Banking giants ‘still financing fossil fuel expansion’: study
THE world’s 60 biggest banks financed fossil fuels by £5.5 trillion since the Paris Agreement, according to an analysis.
The banks, which include UK giants like Barclays and HSBC, committed £562 billion in financing to fossil fuels in 2023, according to the 15th annual Banking On Climate Chaos (BOCC) report published yesterday.
It comes seven years after the legally binding international treaty to try to limit warming to 1.5C above pre-industrial levels came into force in 2016.
The UN says banks will play an important role in the transition by aligning their portfolios with the Paris Agreement.
The International Energy Agency has said that no new fossil fuel projects should be developed beyond existing fields to remain within the temperature limit.
The BOCC coalition of campaign and research groups analysed the banks’ lending and underwriting to more than 4,200 fossil fuel companies reported in Bloomberg LP and London Stock Exchange Group (LSEG).
They found that £277 billion, more than half of the biggest banks’ financing for fossil fuels in 2023, went to expansion alone.
Meanwhile, a total of £2.6 trillion was found to have gone towards fossil fuel expansion since 2016.
US bank JP Morgan Chase was identified as the biggest fossil fuel financier globally in 2023, committing £33 billion to fossil fuel companies.
Citibank provided the most financing to fossil fuel expansion at 204 billion dollars (£163 billion) since 2016, the analysis suggests.
The UK biggest bank, Barclays, came eighth in the world for its financing of fossil fuels since 2016 at £188 billion.
It also came ninth out of the top 12 for the amount of finance committed to fossil fuels in 2023 at £19 billion.
HSBC came 12th in the world for its financing of fossil fuels since 2016 at £153 billion.
April Merleaux, report co-author and research manager at Rainforest Action Network, said the report lifts the lid on the banks’ greenwashing.
“In a year with record climate impacts, I am shocked to see financing for any category of fossil fuels increase,” she said.
Lucie Pinson, director at Reclaim Finance, who also co-authored the report, said: “European banks like to claim to be showing leadership when it comes to action on climate change, but they are continuing to channel money into fossil fuel expansion, despite the clear warnings from climate science.”
The paper, which was endorsed by almost 600 organisations in 69 countries, was written by researchers at Banktrack, Centre for Energy, Ecology and Development, Indigenous Environmental Network, Oil Change International, Sierra Club, and Urgewald.
The authors said every bank was contacted and given an opportunity to review the deals attributed to them.
Coinciding with the release of the report, Barclays was accused of calling billions of dollars in financing for fossil fuel companies “sustainable”.
The bank has pledged to invest £0.8 trillion in sustainable and transition finance by 2030, including green loans and bonds.
But it helped to raise £33 billion in sustainability-linked finance for fossil fuel companies last year, according to an analysis of LSEG data by the Bureau of Investigative Journalism (TBIJ).
This includes £2.3 billion in sustainability-linked finance for Enbridge, which is expanding oil and gas infrastructure, and Harbour Energy, the UK’S largest oil and gas producer.
Both of the firms have committed to reducing emissions from their operations but not those generated from burning fossil fuels, known as scope three emissions.
A spokesman for Barclays said the bank does not agree with the TBIJ claims and accused the organisation of “inflating financing figures attributed to Barclays”.