A damning new analysis of the energy investments of the world’s 30 largest listed financial firms has revealed that they collectively provided $740 billion to the fossil fuel industry in 2020 and 2021 – often with limited climate requirements.
Published today (March 25) by InfluenceMap, analysis examined the climate promises of the 30 companies and whether they were in line with their energy investments.
Promisingly, 29 of the 30 companies have committed to zero net funded emissions by 2050 or earlier. Only the Chinese firm Ping An Group had not made this commitment.
But InfluenceMap found that the 29 companies with net zero commitments are members of industry associations that have lobbied to weaken sustainable finance policies in the US, UK and EU. Additionally, 15 of the companies are members of associations that have strongly opposed progress in climate policy more generally.
The report also reveals slow progress in phasing out funding for fossil fuel companies with expansion plans and without credible climate targets.
The banking arms of assessed companies collectively facilitated at least $740 billion in primary financing to the fossil fuel sector in 2020 and 2021, equivalent to 7% of their total primary financing over that period. This figure includes $697 billion for oil and gas and £42 billion for coal.
InfluenceMap estimates that the majority of oil and gas funding has gone to companies that plan to increase exploration and development for years to come. This is concerning in terms of net zero, as the International Energy Agency’s (IEA) global net zero pathway by 2050 relies on no new oil and gas projects opening up after what had already been confirmed in 2021.
JP Morgan is named as the largest fossil fuel finance facilitator over the two-year period assessed, having provided $81 billion. Citigroup comes in second with $69 billion and Bank of America comes in third with $55 billion. Of the companies assessed, JP Morgan increased its financing of coal production the most between 2020 and 2021, according to the report.
More broadly, only seven of the 29 companies have drawn up thermal coal exit plans that comply with the UN 1.5C guidelines.
Not all assessed companies have a banking branch. To this end, InfluenceMap also assessed the work of their asset management functions.
25 of the companies assessed have asset management activities and, promisingly, 22 of them are involved in the Climate Action 100+ (CA100+) initiative.
However, the report reveals that, collectively, the equity portfolios of these companies are still misaligned with a 1.5°C temperature trajectory. This is largely due to overexposure to fossil fuels and low exposure to clean technologies.
He claims that in 2027, the average company in this cohort will invest in companies that produce 50% too much coal, 12% too much oil and 55% too much gasoline and diesel in road transport. It will also underinvest by 60% in renewables and 25% in electric vehicles.
InfluenceMap senior analyst Eden Coates, who contributed to the report, said: “These global financial institutions have significant economic and political influence, and they are delaying actions that are critical to responding to the climate crisis.
“There is a glaring disconnect between what they say about climate change and what they actually do – especially when it comes to pushing back against policymakers’ attempts to align financial regulation with climate goals. If they are serious about achieving their net zero goals, they need to set concrete, achievable short-term goals in all aspects of their operations.”
Growing pressure for exclusions and divestments
The InfluenceMap report comes after a separate study, published by ShareAction last month, found that 25 of Europe’s biggest banks have provided $400 billion to fossil fuel companies with expansion plans since 2016.
While many banks assessed by ShareAction have set their own net zero targets and joined collaborative net zero initiatives, ShareAction believes they have yet to successfully match words with action. He named HSBC, Barclays and BNP Paribas as the worst offenders.