The world’s largest 60 banks have pumped $3.8 trillion (€3.2 trillion) into the fossil fuel industry in the five years since the Paris climate accord, a new report has revealed.
The research by several leading climate groups also found that fossil fuel financing was higher in 2020 than in 2016, a trend which it said “stands in direct opposition” to the agreement’s central aim of reducing carbon emissions.
The “Banking on Climate Chaos” report tracked the lending and underwriting activities of the world’s leading commercial and investment banks.
It found that US banks were the largest global drivers of emissions and that Wall Street giant JP Morgan was the worst.
The US bank provided nearly $317 billion in financing to the fossil fuel sector between 2016 and 2020, which included loans and bond-underwriting services to oil majors Chevron and Exxon Mobil.
The report noted that while JP Morgan recently committed to align its financing with the Paris Agreement, it “ continues essentially unrestrained financing of fossil fuels”.
Rival US bank Citi was the next-worst in terms of financing the fossil fuel sector, providing $48.4 billion in 2020 alone, followed by Wells Fargo, Bank of America, Royal Bank of Canada and MUFG, Japan's largest bank.
UK bank Barclays was the worst European lender while Bank of China was the worst in China.
Leverage
Climate groups have increasingly begun to focus on the financial pipeline behind the global fossil fuel industry in the belief that banks have the greatest leverage on their clients.
The report – jointly published by Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change International, Reclaim Finance, and Sierra Club – is, however, a damning indictment of global efforts to combat climate change.
It found that fossil fuel financing dropped by 9 per cent last year in parallel with a global drop in fossil fuel demand due to the Covid-19 pandemic.
Nonetheless, 2020 financing levels remained higher than in 2016, the year immediately following the adoption of the Paris Agreement, which seeks to limit global warming to below 2 degrees compared to pre-industrial levels.
“The overall fossil fuel financing trend of the last five years is still heading definitively in the wrong direction, reinforcing the need for banks to establish policies that lock in the fossil fuel financing declines of 2020, lest they snap back to business-as-usual in 2021,” the report said.
It showed that much of this $3.8 trillion in financing over the past five years facilitated the expansion of fossil fuel extraction and infrastructure in the oil, gas and coal industries, and that nearly 40 per cent went to just 100 companies.
Controversial projects
These include the companies behind highly controversial projects such as the Line 3 tar sands oil pipeline between the US and Canada, and the expansion of fracking on the land of indigenous Mapuche communities in Argentina's Patagonia region, two of the nearly 20 case studies featured in the report.
"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," Ginger Cassady, executive director of Rainforest Action Network, said.
"US-based banks continue to be the worst financiers of fossil fuels by a wide margin. Going into the Glasgow climate summit at the end of the year, the stakes could not be higher," she said.
