Banks may pledge to be better stewards of the planet through emissions reduction and other actions, but their money keeps the oil pumping for now.
Some 60 of the world’s largest commercial and investment banks have in total put $3.8 trillion into fossil fuels from 2016 to 2020, the five years after the voluntary Paris Agreement was signed. The multinational pact’s goal is to limit global warming to well below 2 degrees Celsius, and preferably to 1.5 degrees, compared to pre-industrial levels. Beyond oil patch financing, global coal projects also continue to be funded.
That’s according to a report called Banking on Climate Chaos 2021 published Wednesday from a handful of climate organizations, including the Rainforest Action Network. The group’s review of the financial sector has been issued each year for more than a decade.
The three banks that did the most fossil-fuel financing in 2020, according to the report, were JPMorgan Chase
at $51.3 billion; Citi
at $48.4 billion; and Bank of America
with $42.1 billion. JPMorgan’s fossil-fuel financing since the Paris declaration has reached $317 billion, to lead all banks, according to the report. Wells Fargo & Co.’sWFC financing in the fossil-fuel space fell 42% to $26.4 billion in 2020.
French bank BNP Paribas
was shown to have increased its lending to oil, gas and similar interests by 41% in 2020 from the prior year. Its clients have included BP
and Royal Dutch Shell
which have committed to cutting their reliance on fossil fuels and investing more in renewable energy-related businesses.
On an annual basis, total fossil fuel financing among the banks in the report dropped 9% in 2020, although due in large part to the COVID-19 shutdown.
“This report serves as a reality check for banks that think that vague ‘net-zero’ goals are enough to stop the climate crisis,” said Lorne Stockman, senior research analyst at Oil Change International. “Our future goes where the money flows, and in 2020 these banks have ploughed billions into locking us into further climate chaos.”
Bank of America earlier this year joined select other big banks, including JPMorgan Chase and Morgan Stanley
who’ve pledged to achieve net-zero greenhouse gas emissions through its financing before 2050. Bank of America, as part of a group working to align carbon accounting reporting, said then that it is committed to disclosing its financed emissions no later than 2023.
Val Smith, Citi’s chief sustainability officer, said in a blog post this week, the lender will work with existing fossil fuel banking clients to transition first to a public reporting of greenhouse gas emissions and eventually to a gradual phase out of financing offered to companies that don’t comply in adhering to carbon reduction standards.
Banks do continue to advise other companies in the transition from fossil-fuel reliance. The economic impact of climate change could reach $69 trillion this century, and investments in the energy transition need to increase to $4 trillion a year, Bank of America’s head of global thematic investing research Haim Israel said in a report earlier this year.