Numbers Don’t Lie, GFANZ Members Might

    Stockholm (NordSIP) – On 17 January, research and campaign NGO Reclaim Finance, supported by several other NGOs, published a report with the disturbing title Throwing Fuel on the Fire: GFANZ financing of fossil fuel expansion. Even more disturbing, however, are the numbers exposed in the paper. The authors present plenty of evidence that, after committing to net zero by joining the Glasgow Financial Alliance for Net Zero (GFANZ), financial institutions have continued pouring hundreds of billions of dollars into the companies developing fossil fuels.

    The report analyses the volumes of financing provided to fossil fuel expanders from the most prominent members of the four GFANZ sectoral alliances with the most owned or managed assets: the Net-Zero Banking Alliance (NZBA), the Net Zero Asset Managers initiative (NZAM), the Net-Zero Asset Owner Alliance (AOA) and the Net-Zero Insurance Alliance (NZIA). It covers data from 161 financial institutions that have committed to GFANZ.

    The main findings of the NGOs make for a genuinely discouraging reading. In total, 229 of the world’s largest fossil fuel developers received finance from the GFANZ members covered in the report. The money will support them in developing new coal power plants, mines, ports, and other infrastructure, as well as new oil and gas fields, pipelines and LNG terminals.

    Since joining the alliance, 56 of the biggest banks in the NZBA have provided USD 270 billion to 102 major fossil fuel expanders via 134 loans and 215 underwriting transactions. Of this amount, USD 168 billion (62%) was provided through 134 syndicated loans to 77 companies and USD 101 billion in new debt and equity for 74 fossil expanders through 215 underwriting transactions.

    Meanwhile, 58 of the largest members of the NZAM held at least USD 847 billion in the stocks (89%) and bonds (11%) of fossil fuel developers. Around 90% of these holdings were in oil and gas expansionists, with a total of 165 billion barrels of oil equivalent under development and field evaluation. This corresponds to 72% of the amount the industry plans to bring into production by 2030. The coal companies held by NZAM members are, in aggregate, planning to develop 257 gigawatts of new coal power plants.

    “GFANZ members are acting as climate arsonists,” comments Reclaim Finance Senior Analyst Paddy McCully, the main author of the report. “They’ve pledged to achieve net zero but are continuing to pour hundreds of billions of dollars into fossil fuel developers. GFANZ and its member alliances will only be credible once they up their game and insist that their members help bring a rapid end to the era of coal, oil and fossil gas expansion.”

    According to the report, only a handful of the financial institutions committed to net zero on paper have even adopted policies that meaningfully restrict finance to new fossil fuel projects and companies developing new fossil supply projects since joining GFANZ.

    “The science is very clear: we need to stop developing new coal, oil and gas projects as soon as possible if we want to meet our climate goals and avoid a worst-case scenario,” says Lucie Pinson, Executive Director and founder of Reclaim Finance. “Yet, it is business as usual for most banks and investors who continue to support fossil fuel developers without any restrictions, despite their high-profile commitments to carbon neutrality. Their greenwashing is all the more damaging as it casts doubt on the sincerity of all net zero commitments and undermines the efforts of those who are truly acting for the climate.”

    Image courtesy of Bart van Dijk on Unsplash
    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.

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