Net zero liabilities may have ricocheted through the banking sector over the past 18 months, but climate concern attestations from big banks haven’t stopped many from expanding funding to the world’s major fossil fuel companies to the during the pandemic year.
That’s according to the latest edition of the Rainforest Action Network’s Annual Fossil Fuel Funding Tracker, which reveals that while fossil fuel funding fell a record 9% during the economic recession induced by the 2020 pandemic, The world’s largest banks have increased funding for the 100 largest fossil fuel expansion companies by 10 percent.
The green groups behind the report warned of an “alarming disconnect” between the global scientific consensus on climate change and the current practices of the world’s major banks. Analysis, “Banking on climate chaos 2021Points out that while overall fossil fuel funding fell significantly in 2020, the total amount of funding given to fossil fuel companies in 2020 was still more than $ 40 billion more in 2020 than in 2016, at 750 billion dollars.
“Despite this significant drop from 2019 to 2020, the general trend of the past five years is definitely in the wrong direction,” the report says. Overall, the world’s largest banks funneled $ 3.8 trillion to coal, oil and gas companies in the five years since the signing of the Paris Agreement, he estimates.
The decline in lending and debt underwriting levels to fossil fuel companies in 2020 was largely due to the economic recession of COVID-19 and not to banks proactively distancing themselves from fossil fuels, according to the report. . A separate scorecard ranking the banking sector’s climate policy commitments concludes that overall, climate policies are ‘grossly insufficient’ and not aligned with global climate goals, with no bank surveyed scoring more than 94 points out of a total of 200. The overwhelming majority of fossil fuel financing is not controlled by bank policies, she warns, as climate promises unveiled to date tend to focus on specific financing for the economy. projects, which represent only 5% of all fossil fuel financing granted by banks. .
Additionally, the report points out that fossil fuel financing was larger from January to June than any six-month period since 2016, as large companies around the world capitalized on low interest rates and programs. buying central bank bonds to take on cheap debt. This frenzy was then offset by record second half funding, he notes, leading to an overall funding drop of 9%.
Ginger Cassady, executive director of the Rainforest Action Network, one of the groups behind the analysis, said the banking industry faces a “tough choice” as it develops its strategy to drive a global recovery of the coronavirus crisis.
“The unprecedented drop in COVID-19 in global fossil fuel financing offers the world’s biggest banks a difficult choice for the future,” she said. “They may decide to lock in the downward trajectory of support for the primary industry that is causing the climate crisis or they may recklessly revert to the status quo as the economy recovers.”
The report reveals that US banks continue to be the primary drivers of global emissions, with JP Morgan Chase retaining its position as the world’s largest fossil fuel funder. UK bank Barclays named as Europe’s most prolific fossil fuel lender in five-year period under review, with analysis noting that it has increased funding for hydraulic fracturing by 24% in 2020 Meanwhile, BNP Paribas has upped the scoreboard after increasing its funding. to fossil fuel companies by 41% in 2020 to $ 41 billion, making it the fourth worst fossil fuel financier in 2020.
The analysis is the latest in a long line of reports led by the Rainforest Action Network that hammers out the banking sector’s deep ties to the fossil fuel industries fueling the climate emergency, but this year’s edition is a bit more poignant. The past 12 months have been a calamitous period for the fossil fuel industry amid declining demand for oil and gas and depressed prices during the pandemic, and it is against this backdrop that the banking sector has finally recognized the essential role it must play in ensuring that temperature rises are capped to safe levels by ending its support for environmentally destructive sectors.
Promises of ‘zero net financed emissions’ have swept the banking sector since January 2020, with UK’s biggest financiers in the fossil fuel arena – Barclays and HSBC – and many of America’s largest investment banks – Goldman Sachs, Citi Group, Wells fargo, Bank of America and Morgan stanley – all committing to align their loans and debt with global climate goals over the next 30 years. And yet, even as these promises were made, investments in fossil fuel infrastructure continued to flow largely unimpeded. Beyond a welcome tightening of lending policies to coal and oil sands companies, many of the world’s biggest financiers have failed to translate their net zero promises into meaningful change in their businesses. investment.
Banks may decide to lock in the downward trajectory of primary industry support that is causing the climate crisis, or they may recklessly resume the status quo as the economy recovers.
As such, the green organizations behind the report have touted the latest findings as evidence of the “void” of the wave of net zero targets unveiled by the banking industry and urged companies to meet their 2050 targets with short-term pledges to move quickly to the financing phase of all fossil fuel infrastructure, including oil and gas projects. Policies are needed to “lock in” the fossil fuel cuts of 2020 and thus steer a controlled decline in fossil fuel production over the next decade, they warn.
“Many of the world’s biggest banks, including the Big Six U.S. banks, have made dramatic commitments over the past few months to mitigate the climate impact of their funding over the next 30 years,” said Ben Cushing, chief executive officer. of the financial advocacy campaign in Sierra. Club. “But what matters most is what they do now, and the numbers don’t lie. This report separates words from actions, and the picture it paints is alarming: Big banks around the world, led by US banks in particular, are fueling climate chaos by dumping billions of dollars into the fossil fuels that are causing the crisis. “
Lucie Pinson, founder and executive director of Reclaim Finance, said the numbers exposed “the void of growing banks’ commitments” to be net zero or to align with global climate goals. “BNP Paribas deserves to be named the world’s fourth largest fossil financier in 2020, having channeled multi-billion dollar loans to oil giants like BP and Total,” she said. “Nonetheless, it is clear that all banks must replace empty promises with meaningful policies embracing zero tolerance for fossil fuel developers.”
The banking industry argues that serious changes are underway, indicating much stricter lending policies for coal companies and the continued development of new guidelines and policies that will hopefully decarbonize their portfolios over the next three decades. . They insist that it will take time to change investment practices in a way that ensures a managed transition for businesses and investors. Approached for comment on the report, spokespersons for Barclays and HSBC highlighted their respective net-zero commitments for 2050, although the two banks are ranked the seventh and 13th largest fossil fuel lenders in the world since 2016 by the report. today, having funneled $ 145 billion and $ 111 billion into coal, oil and gas, respectively.
The banking industry maintains that serious changes are underway.
“HSBC has announced that it will be proposing a special resolution on climate change at its AGM in May that will define the next phase of HSBC’s strategy to support its clients in the transition to net zero carbon emissions,” said the HSBC spokesperson. “This includes the publication and implementation of a policy to phase out funding for coal power and thermal coal mining by 2030 in the markets of the European Union and the OECD, and by 2040 in other markets. “
“We are committed to aligning our entire financing portfolio with the objectives of the Paris Agreement, with specific objectives and transparent reporting, in order to achieve our ambition to be a zero rate bank. ‘by 2050,’ the Barclays spokesperson said. “We believe Barclays can make a real contribution to the fight against climate change and help accelerate the transition to a low carbon economy.”
JP Morgan Chase declined to comment on the results, and BNP Paribas and CitiGroup did not respond to a request for comment at the time of going to press.
While it is clear that the banking sector has reached a turning point in sustainability over the past 12-18 months, today’s report provides compelling evidence that promises of net zero must be quickly backed up by strategies. that will quickly reduce the bank’s exposure to fossil fuels. fuels and step up support for clean infrastructure. Promises of building a portfolio of climate-friendly investments 30 years from now are clearly meaningless if banks continue to funnel hundreds of billions of dollars into industries that block decades of carbon-intensive infrastructure.
And yet today’s report comes hours after the UK government demonstrates how ministers are grappling with exactly the same tensions, as they both talked about plans to cut emissions from the oil and gas industry and left the door open for further exploration in the North Sea. As the global economy rebounds from the pandemic, all eyes will be on whether big banks and governments can finally match their climate action rhetoric with a controlled decline in fossil fuel financing.