Since 2016, the year the Paris agreement took effect, the world's 60 largest private banks have provided $5.5 trillion in financing to the fossil fuel industry, contravening their pledges to put themselves and their clients on a path to net-zero greenhouse gas emissions as the window to avert the worst effects of the climate crisis rapidly closes.
That's according to the latest iteration of Banking on Climate Chaos, an annual report that tracks how the financial industry's lending and underwriting practices are enabling new coal, oil, and gas projects to proceed despite the international scientific consensus that fossil fuel expansion is incompatible with limiting global warming to 1.5°C above preindustrial levels.
Authored by Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change International, Reclaim Finance, Sierra Club, and Urgewald and endorsed by 624 organizations from 75 countries, the report published Wednesday juxtaposes banks' public vows to stop funding planet-heating pollution with their continued support for the fossil fuel industry, which is most responsible for the heat-trapping emissions that are intensifying extreme weather across the globe, with deadly consequences.
In 2022 alone, the world's biggest private-sector banks still financed coal, oil, and gas to the tune of $673 billion, the report notes, even as the fossil fuel industry raked in a record-high $4 trillion in profits amid Russia's invasion of Ukraine, which sent energy prices soaring. Notably, the banks poured $150 billion into the 100 corporations doing the most to ramp up fossil fuel production worldwide, including TC Energy, TotalEnergies, Venture Global, ConocoPhillips, and Saudi Aramco.
Of the 60 banks profiled in the analysis, 49 have committed to achieving net-zero emissions by 2050. The value of such promises is questionable, however, because those 49 banks provided 81% of the financing to the top 100 fossil fuel expanders in 2022. Key areas of growth include oil and gas extraction in the rapidly warming Arctic and the beleaguered Amazon rainforest; offshore drilling; fracking; liquefied "natural" gas export infrastructure in the U.S. Gulf South; and coal mining and power plants, particularly in China.
"Banks' 'net-zero' commitments aren't worth the paper they're printed on—they're simply cheap PR cover for pouring fuel on the climate crisis."
The U.S. financial giants JPMorgan Chase ($434.2 billion), Citi ($332.9 billion), Wells Fargo ($318.2 billion), and Bank of America ($281.2 billion) have been the worst offenders since the Paris agreement entered into force, together providing a quarter of all fossil fuel financing identified over the past seven years, the report notes.
Those four banks accounted for a combined 28% of fossil fuel financing identified in 2022 and were still among the year's top five worst actors. However, for the first time, a bank other than Chase topped the annual list. Royal Bank of Canada funneled $42.1 billion into tar sands oil pipeline giant Enbridge and other clients in 2022. Chase, Wells Fargo, Bank of America, and Citi weren't far behind, respectively providing $39.2 billion, $38.8 billion, $36.9 billion, and $33.9 billion to the fossil fuel industry last year.
"Our window of opportunity for keeping global warming below 1.5ºC is closing fast," report co-author April Merleaux, research and policy manager at Rainforest Action Network, said in a statement. "We need a people-centered energy transition now. Profits now are a false economy because we simply cannot afford to continue burning fossil fuels—the costs down the road will be devastating."
"Fossil fuel companies are the ones dousing the planet in oil, gas, and coal, but big banks hold the matches," said Merleaux. "Without financing, fossil fuels won't burn."
Report co-author Adele Shraiman, senior representative for the Sierra Club's Fossil-Free Finance Campaign, lamented that "in a critical year for climate action, fossil fuel giants doubled down on reckless expansion projects and walked back their climate commitments."
"Meanwhile," she added, "major U.S. banks stalled on their net-zero plans and failed to adopt stronger and more robust financing restrictions for companies pushing unsustainable fossil fuel expansion."
As the report explains:
Bank policies contain loopholes that still leave them exposed to climate risk. For example, underwriting bonds and equities accounted for 36% of all fossil fuel financing, though major banks exclude these activities from their fossil fuel policies. Bank policies also include loopholes based on sector, region, or project.
A real-world example of banks' weak policies is ConocoPhillips, which is expanding through the recently-approved Willow oil drilling project in the Arctic, among other projects. In 2022, ConocoPhillips received financing for general corporate purposes from a syndicate including 12 banks profiled in this—Bank of America, Barclays, Citi, Credit Suisse, HSBC, JPMorgan Chase, Mizuho, MUFG, RBC, SMBC Group, TD, and Wells Fargo. While 39 of the top 60 banks have some type of Arctic exclusion policy applicable to projects, this exclusion did not preclude financing for ConocoPhillips' Willow project, since the company sought financing for general corporate purposes rather than for a specific project. Financing designated for general corporate purposes clearly enables ConocoPhillips to pursue this and other destructive projects.
The International Energy Agency has stated unequivocally that there is "no need for investment in new fossil fuel supply in our net-zero pathway."
After the Intergovernmental Panel on Climate Change released its latest assessment last month, United Nations Secretary-General António Guterres said that limiting temperature rise to 1.5°C is possible, "but it will take a quantum leap in climate action," including a prohibition on approving and financing new coal, oil, and gas projects as well as a phaseout of existing fossil fuel production.
"It is past time for banks to stop funding fossils," report co-author David Tong, global industry campaign manager at Oil Change International, said Wednesday. "Peer-reviewed research confirms that we cannot burn all the oil and gas in fields and mines operating now if we are to limit warming to 1.5ºC or even 2ºC—and yet banks keep fueling the climate crisis by pouring billions into the fossil fuel industry."
"The big oil and gas companies that have done the most to fuel the climate crisis cannot be trusted to phase out their own extractive, polluting business model," Tong added. "The fundamental arithmetic of 1.5ºC requires oil and gas production to decline by at least 3-4% per year, starting now. It's time for banks to take real action and stop funding climate destruction."
"Banks will not act in the public interest unless we force them to."
Earlier this week, more than 1,300 scientists and researchers published a letter urging JPMorgan shareholders to support a resolution that asks the bank's board of directors to "adopt a policy for a time-bound phaseout" of financing new coal, oil, and gas projects.
Shraiman said Wednesday that "as big banks face shareholder votes in the coming weeks, we will keep up pressure on banks and investors to adopt credible policies to achieve their climate commitments and take real steps to accelerate the clean energy transition."
Meanwhile, U.S. Sen. Ed Markey (D-Mass.) called on Congress to pass the Fossil Free Finance Act, a piece of bicameral legislation he recently reintroduced alongside fellow progressive lawmakers.
"Corporate greed is killing us," said U.S. Rep. Rashida Tlaib (D-Mich.), a co-sponsor of the bill. "This report makes it clear that banks' 'net-zero' commitments aren't worth the paper they're printed on—they're simply cheap PR cover for pouring fuel on the climate crisis."
"Banks will not act in the public interest unless we force them to," Tlaib stressed. "While grassroots movements around the world continue to build pressure, it's long past time that the Federal Reserve, White House, and Congress take more aggressive action that meets this critical moment for the planet."