Stockholm (NordSIP) – The vast amounts of financing provided to the fossil fuel industry by the world’s largest banks since the signing of the Paris climate agreement are revealed in new collaborative research published on 12 May 2024. The 15th annual Banking on Climate Chaos report examines the 60 largest banks’ lending and underwriting to more than 4,200 companies involved in the fossil fuel industry and the degradation of the Amazon and Arctic regions.
Behind the headline figure of almost $7 trillion worth of financing since 2016 is the damning evidence that nearly half of that amount was remarked for fossil fuel expansion projects. United States (US) banks dominate the top of the ranking, with JP Morgan Chase, Citigroup, and Bank of America alone accounting for well over $1 trillion of fossil fuel financing. Mitsubishi UFJ Financial Group (MUFG) and Mizuho lead the way for Asian banks, with the latter having shot up the rankings to second place behind JP Morgan Chase for fossil expansion financing in 2023. With $204 billion funnelled towards new projects since 2016 Citibank retains the record as the biggest funder of fossil fuel expansion since the Paris agreement.
The Dirty Dozen: Top 12 banks financing fossil fuels globally (2016–2023)
Source: www.bankingonclimatechaos.org
Barclays and UBS are the only European banks in the Top 10, with the former accounting for more than $235 billion over the period and a year-on-year increase from 2022 to 2023. In February 2024 the Barclays group released its new Climate Change Statement that included a pledge to no longer provide project finance or other direct finance to energy clients, for upstream oil and gas expansion projects or related infrastructure. The statement drew criticism over its vague language and numerous potential loopholes. Barclays is the 4th largest financier of Arctic fossil fuel extraction, with Equinor and Aker BP’s Wisting oil field in the Barents Sea one such example of projects that carry significant environmental and reputational risks. According to the report, the financing of upstream oil and gas expansion is highly concentrated. Just 20 companies are behind more than half of the total spending, with the 10 largest banks financing 58% of their activity. Nordea and Danske Bank are the only Nordic institutions represented in the report, with $4.7 billion and $3.5 billion of fossil financing since 2016.
Money flowing to controversial practices
The large-scale financing of fossil fuel expansion is a grave concern, given the insistence by supranational bodies and the scientific community that new coal, oil, and gas projects are entirely incompatible with 2050 net-zero pathways. However, many banks are supporting the most climate-damaging, highly controversial fossil fuel practices. CIBC, RBC, Scotiabank, Toronto-Dominion Bank and Mizuho ploughed billions into tar sands extraction in 2023. MUFG, JP Morgan Chase, CITIC, Unicredit, and Bank of America are some of the banks financing ultra deep offshore drilling, fracking, thermal coal mining, or oil and gas extraction in the Arctic or Amazon.
The methodology underpinning the report has been strengthened in response to criticism that it lacked granularity and relied too heavily on public sources such as Bloomberg. The contributors have included for primary data sources tracking bank participation in corporate finance deals, including bonds, loans, and share issuances and sought to include banks with subordinate as well as leading roles. The entirety of the data is available for download from the Banking on Climate chaos website, along with a detailed overview of the methodology used. The 2024 report was authored by the Rainforest Action Network, BankTrack, the Center for Energy, Ecology, and Development, Indigenous Environmental Network, Oil Change International, Reclaim Finance, Sierra Club, and Urgewald. It has been endorsed by 589 organisations in 69 countries.
April Merleaux, Research and Policy Manager at Rainforest Action Network and a co-author of the report said: “Banks that profit from climate chaos invent new greenwash every year, but we have the receipts that show how much money they put into fossil fuels. Our new methodology uncovers previously unreported details on banks’ support for fossil fuels and gives campaigners new tools to hold them accountable.” According to Merleaux, bank financing for fossil fuels is not declining nearly fast enough: “In 2023, we saw nearly $350 billion financed to companies expanding fossil fuels, which is dangerous and inconsistent with real climate commitments. In a year with record climate impacts, I am shocked to see financing for any category of fossil fuels increase. And yet in 2023 this report shows a big increase in financing to companies developing methane gas terminals and related infrastructure. Banks should be listening to those on the frontlines and stepping away from these projects.”
