Major global banks do not lose the habit of investing in fossils. Even when they promise net-zero
A Reclaim Finance report on finance that still invests in fossils
(sustainabilityenvironment.com) – At least 56 of the largest banks that in 2021 promised to become net-zero by 2050 actually continue to investing in fossils hundreds of billions of dollars. The news will perhaps please the new president of COP28, the Emirate Sultan al-Jaber (who is also the CEO of the national oil company of Abu Dhabi), convinced that the real root of energy problems is that too little is invested in oil, gas and coal. But this shows how slow the transformation of the financial sector is compared to the speed with which the climate crisis is escalating.
The Glasgow Financial Alliance for Net Zero (Gfanz), the most important global initiative for climate finance, is a report published by the French NGO Reclaim Finance along with 13 other NGOs including the Italian Re:Common. Gfanz was born in 2021 at COP26 in Scotland as a tool to steer climate finance. The life of the group was immediately troubled: all the big have joined but not everyone really wanted to commit to net-zero. Thus, among the 450 member organizations, expression of 45 countries and with a total portfolio of 130 trillion dollars, many continue to manage their business as before.
Who keeps investing in fossils?
And it’s not a lot of money. The 56 realities identified by Reclaim Finance (among a small group of 161 institutions that has been analyzed), from November 2021 to August 2022, mobilized something like 269 billion dollars to support the expansion of 102 fossil companies. These companies, together, have plans to produce 137 billion barrels of oil equivalent: it is 60% of what the entire global oil & gas industry plans to extract by 2030. Not only that: in their projects there are also 92 new GW of installed coal capacity.
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Coal is one of the weakest points. Although COP26 is committed to reducing the use of coal and the UN Race to Zero -on which the most ambitious sub-sectors of GFANZ are based- has clarified that there is no more room for investing in fossils fuel, Only 61 banks analyzed have policies that exclude investments in companies that want to produce more coal. And of these 61, only 9 (including Unicredit) have solid policies that span the range of possible investments.
Among the worst banks are Citigroup, Bank of America, Mitsubishi UFJ Financial, Mizuho Financial, Royal Bank of Canada, Deutsche Bank. Among the worst 10 investment funds, the top 9 are all American. Which oil & gas companies benefit from this funding? Especially at Exxon, Chevron, Shell, ConocoPhillips.
“Financing the expansion of fossil fuels means delivering to the fossil fuel industry funds that could have been used for the construction of renewable sources and batteries, the development of new electric arc furnaces or the payment of a fair elimination of coal and gas power plants“, reads the report. “By continuing to finance the expansion of fossil fuels, GFANZ members send a message to the rest of the financial sector, industry and governments: as long as fossil companies want to continue to destroy the climate we all depend on, there will be funding to support them”.