Banks have continued to pump trillions of dollars into underwriting the global fossil fuel industry since the Paris Agreement in 2015, revealing an “alarming disconnect” between the scientific consensus on climate change and the broadly business-as-usual path being travelled by the international finance sector, a new report has concluded.
According to research led by US environmental lobbyist the Rainforest Action Network (RAN), banks have invested $3.8trn in the oil, gas and coal sectors in the last five years, a level higher in 2020 than 2016, “a trend that stands in direct opposition to the [Paris] Agreement’s stated goal of rapidly reducing carbon emissions with the aim to limit global temperature rise to 1.5°C”, said the authors.
The report, Banking on Climate Chaos, highlights that even in pandemic-spurred recession that led to an “across-the-board” cut of fossil fuel financing of some 9%, the world’s 60 largest banks increased financing to the 100 companies “most responsible for fossil fuel expansion” by over 10%.
“These banks have poured nearly $1.5trn over the past five years into 100 top companies expanding fossil fuels. This includes companies behind highly controversial projects like the Line 3 tar sands oil pipeline and the expansion of fracking on the land of Indigenous Mapuche communities in Argentina’s Patagonia region,” said the authors of the report, which was published by RAN with bodies including BankTrack, Indigenous Environmental Network, Oil Change International, Reclaim Finance and Sierra Club.
US-based banks were spotlighted as the “largest global drivers of emissions” in 2020, with JPMorgan named-and-shamed as the “world’s worst” fossil-supporting financial institution, having committed to align with the Paris Agreement but, according to the RAN report, continuing an “essentially unrestrained financing of fossil fuel”, underwriting $317bn in projects over the last five years, 33% more than Citi, which was second worst.
The report noted that Wells Fargo’s total fossil financing dropped 42% last year, moving the bank from fourth-worst in 2019 to ninth worst, and BNP Paribas’ 41% rise year-on-year to providing $41bn in finance to fossils, “the biggest absolute increase” in its survey, despite the bank’s “strong policy commitments restricting financing for unconventional oil and gas”.
RAN executive director Ginger Cassady said: “The unprecedented Covid-19 dip in global financing for fossil fuels offers the world’s largest banks a stark choice point going forward; they can decide to lock in the downward trajectory of support for the primary industry driving the climate crisis or they can recklessly snap back to business as usual as the economy recovers.
“US-based banks continue to be the worst financiers of fossil fuels by a wide margin. Going into the Glasgow [COP26] climate summit at the end of the year, the stakes could not be higher. Wall Street must act now to stop financing fossil expansion and commit to fossil zero.”
The report ran the rule over existing global climate policy commitments by banks and found them “grossly insufficient and out of alignment” with the Paris Agreement due to being based on “distant and ill-defined goal of achieving ‘net zero by 2050’ or on restricting financing for unconventional fossil fuels”.
Reclaim Finance executive director Lucie Pinson said: “These numbers expose the hollowness of banks’ ever-multiplying commitments to be net-zero or align with the Paris Agreement climate targets.
“BNP Paribas merits singling out as the world’s fourth-largest fossil financier in 2020, having funnelled multi-billion-dollar loans to oil giants like BP and Total. Nonetheless, it’s clear that all banks need to replace empty promises with meaningful policies enacting zero tolerance for fossil fuel developers.”
Sierra Club financial advocacy campaign manager Ben Cushing stated: “Many of the world’s largest banks, including all six major US banks, have made splashy commitments in recent months to zero-out the climate impact of their financing over the next 30 years.
“But what matters most is what they’re doing now, and the numbers don’t lie. This report separates words from actions, and the picture it paints is alarming: major banks around the world, led by US banks in particular, are fuelling climate chaos by dumping trillions of dollars into the fossil fuels that are causing the crisis.
“Big banks don’t deserve a pat on the back if their 2050 pledges are not paired with meaningful 2021 actions to cut fossil financing.”