Banks Poured $3.8B Into Fossil Fuel Companies Since Paris Agreement


Graphic by Annabel Driussi for ODP

by Natasha Lasky, ODP Staff Writer

A new report, published Wednesday found that the world’s largest commercial and investment banks have altogether put $3.8 trillion into fossil fuels from 2016 to 2020. This report — a collaboration between the Rainforest Action Network, Bank Track, Indigenous Environmental Network, Oil Change International, Reclaim Finance, and Sierra Club —found that fossil fuel financing has increased precipitously in the years since the Paris Agreement was signed.

Why This Matters: As the Guardian explained, 17 of the 60 banks assessed for this study had made net-zero by 2050 commitments, yet the report describes the pledges as “dangerously weak, half-baked, or vague”, arguing that action is needed today. And while some of the banks have policies against financig coal, almost two-thirds of funding is for oil and gas companies.

Banks are enabling fossil fuel companies to keep expanding their operations, despite the lip service of a “green recovery” from the pandemic. 

What Can You Do? Climate Scientist Katharine Hayhoe has some ideas.

Investing in Climate Change: The three banks that financed the most fossil fuel companies in 2020 were JPMorgan Chase at $51.3 billion; Citi at $48.4 billion; and Bank of America with $42.1 billion.

These banks have suggested that they are pivoting their strategy to address climate change. A representative of JPMorgan Chase told CNBC that they were “adopting a financing commitment that is aligned to the goals of the Paris Agreement” and facilitating $200 billion in clean, sustainable financing by 2025. Yet, as of 2020, the bank has contributed $268 billion to coal, oil and gas firms since the Paris Agreement. 

Meanwhile, CitiBank emphasized that the bank is planning to work with its fossil fuel banking clients to publicly report their greenhouse gas emissions and then gradually stop financing companies that don’t reduce their emissions. 

But this report suggests that banks are the lifeline of fossil fuel companies and their capital ensures that fossil fuels won’t be left in the ground. Lorne Stockman, a Senior Research Analyst at Oil Change International, one of the organizations authoring the report, said: “This report serves as a reality check for banks that think that vague ‘net-zero’ goals are enough to stop the climate crisis. Our future goes where the money flows, and in 2020 these banks have ploughed billions into locking us into further climate chaos.”

Changing Green Finance: While banks have continued to support fossil fuel companies, investors overall want better disclosure of climate risks from public companies–a shared goal of the Biden administration. Yesterday it was announced that the Federal Reserve is creating a “Financial Stability Climate Committee” (FSCC) to “identify, assess, and address climate-related risks to financial stability.”

As Axios reported, this announcement is just the latest in a widening series of moves by the central bank to get a better handle on climate-related financial risks.

  • It comes two months after the Fed announced a separate body called the “Supervision Climate Committee” (SCC).
  • And late last year, for the first time, the Fed included climate among the risks described in its formal Financial Stability Report.

 

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