What’s going on here?
The fossil fuel industry is still raking it in, receiving over $700 billion last year from the world’s top 60 banks. To put that into perspective, that’s billions with a B – nine zeroes – and about the same as the Gross Domestic Product (GDP) of Poland.
What does this mean?
According to the newly released Banking on Climate Chaos report, the world’s major banks are providing vast amounts of cash to businesses dealing in oil, coal and gas, including expansion projects. JP Morgan tops the list, with $40 billion, followed by Citigroup and Bank of America.
Figures from the report show that $6.9 trillion has been invested in fossil fuels since the 2015 Paris agreement. While 33 of the top 60 banks have decreased financing for fossil fuels, the other 27 have upped it.
Why should we care?
Money makes the world go around, and it’s expensive to transition our global energy supply to clean, renewable sources. But avoiding the worst effects of climate chaos would be a good investment. Last year, data from the World Economic Forum (WEF), estimated that the global cost of climate-related damage could be between $1.7 trillion and $3.1 trillion per year by 2050.
The International Energy Agency (IEA) gives an optimistic picture of funding for renewables. Its World Energy Investment report estimated that clean energy received $1,740 billion in 2023, compared to $1,050 billion for fossil fuels.
The trends are going in the right direction, but the banking industry needs to change faster. While big banks still provide the most fossil fuel financing overall, smaller banks are investing a higher proportion of their assets. Truist Financial committed 2.65% of its overall assets to carbon-based fuels, with Scotiabank just behind on 2.33%.
In particular, banks’ policies are too weak to tackle oil and gas expansion. According to Banking on Climate Chaos, only La Banque Postale and Danske Bank have strict policies on not funding expansion into new oil and gas fields. Most banks’ net zero plans are full of loopholes and do not prevent them from fuelling fossil expansion in the short term.
Be curious
- Read the full Banking on Climate Chaos 2024 report
- Find out how Barclays pledged to end financing for oil and gas expansion
- Want to keep your cash away from fossil fuels? Check how green your bank is
- Lobby your pension provider in a few clicks with the Make My Money Matter campaign
Featured image by Eelco Böhtlingk, via Unsplash
