Despite increasing pressure to defund oil and gas firms in support of international decarbonisation efforts, many major banks are continuing to provide financing to fossil fuel companies. A recent report from the U.S. organisation Rainforest Action Network (RAN) and partners revealed that in the years following the 2015 Paris Agreement, the 60 largest private banks in the world provided $6.8 trillion in funding to fossil fuels. Over the past eight years, approximately $3.3 trillion went to fossil fuel expansion. These banks supported over 4,200 fossil fuel companies with loans and securities transactions or underwriting. In 2023, after many major banks had pledged to reduce or end funding to oil and gas companies as part of the Net Zero Banking Alliance, financing for fossil fuel companies reached $705 billion, with $347 going towards expansion.
The report shows that JPMorgan Chase was the biggest financer for fossil fuels, contributing $40.8 billion in funding to fossil fuel companies in 2023. This is followed by the Japanese bank Mizuho, which provided $37 billion in financing, with $18.8 billion contributing to fossil fuel expansion. Citibank was also a major contributor, providing $204 billion to fossil fuel companies since 2016. Meanwhile, Deutsche Bank gave nearly $13.4 billion, DZ Bank $2.5 billion, Barclays $24.2 billion and Santander $14.5 billion to the fossil fuel industry in 2023.
The Research and Policy Manager at RAN and the report’s co-author April Merleaux stated, “Wall Street’s biggest concern is profit, our main concern is climate and human rights. While the banks profiting from climate chaos create new greenwashing tales every year, our data shows how much money they are actually pouring into fossil fuels. Merleaux added, “Our report’s new methodology uncovers previously unknown details about bank financing of fossil fuels and gives activists new tools to confront the banks. Our data shows that bank financing of fossil fuels is not declining nearly fast enough. In 2023, nearly $350 billion has flowed to fossil fuel companies, incompatible with real climate commitments.”
Critics of the report said there was little evidence showing where the funding went in the fossil fuel sector, with several banks responding that their financing mainly went towards green transition efforts by energy companies. It was unclear whether some of the expansion funding went to supporting new green energy projects or fossil fuel activities.
U.S. banking institutions were found to be the biggest contributors to the fossil fuel sector, providing 30 percent of the financing in 2023. JPMorgan responded to the report saying it was one of the world’s biggest funders to both traditional and clean energy firms. It stated that it would disclose the proportion of financing contributing to low-carbon energy compared to fossil fuel energy financing, following a request from the New York City comptroller on behalf of pensions it manages. JPMorgan stated, “We believe our data reflects our activities more comprehensively and accurately than estimates by third parties.”
Meanwhile, Bank of America, the third biggest funder of fossil fuels worldwide, according to the report, said that it was a market leader in terms of energy transition funding. It stated, “We are engaged with clients across the energy spectrum to help them with their energy transition goals.” Citibank said that by 2020 it had achieved $441 billion towards a $1 trillion sustainable finance goal, suggesting that much of its energy financing is going towards transition sectors.
In June, the boss of Barclays bank, CS Venkatakrishnan, said he thought it was unrealistic to ask banks to stop this financing funding fossil fuel companies altogether. He said that lenders “cannot go cold turkey” and emphasised the importance of a transition away from the most polluting fossil fuels to cleaner alternatives, such as gas. Venkatakrishnan said that Barclays is “very much moving away from” coal and oil, but suggested that fossil fuels will be around “for quite some time” and “We are very much moving away from coal to oil, oil to gas, gas to clean energy and the reality is that for quite some time fossil fuels will be with us, especially natural gas.”
In February, Barclays announced plans to stop directly financing new oil and gas projects following mounting pressure to decarbonise operations. However, environmentalists continue to put pressure on Barclays to do more in support of a green transition. Recent reports suggest that Cambridge University is considering cutting ties with Barclays due to its poor climate change record.
Most major banks around the globe are continuing to finance fossil fuel companies, despite mounting pressure from governments and environmentalists to reduce funding in support of a green transition. However, it is still unclear how much of the financing is going towards fossil fuels compared to how much contributes to the transition energy sector. Greater transparency from these banks could help consumers understand where the financing is going as well as put pressure on banks to make a change.