Despite falling in 2021 from the previous year, banks had more fossil fuel financing than the year the Paris climate accords were signed.
The Paris climate agreement was signed in December 2015, and went into effect in November 2016, with the goal of limiting global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.
Since the ink dried on the agreement, the top 60 banks continued to finance the fossil fuel industry to the tune of $4.6 trillion, according to the latest report from bankingonclimatechaos.org. The types of financing the report analyzed were tar sands oil, offshore-, arctic-, and fracked oil and gas, LNG, coal mining and coal power.
Last year total financing fell to $741.8 billion from $749.9 in 2020, marking the second consecutive decline. However, that was due to the Covid pandemic, the report noted. In fact, the 2021 financing level was higher than the 723.5 billion in 2016.
The report ranked the banks based on their cumulative financing since 2016, with J.P. Morgan at the top of the list with $382.4 billion, followed by Citi, Wells Fargo and Bank of America and RBC, each of whose cumulative financing since 2016 topped $200 billion.
Right Direction
The report also singled out some banks' policies as heading in the right direction. For example, France’s La Banque Postale «has set the bar for oil and gas policies, publishing in 2021 a commitment to end financing for all companies expanding oil and gas, and exit the sector completely by 2030,» with others such as Credit Agricole and Nordea making similar commitments on coal.
Green Financing
To be sure, this is a transition of historic proportions, and while there is a long history of lending to the fossil-fuel sector, the market for «green» investment is still in its infancy.
According to statista.com, the United States was the leading issuer of «green bonds» in 2021 with $81.9 billion followed by China with $68.1 billion and Germany at $63.2 billion.
Swiss Banks
Switzerland's two largest banks were also included in the rankings, with Credit Suisse coming in at 19th with cumulative financing totaling $91.7 billion. Last year the bank had $9.39 billion in fossil financing, down from $19.7 billion in 2016, declining each year but one since then.
Recently, a group of activist investors issued a call to Credit Suisse to reduce the bank's exposure to the financing of fossil fuel companies, as finews.com reported.
The investors are concerned about financial and regulatory risks and Credit Suisse’s reputation, the statement said, pointing out the bank continues to finance business activities that appear incompatible with the bank's stated goals of aligning its financing with the Paris Agreement.
UBS, Switzerland's largest bank, had less than half the total financing of Credit Suisse with $40.1 billion, according to the report, and made the list in 34th position. In 2016, UBS financed $7.8 billion, rising to $9.1 billion the following year and topping out at $11.0 billion in 2018. Last year, the bank had $3.6 billion, an increase from $2.3 billion the year before.
Both banks are members of Swiss Sustainable Finance, which wants financial institutions to be in a position to meet their sustainability targets by 2030.
Swiss Government
The same day as the report was released, the Swiss Federal Council announced it initiated the consultation period on the implementing ordinance on climate reporting for large Swiss companies which will run until July 7 of this year.
The ordinance provides a binding implementation of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations by large Swiss companies based on the benchmarks set in August 2021 and is expected to come into force in 2023.
