The net-zero emissions pledges from the six biggest U.S. banks fall short of what is needed to meet global climate goals. The findings come from a new report by the Sierra Club’s Fossil-Free Finance campaign that looks at the financial sector’s net-zero emissions pledges.
The report focuses on the net-zero financed emissions pledges by 2050 of the six biggest U.S. banks ( JPMorgan Chase, Wells Fargo, Citibank, Morgan Stanley, Bank of America, and Goldman Sachs). All six are members of the Net Zero Banking Alliance, which is led by industry but convened by the United Nations. It represents about 40 percent of global banking assets.
“If banks want to live up to their net-zero pledges, they need to commit to real emissions reductions and end financing for companies expanding fossil fuels,” said Adele Shraiman, Campaign Representative for the Sierra Club’s Fossil-Free Finance campaign, in a statement.
What the Big Six Can Do
The report finds that the progress of the six U.S. banks is limited partly because of their continued financing of fossil fuel expansion. The most prominent fossil fuel financiers globally are U.S. banks. JPMorgan Chase, Citi, Wells Fargo, and Bank of America together provide a quarter of the $4.6 trillion in global fossil fuel financing in the last six years. Their financing comes despite an International Energy Agency released a report last year calling for no investment in new fossil fuel supply projects.
The report recommends things the six U.S. banks can do:
- Setting absolute emissions targets instead of intensity-only targets is essential for banks to meet their net-zero commitments. Only Citi and Wells Fargo have set absolute emissions reduction targets for the oil and gas sector.
- Using a carbon dioxide equivalent metric to assess all greenhouse gas emissions.
- Stop general corporate financing for the oil and gas sector, which is the majority of bank financing for fossil fuel projects.
American versus European banks
The report finds that the big six American banks lag far behind their European counterparts. Dozens of European banks, investors, and insurers will not support most companies that develop new coal projects. Financial institutions are starting to extend those policies to the oil and gas sector. French banks La Banque Postale and Crédit Mutuel stopped financial services to companies expanding oil and gas production.
Many European banks have set more robust emissions reduction targets than American banks. The Swiss bank UBS set a target of a 71 percent reduction in its absolute financed emissions from oil and gas companies between 2020 and 2030.
“The yawning chasm between the stated climate commitments of the big US banks and their actual policies and targets lies in sharp contrast to the increasingly robust fossil fuel policies of many large European financial institutions,” said Paddy McCully, Senior Analyst at Reclaim Finance. “US banks should follow the lead of their European peers, rather than continue with the anti-science fallacy that expanding fossil fuel production is in any way compatible with a liveable climate.”
The NZBA’s First Progress Report
Despite the dismal performance of the big U.S. six, the overall members of the NZBA are on track to meet their targets. The NZBA recently released its first progress report. The report analyzes the intermediate 2030 targets set by over 60 members. The majority (90 percent) of the 43 banks that were due to publish their targets by the end of October released them. Nineteen other members set and delivered their first targets well before their 18-month deadline.
The NZBA has almost tripled in size in a year and a half. It had 43 founding members and now has 122 members from 41 countries, representing 40 percent of global banking assets.