Financial institutions are continuing to provide funding for fossil fuels despite the urgent need to transition to a low carbon economy as a response to climate change. In the seven years since the adoption of the Paris Agreement, the world’s largest private banks have financed fossil fuels with a total of $7.1 trillion, with $3.5 trillion specifically going towards fossil fuel expansion. This financial support for fossil fuels is contradictory to the goals of achieving net zero emissions by 2050, as acknowledged by the International Energy Agency.
The 15th annual Banking on Climate Chaos report examines the support provided by banks to fossil fuels and their impact on the environment. The report highlights that the world’s top 60 banks have lent and underwritten funds to over 4,200 fossil fuel companies, including those contributing to the degradation of the Amazon and Arctic regions. Despite various attempts at greenwashing by banks, the report shows the significant financial support that banks continue to provide to the fossil fuel industry.
JP Morgan Chase stands out as the top financier of fossil fuels globally, with $41 billion committed to fossil fuel companies in 2023. Additionally, they are leading in financing fossil fuel expansion. Other notable offenders include Mizuho, which ranked second in both fossil fuel financing and fossil fuel expansion. Citibank has been identified as the worst funder of fossil fuel expansion since the Paris Agreement, providing $220 billion in funding since 2016.
The report reveals the high levels of bank financing for destructive fossil fuel practices, such as tar sands extraction, ultra deepwater offshore drilling, fracking, and coal mining. Banks like CIBC and RBC tied for the worst funders of tar sands extraction, while Mitsubishi UFJ Financial Group provided substantial funding for ultra deepwater offshore drilling. This financial support from banks perpetuates harmful practices in sensitive ecosystems such as the Arctic and Amazon biomes.
Some banks are increasing their exposure to climate risk by rolling back already weak policies, despite the urgent need for action. Bank of America, for example, dropped exclusions on Arctic drilling, thermal coal, and coal-fired power plants, demonstrating a lack of commitment to climate goals. The issue of greenwash remains a concern in the financial sector, as consumers are being misled into investing in providers with poor environmental records, ultimately funding activities that contribute to climate change.
The banking sector’s continued funding of fossil fuels highlights a disconnect between consumer expectations and bank practices. While consumers increasingly seek to invest in environmentally responsible ways, many are unknowingly supporting providers that fund destructive activities. Regulatory certainty and incentives aligned with climate-positive action are needed to encourage banks to transition towards sustainable investments. It is essential for banks to align their actions with the goals of achieving a future free from fossil fuels to mitigate the impact of climate change.
