Earlier this week, a coalition of environmental organisations published a report on the financing of fossil fuel companies by the world’s largest banks. The report, entitled Banking on Climate Chaos 2025, revealed that the world’s 65 largest banks between them committed $869 billion (€755 billion) last year to companies involved in the extraction of oil, coal and gas. The level of financing had been steadily declining since 2021, but last year marked a sudden reversal of that trend, with two-thirds of those banks increasing their financing, from 2023 to 2024, by a combined $162 billion.
Another relevant fact about 2024 is that it was the hottest year since records began – a fact whose most unsettling aspect is, paradoxically, that it has completely lost its power to unsettle. Every year now is hotter than the previous one, and the previous one was always the hottest yet. The 10 hottest years on record have all been since 2015 – the year that the Paris Agreement was negotiated, a treaty aimed at limiting global warming to below 1.5 degrees above industrial levels. According to the report, staying within the Paris Agreement’s goal probably necessitates decommissioning existing fossil fuel production infrastructure, let alone not expanding it. “This means,” as the reports authors put it, “not a single new well, tanker, export terminal, pipeline, etc – all new energy production and infrastructure as of 2021 should be based on renewable, non-exploitative energy.”
But expansion of fossil fuel exploitation is precisely what is happening. And the global banking sector is not, of course, increasing its financing of this activity for the sheer misanthropic joy of it; it will expect a solid return on its investment over the life of these contracts. In order to provide such returns, the report makes clear, fossil fuel companies will have to keep producing the very material that is destroying any prospect of a liveable future for our planet.
Regular readers of this column might remember that, earlier this year, I wrote about a book by Andreas Malm and Wim Carton called Overshoot: How the World Surrendered to Climate Breakdown. The book’s title refers to the idea that we can temporary “overshoot” safe planetary boundaries such as that set by the Paris Agreement, in the belief that we will be able to fix it at some point in the future, using a technology that has yet to be invented, but which the market will be sure to provide. This idea, according to Malm and Carton, has become increasingly normalised within the fossil fuel industry, and among the political establishments of western countries.
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“The closer the Earth came to being engulfed in flames – literally and figuratively – the harder companies worked to get oil and gas and coal out of the ground and ferry them off to combustion,” write Malm and Carton. “And so a notion began to take hold: that humanity had to reconcile itself to this state of affairs, accept what must not happen as a fait accompli, give up on the idea that emissions can be slashed at the speed required and instead try something else. The time had come, it was said, to postpone the lost cause. If the house was on fire, putting that fire out would have to wait. The age of overshoot was upon us.”
In one sense, it’s tempting to view this as the logic of a serious gambler: yes, we might be underwater now, but if we keep doubling down, eventually the chips will start falling in our favour, and the market will provide a solution, in the form of carbon capture or some as-yet-unthought-of technology.
But this analogy only takes us so far, because the fossil fuel industry, from its own point of view, is not really gambling with anything of real value: what is at stake is merely a liveable future for humanity on this planet, really a very minor concern when placed alongside the ultimate value of short-term profit.
To put it in slightly different terms, a liveable future might be of value to you as a human – as a parent or grandparent of children who will have to live in a world shaped by the ongoing consumption of fossil fuel energy – but it is of no relevance to your stock portfolio. If corporations are people – as is often pointed out in response to the juridical principle of corporate personhood – then they must surely be considered psychopaths.
Few people in international politics have put the issue more forcefully than António Gutteres, the UN secretary general, who in 2022 – incensed by the fossil fuel companies using profits from soaring energy prices in the early period of the war in Ukraine to expand their fossil fuel explorations – said the following: “We seem trapped in a world where fossil fuel producers and financiers have humanity by the throat. For decades, the fossil fuel industry has invested heavily in pseudoscience and public relations – with a false narrative to minimise their responsibility for climate change and undermine ambitious climate policies. They exploited precisely the same scandalous tactics as big tobacco decades before. Like tobacco interests, fossil fuel interests and their financial accomplices must not escape responsibility.”
Four of the top five fossil-financing banks of 2024 – JP Morgan Chase, Bank of America, Citigroup and Wells Fargo – are American institutions (the fifth, Mizuho Financial Group, is Japanese). And so it’s worth pointing out that the relevant figures here were all taken into account before the return to the US presidency of Donald Trump, whose official position on climate change is that it’s “a hoax” and “bullshit”. Which is to say that capitalism had already grown weary of the pretence around sustainability well before Trump regained office and began the unprecedented assault on climate legislation and environmental protection of his first days in power.
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As an economic system, capitalism is by its very nature unsustainable. It is predicated on growth at all costs: on growing consumption, growing markets, growing profits. The fuel that drives that growth is, and always has been, fossil carbon. And so there is something clarifying about this reversal on the part of the world’s largest financial institutions – this clearing of, as it were, the smokescreen of environmental responsibility. It lays bare what can no longer be denied: that capitalism is incompatible with any kind of human flourishing on this planet.
