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Ahead of COP26, a Report Says Banks are Still Banking on Fossil Fuels

The biggest American banks are the most active investors in dirty energy.

The recent report also lists the 60 biggest global private banks that have financed $3.8 trillion in fossil fuels since the 2016 Paris climate agreement.

The report was commissioned by environmental groups, including the Rainforest Action Network. It found that whilst 2020 fossil fuel financing dropped by 9%, the amount spent on extraction projects exceeded that of 2016. According to climate activists, this means the world’s largest banks are working against the target of limiting global warming to 1.5 degrees Celsius. The findings of the “Banking on Climate Chaos” paper support this. 

Dirty Dollar

The 4 worst banks in the world for fossil fuel financing were all based in the United States.

JPMorgan Chase achieved the top spot for the world’s worst “fossil bank.” The investment giant contributed $51.3 billion in fossil fuel financing last year alone. This is a total of $317 billion from 2016 to 2020. The second-worst, Citibank, spent $48.4 billion last year and a total of $237 billion since 2016. According to Jason Disterhoft, lead author of the report, the USA is providing a third of bank financing for fossil fuels.

“The US cannot credibly call itself a global climate leader so long as its banks are driving climate change to this extent, with no plans to phase out that activity,” Disterhoft said in an interview with Vox. However, there is praise for the Biden administration’s plans to involve the Treasury Department to end international financing of fossil energy. “It’s the first time we’re seeing an administration sketch out what an agenda in this space looks like,” says Disterhoft.

Cash for Carbon

The report highlights the worst offenders in other countries too. 

France’s BNP Paribas was the worst in the European Union. It spent $41 billion to finance fossil fuels in 2020. This is a 41% increase from 2019. Japan’s MUFG was the worst in Asia. Also highlighted were China’s CNOOC Limited and France’s Total. These oil and gas powerhouses are funding the world’s longest pipeline. On completion, it is estimated to emit over 33 million tons of CO2. BP, Shell, ConocoPhillips, and Equinor were all criticised for fracking in Argentina’s Patagonia. This is in spite of resistance from Indigenous communities.

COP26 Goals

A 2019 study, commissioned by the World Wildlife Fund and Greenpeace, was equally damning of the UK’s financial institutions. “The Big Smoke” report claimed financed emissions from UK banks and asset managers are responsible for half of the annual carbon emissions. This is in spite of November’s UN Climate Change Conference (COP26) taking place in Scotland and the UK wanting to lead the way in resolving the fossil fuel investment issue. Support for COP26 initiatives such as the Powering Past Coal Alliance Finance Principles has been limited. Furthermore, at the recent G20 meeting, the US and Japan blocked efforts to set a date for phasing out coal use. However, speaking to The Independent, a UK Treasury spokesperson said the government is “committed to the UK being the best place in the world for green and sustainable investment and was the first country in the world to commit to fully mandatory reporting by businesses across the economy on the financial risks posed by climate change.”

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