mining and coal-fired power generation. “We are focused on working with our fossil fuel clients to help them decarbonise their businesses,” the bank told Eco-Business in an emailed statement. 

BNP Paribas and Barclays did not immediately respond to requests for comment. 

In 2021, fossil fuel lending and underwriting continued to drive “shocking” human rights abuses, particularly in Indigenous, Black, and Brown communities, the report said. 

“We desperately need to direct global financial flows away from destructive fossil fuels and the cruel and corrupt governments that weaponise them against our environment and ourselves,” said Katrin Ganswindt, head of finance Research at Urgewald, a Germany-based non-profit. 

The analysis also noted the “alarming” increase in the financing of tar sands oil projects, which jumped 50 per cent between 2020 and 2021, to US$23.3 billion.

Although most banks have some policy language addressing fossil fuel finance, it is largely ineffective given how project-specific it is. Exclusion policies tend to focus on coal. 

Of the 44 banks examined in the report that had committed to net zero emissions goals by 2050, 27 did not have a “meaningful no-expansion policy for any part of the fossil-fuel industry.” 

“This points to a huge mismatch between where banks have focussed their policies and where money is actually flowing,” the report said. 

Twelve banks still have no fossil fuel financing exclusion policy strong enough to merit points in RAN’s analysis, including 10 of the 13 Chinese banks in the report. 

A study by a Singapore-based research firm Asia Research & Engagement said that the lending policies of Asia’s major banks are “falling short” of national plans to reduce carbon emissions and meet global pledges to tackle climate change.

The report said that they have lagged in diverting capital away from carbon-intensive industries or addressing climate change through governance, risk management, or policies prompting concerns about greenwashing. 

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