An analysis of the world’s 60 largest commercial and investment banks found that they have invested a combined $3.8 trillion into the fossil fuel industry between 2016 and 2020, the five-year period after the Paris Climate Agreement was signed.
Authored by six environmental and financial transparency advocacy groups — Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change International, Reclaim Finance and Sierra Club — the report found that JPMorgan Chase & Co. was the world’s top funder of the fossil fuel industry for each of the past five years, though the investment bank did reduce its funding between 2019 and 2020 by nearly $13 billion.
Meanwhile, its competitors Citigroup Inc. and Bank of America Corp. are catching up, having bumped up their investments in the fossil fuel sector on average between 2016 and 2020. And while Well Fargo & Co. increased its own investments steadily between 2016 and 2018, its fossil fuel financing has since dropped.
Titled “Banking on Climate Chaos,” the fossil fuel financing report covers the 60 biggest banks by assets (with certain exclusions), with Chinese financial institutions in the top four slots. However, when ranked by their total fossil fuel financing, the largest four U.S. banks outstripped the rest, with the Royal Bank of Canada coming in fifth.
The report also found that JPMorgan, Citi and Bank of America were the top funders of worldwide fossil fuel expansion over the 2016-20 period.
While the coronavirus pandemic correlated with a 9 percent decrease in fossil fuel financing, the report’s authors say “the overall fossil fuel financing trend of the last five years is still heading definitively in the wrong direction, reinforcing the need for banks to establish policies that lock in the fossil fuel financing declines of 2020.”
Comparing the combined financing totals for all 60 banks from 2016 with that of 2020 found that the total funds devoted to the fossil fuel sector have increased, even as major banks have made commitments to carbon neutrality in the coming decades.
Wells Fargo, the last of the major U.S. banks to make such a commitment, pledged earlier this month that all its operations (including projects and companies it finances) will be carbon neutral by 2050. The report’s authors note that these commitments leave room for continued fossil fuel financing in parallel with purchasing carbon offsets or carbon capture investments.
The report used transaction data sources from Bloomberg Finance LP and weighted each transaction on the proportion of the borrower’s operations devoted to the sector in question, adjusting for each company’s overall fossil fuel assets or revenue. The IJGlobal database was also used for analyzing project finance transactions related to liquefied natural gas and coal power.