Banks Can Make a Real Difference on Climate; Will They?
The annual Banking on Climate Chaos report reveals how big banks are fueling the climate crisis through their financing, based on aggregated statistics from banks globally.
Banks are exacerbating the climate emergency by funding the fossil fuel sector including tar sands oil extraction, Arctic oil and gas extraction, fracking, liquefied natural gas infrastructure, and coal mining.
The report tallies how the sixty largest banks have financed fossil fuels with USD $4.6 trillion since adoption of the Paris Agreement in 2015.
Fossil fuel financing remains dominated by four U.S. banks - J.P Morgan Chase, Citi, Wells Fargo, and Bank of America. Together these banks account for a quarter of all fossil fuel financing over the last six years.
Green America is pleased to join the hundreds of organizations world-wide that have endorsed the 2022 Banking on Climate Chaos Report; the report is essential reading for understanding the trajectory of banks’ financing of the fossil fuel sector.
Change is Possible
To help banks reverse this trend as swiftly as possible, the Climate Safe Lending Network has developed The Good Transition Plan, The Network is a transatlantic, multi-stakeholder collaborative of banks, NGOs, academics, investors and others working to accelerate the decarbonization of the banking sector to secure a climate-safe world.
Some banks are doing the right thing. La Banque Postale, a major French bank, shows that change is possible. It committed to ending financing for all companies and infrastructure development in the oil and gas sectors by 2030 -- exiting the sector completely.
Halt Fossil Fuel Expansion
Such bank action is a rarity, however, as bank fossil fuel financing has plateaued in the last year rather than plummeting as needed.
In particular, financing of fossil fuel expansion must end immediately. Despite a growing number of bank commitments to “net zero” carbon emissions in their lending and investment portfolios, banks continue to support new fossil fuel development. Research shows that the oil and gas industry is prepared to produce more oil and gas than we can burn if we are to limit global warming to 1.5ºC and avoid the worst climate impacts.
Bank Promises on Climate Lack Scope & Speed
The report notes that most big banks have policies addressing fossil fuel finance and climate. To meet the reality of the crisis, however, these policies need to go further and their implementation swifter. In 2021, several banks set “net zero” goals and 44 of the 60 banks in the report have now committed to net zero emissions by 2050.
2050 is too far off; as a society we need to take dramatic action on climate change by 2030. There isn’t a moment to lose in transitioning bank financing in keeping the necessity of remaining below a 1.5-degree Celsius increase in global temperature.
Amplify Indigenous Communities’ Voices
Banking on Climate Chaos describes how Indigenous communities are leading global resistance to the fossil fuel industry.
In 2021, the Indigenous Environmental Network and Oil Change International published Indigenous Resistance Against Carbon, a report examining 26 cases of Indigenous resistance to the fossil fuel industry that led to quantifiable and large reductions in greenhouse gas emissions.
Their resistance is based on a long history of resistance to colonization: “Indigenous resistance is based on hundreds of years of resistance to colonization, the preservation of their sovereign rights as peoples, their right of self-determination, and their right to say “no” — no to unwanted, unfettered ruination of not only their lands but also their cultures.”
Voices of Indigenous communities must be included in all fossil fuel issues affecting their land and well-being, and in the shift to a clean energy economy.
Four Essential Demands
The report concludes by calling on banks to take bolder action:
- End fossil fuel expansion immediately.
- Respect the rights of Indigenous Peoples and all frontline communities.
- Immediately begin zeroing out all financing for fossil fuel extraction.
- Measure, disclose and set targets to zero out the absolute climate impact of overall financing activities on a 1.5°C-aligned timeline.
What Bank Do You Use?
We know conventional big banks are driving the climate crisis.
Fortunately, there are lots of better banking options to choose from so your deposits are not supporting climate chaos.
Find banks and credit unions that reflect your values with our Get a Better Bank map.
The banks and credit unions included in our Get a Better Bank Map meet at least one of the following criteria:
- Federal certification by the CDFI (Community Development Financial Institution) Fund
- Certification by Green America’s Green Business Network
- Membership in Inclusiv: Inclusiv's mission is to help low- and moderate-income people and communities achieve financial independence through credit unions.
- Membership in the Global Alliance for Banking on Values (US members)
- FDIC-identified Minority Depository Institutions (The scope of this designation indicates minority ownership and/or having a majority of board directors who are a minority and a customer base that is predominantly a minority.)
Together, using better banks, while holding major banks accountable for fueling the climate crisis, we can build a clean energy economy.