Global Banks’ Fossil Fuel Financing Continues to Lead Us Down the Path Towards Climate Disaster

Thirty-three of the world’s largest multinational banks continues to finance fossil-fuels exploration, refining, and distribution. Their continued activities propel humanity down the path of climate change-induced disaster, according to Banking on Climate Change: Fossil Fuel Finance Report Card 2019.

According to the report, 33 global banks have financed the fossil fuel industry to the tune of $1.9 trillion since adopting the U.N. Paris Climate Agreement in 2016. Moreover, annual totals rose successively in the three years the report covers. “This is dangerously at odds with the steep cuts to emissions we need to keep the world’s warming to 1.5°C,” one commentator pointed out.

Produced by Banktrack, Honor The Earth, Indigenous Environmental Network, Oil Change International, Rainforest Action Network, and the Sierra Club and endorsed by 160 other organizations worldwide, the 2019 Fossil Fuel Finance Report Card is the 10th annual edition of the report. This year’s edition, for the first time, tallies lending and underwriting for the fossil fuel industry on the part of Canadian, Chinese, European, Japanese and U.S. banks.

The World’s Biggest Fossil-Fuels Bankers

Globally, JPMorgan Chase proved to the fossil fuel industry’s biggest banker by a wide margin. Royal Bank of Canada, Barclays in Europe, MUFG in Japan, and Bank of China were the biggest fossil-fuel industry financiers in their respective regions.

Zooming in on the fastest-growing 100 fossil fuel industry companies, the report’s producers found that banks provided $600 billion of financing to them in the last three years, despite knowing that the International Panel on Climate Change (IPCC) has concluded that there’s no room for more fossil fuels in the world’s carbon budget, the report authors highlight. JP Morgan again topped the list among individual banking groups, while North American banks overall were the biggest financiers of fossil-fuel expansion.

Looking forward, the report’s producers also graded bank’s policies regarding fossil fuels, more specifically, whether or not they had policies phasing out or limiting fossil-fuel industry financing and aligned with helping cap the rise in global mean temperature to the 1.5-degrees Celsius set out in the U.N. Paris agreement. Some banks have taken significant steps in this regard. Nonetheless, the report producers found that “overall, major global banks have simply failed to set trajectories adequate for dealing with the climate crisis.”

Dirty Dozen: big banks financing fossil fuel expansion

Assessing Global Banks’ Fossil-Fuel Financing Policies and Practices

The 2019 Fossil Fuel Finance Report Card also assesses the 33 global banks’ policies and practice with regard to specific “hot button” areas of fossil fuels exploration, extraction, refining, and distribution. According to the report:

  • Oil from Canada’s Athabasca tar sands: RBC, TD, and JPMorgan Chase are the biggest bankers of 30 top tar sands producers, plus four key tar sands pipeline companies. In particular, these banks and their peers support companies working on expanding tar sands infrastructure, such as Enbridge and Teck Resources.
  • Arctic oil and gas: JPMorgan Chase is the world’s biggest banker of Arctic oil and gas by far, followed by Deutsche Bank and SMBC Group. Worryingly, financing for this sub-sector increased from 2017 to 2018.
  • Ultra-deepwater oil and gas: JPMorgan Chase, Citi, and Bank of America are the top bankers here. Meanwhile, none of the 33 banks have policies to proactively restrict financing for ultra-deepwater extraction.
  • Fracked oil and gas: For the first time, the report card looks at bank support for top fracked oil and gas producers and transporters — and finds financing is on the rise over the past three years. Wells Fargo and JPMorgan Chase are the biggest bankers of fracking overall — and, in particular, they support key companies active in the Permian Basin, the epicenter of the climate-threatening global surge of oil and gas production.
  • Liquefied natural gas (LNG): Banks have financed top companies building LNG import and export terminals around the world with $46 billion since the Paris Agreement, led by JPMorgan Chase, Société Générale, and SMBC Group. Banks can avoid further damage by not financing Anadarko’s Mozambique LNG project, in particular.
  • Coal mining: Coal mining finance is dominated by the four major Chinese banks, led by the China Construction Bank and Bank of China. Though many European and U.S. banks have policies restricting financing for coal mining, total financing has only fallen by three to five percentage points each year.
  • Coal power: Coal power financing is also led by the Chinese banks — Bank of China and ICBC in particular— with Citi and MUFG as the top non-Chinese bankers of coal power. Policy grades for this sub-sector show some positive examples of European banks restricting financing for coal power companies.

*Image credits: Banking on Climate Change: Fossil Fuel Finance Report Card 2019

Andrew Burger
Andrew Burger
A product of the New York City public school system, Andrew Burger went on to study geology at the University of Colorado, Boulder, work in the wholesale money and capital markets for a major Japanese bank and earn an MBA in finance.

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