Global Banks Fund Fossil Fuel Companies to the Tune of $750bn in 2020
(24 March 2021 – Global) Global banks provided $750bn in financing to coal, oil and gas companies last year, despite many having pledged to back the Paris climate accord and cut their funding for fossil fuels, according to a new study by an activist group.
According to the latest analysis by activist group Rainforest Action Network (RAN), BNP Paribas stood out for the largest absolute increase in funding to fossil fuel companies, with a 41 percent annual rise to $41bn.
US banks continue to be the largest financiers of fossil fuel companies with JPMorgan Chase the leading player with $317bn of funding provided through lending and underwriting since 2016. However, the bank reduced the amount of financing by 20 percent to $51bn in 2020.
Citigroup followed in second place, providing $48bn of funding last year, down from $53bn the previous year, for a total of $238bn in financing since 2016.
In total, the world’s 60 largest banks have provided $3.8tn to fossil fuel companies since 2016, when the Paris agreement came into effect.
Overall, lending, debt and equity underwriting for the sector fell by 9 percent to $750bn in 2020, but climate change experts do not see this drop as a sign that banks are making good on their climate promises but more a result of the pandemic and global lockdowns.
BNP Paribas gave no comment to the Financial Times but responded in a letter to authors of the RAN report that its funding for oil and gas companies grew less significantly than its funding to other sectors and it had “played a major role in stabilising the economy” by providing liquidity to companies hit by the pandemic.
Earlier this month HSBC avoided a potential shareholder revolt at its annual meeting by amending its climate policy to incorporate the demands of activists following months of negotiations. Europe’s largest bank has now proposed to set formal, near-term targets to reduce its exposure to carbon-intensive assets and report on its progress.
HSBC was involved in $23bn of fossil fuel financing in 2020, according to the RAN report, down from $28bn the year before, for a total of $111bn since 2016.
The RAN report ranked Barclays as the biggest fossil fuel financier based in Europe, extending $28bn in credit last year for a total of $144bn since 2016.
Last week the ECB said a stress test revealed rising global temperatures are “a major source of systemic risk” because of the probability of mass loan defaults from thousands of corporate borrowers.
As a result, the European bank supervisor is preparing to raise the amount of capital required at lenders it considers to have disproportionately high levels of climate risk on their balance sheets.