Executive summary from the report Banking on Climate Change, Fossil Fuel Finance Report Card 2019. The report is prepared by Rainforests Action Network, BankTrack, Sierra Club, Oil Change, Indigenous Environmental Network, Honour The Earth. This year, 163 organisations, including Centre for Financial Accountability, from around the world endorsed the report.
In October 2018, the Intergovernmental Panel on Climate Change (IPCC) released a sobering report on the devastating impacts our world will face with 1.5° Celsius of warming — let alone 2°C — while setting out the emissions trajectory the nations of the world need to take if we are to have any shot at keeping to that 1.5°C limit. This 10th edition of the annual fossil fuel finance report card, greatly expanded in scope, reveals the paths banks have taken in the past three years since the Paris Agreement was adopted, and finds that overall bank financing continues to be aligned with climate disaster.
For the first time, this report adds up lending and underwriting from 33 global banks to the fossil fuel industry as a whole. The findings are stark: these Canadian, Chinese, European, Japanese, and U.S. banks have financed fossil fuels with $1.9 trillion since the Paris Agreement was adopted (2016–2018), with financing on the rise each year. This report finds that fossil fuel financing is dominated by the big U.S. banks, with JPMorgan Chase as the world’s top funder of fossil fuels by a wide margin. In other regions, the top bankers of fossil fuels are Royal Bank of Canadain Canada, Barclays in Europe, MUFG in Japan, and Bank of China in China.
This report also puts increased scrutiny on the banks’ support for 100 top companies that are expanding fossil fuels, given that there is no room for new fossil fuels in the world’s carbon budget. And yet banks supported these companies with $600 billion in the last three years. JPMorgan Chase is again on top, by an even wider margin, and North American banks emerge as the biggest bankers of expansion as well.
This report also grades banks’ overall future-facing policies regarding fossil fuels, assessing them on restrictions on financing for fossil fuel expansion and commitments to phase out fossil fuel financing on a 1.5°C-aligned trajectory. While some banks have taken important steps, overall major global banks have simply failed to set trajectories adequate for dealing with the climate crisis.
As in past editions, this fossil fuel finance report card also assesses bank policy and practice around financing in certain key fossil fuel subsectors, with league tables and policy grades on:
- Tar sands oil: RBC, TD, and JPMorgan Chase are the biggest bankers of 30 top tar sands producers, plus four key tar sands pipeline companies. In particular, these banks and their peers support companies working to expand tar sands infrastructure, such as Enbridge and Teck Resources.
- Arctic oil and gas: JPMorgan Chase is the world’s biggest banker of Arctic oil and gas by far, followed by Deutsche Bank and SMBC Group. Worryingly, financing for this subsector increased from 2017 to 2018.
- Ultra-deepwater oil and gas: JPMorgan Chase, Citi, andBank of America are the top bankers here. Meanwhile, none of the 33 banks have policies to proactively restrict financing for ultra-deepwater extraction.
- Fracked oil and gas: For the first time, the report card looks at bank support for top fracked oil and gas producers and transporters — and finds financing is on the rise over the past three years. Wells Fargo and JPMorgan Chase are the biggest bankers of fracking overall — and, in particular, they support key companies active in the Permian Basin, the epicenter of the climate-threatening global surge of oil and gas production.
- Liquefied natural gas (LNG): Banks have financed top companies building LNG import and export terminals around the world with $46 billion since the Paris Agreement, led by JPMorgan Chase, Société Générale and SMBC Group. Banks have an opportunity to avoid further damage by not financing Anadarko’s Mozambique LNG project, in particular.
- Coal mining: Coal mining finance is dominated by the four major Chinese banks, led by China Construction Bankand Bank of China. Though many European and U.S. banks have policies in place restricting financing for coal mining, total financing has only fallen by three to five percentage points each year.
- Coal power: Coal power financing is also led by the Chinese banks — Bank of China and ICBC in particular — with Citi and MUFG as the top non-Chinese bankers of coal power. Policy grades for this subsector show some positive examples of European banks restricting financing for coal power companies.
The human rights chapter of this report shows that as fossil fuel companies are increasingly held accountable for their contributions to climate change, finance for these companies also poses a growing liability risk for banks. The fossil fuel industry has been repeatedly linked to human rights abuses, including violations of the rights of Indigenous peoples and at-risk communities, and continues to face an ever-growing onslaught of lawsuits, resistance, delays, and political uncertainty.
The IPCC’s 2018 report on the impacts of a 1.5°C increase in global temperature showed clearly the direction the nations of the world need to take, and the emissions trajectory we need to get there. Banks must align with that trajectory by ending financing for expansion, as well as for these particular spotlight fossil fuels — while committing overall to phase out all financing for fossil fuels on a Paris Agreement-compliant timeline.