The 2015 Paris Climate Agreement was considered a historic breakthrough in putting the world on a trajectory to limit global warming to no more than 1.5°C, the level scientists say is required to prevent irreversible climate chaos.
Yet since then, the world’s 60 largest banks have plowed $5.5 trillion into fossil-fuel financing, including expansion projects, tar sands oil, Arctic and Amazon oil and gas, offshore drilling, fracking, liquified natural gas, and coal mining, according to the 2023 Banking on Climate Chaos report.
Topping the list of banks at the root of climate chaos are the Big 4 – JPMorgan Chase, Citi, Wells Fargo, and Bank of America – which together account for $1.37 trillion, or 25%, of all fossil-fuel financing since 2015. These four megabanks topped fossil-fuel funding in 2022 as well.
These banks are propping up corporations like ExxonMobil, Saudi Aramco, Chevron, BP, Shell, and ConocoPhillips– which is driving the disastrous Willow oil-drilling project in the Arctic – even as the fossil-fuel industry made a record $4 trillion in profits in 2022 due to high energy prices from the war in Ukraine.
No new fossil fuel projects
All this is happening in the shadow of the Intergovernmental Panel on Climate Change’s March 2023 Synthesis Report, a “final warning” that the world must stop expanding fossil-fuel production if we want a chance of a livable planet: “no new oil and gas fields, no new coal mines, no new or expanded oil and gas pipelines, no new LNG terminals, no new coal-fired power plants,” the report said.
“The world cannot afford any fossil fuel expansion: no new oil and gas fields, no new coal mines, no new or expanded oil and gas pipelines, no new LNG terminals, no new coal-fired power plants.”2023 Banking on Climate Chaos report
The fossil fuel projects already in process – wells being drilled, gas being fracked, coal being mined – are more than enough to push the climate past 2°C of global warming, the Banking on Climate Chaos report said. Much of current fossil fuel production – and any new projects – are stranded assets.
Fossil fuel reserves may be listed on a company balance sheet, but they can never be dug up and burned – or profited from -- without causing irreversible climate catastrophe.
Green America was one of 623 organizations in 75 countries to endorse the 2023 Banking on Climate Chaos report. The report is authored by Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change International, Reclaim Finance, Sierra Club, and Urgewald.
Frontline and Indigenous communities
Central to this year’s Banking on Climate Chaos report are the stories of fossil fuel and climate impacts on frontline communities worldwide, from the United States and Canada to Argentina, Nigeria, Turkey, Uganda, Mozambique, Pakistan, Japan, Indonesia, the Philippines, and more.
For example, the Mountain Valley Pipeline – financed by Bank of America, JPMorgan Chase, Wells Fargo, PNC, and BNP Paribas – would carry fracked gas across 591 streams in West Virginia, Virginia, and North Carolina, through an Appalachian sacrifice zone already riddled dirty coal and gas projects.
What are the solutions?
In a special essay for this year’s report, Tom BK Goldtooth and Tamra Gilbertson of Indigenous Environmental Network outline what must be done to address climate chaos.
At the top of the list is a specific demand: Keep fossil fuels in the ground. “We must restructure our social and economic systems, replacing the business-as-usual, fossil-fueled, extractive, throwaway economy with one that protects people and the environment,” Goldtooth and Gilbertson write.
They point to carbon pricing, carbon offsets, carbon trading, and other market schemes as chief culprits in the continued burning of fossil fuels. “From the United Nations (UN) to the state, 25 years of carbon games have not stopped fossil fuel extraction. Carbon accounting is in fact designed precisely so that polluters can continue extracting,” they say.
“The only way to address climate change is to stop relying on carbon trading and other greenwashed mitigation and keep it in the ground.”Tom BK Goldtooth and Tamra Gilbertson
Instead, Goldtooth and Gilbertson call for Indigenous peoples to lead future climate negotiations. “We hold an estimated 80% of what remains of the Earth’s land-based biodiversity in our lands and traditional territories. Without Indigenous Peoples protecting and maintaining ecosystems, climate change would have already caused widespread planetary collapse,” they write.
Goldtooth and Gilbertson point to the increase in carbon offset markets under Article 6 of the Paris Agreement as especially threatening for the sovereignty and rights of Indigenous communities because it will set up the system for land grabs. “We at Indigenous Environmental Network have serious concerns about how the UN will monitor the new carbon trading platform, what accounting system will track the market, who will control it, and what role the private sector will play,” they say.
Carbon offsets are false solutions that do not reduce emissions, but instead deepen climate chaos, Goldtooth and Gilbertson write. Efforts to stop the climate crisis must be trusted to and led by Indigenous people who hold a spiritual relationship with the land, water, ecosystems, and all life. Strategies for system change must center Indigenous people’s rights and keep fossil fuels in the ground.
What banks must do
Not all banks are on the wrong path. Banque Postale, a public bank in France, shows change is possible. In 2021 after the International Energy Agency said investments in renewable energy need to triple, Banque Postale committed to end financing for all companies expanding oil and gas and to exit the fossil fuel sector completely by 2030. Crédit Agricole of France and Nordea Bank of Finland have made similar commitments on coal.
But other major banks, especially in the United States and Canada, lag far behind.
The Banking on Climate Chaos report makes five demands:
- End all finance for fossil fuel expansion immediately.
- Set emissions reduction targets for 2025 and 2030, with zero emissions by 2050 at the latest, based on absolute emissions reductions, not carbon offsets.
- Require all fossil fuel clients to adopt robust transition plans aligned with a 1.5°C pathway.
- Protect human rights and Indigenous People’s rights, including Free, Prior, and Informed consent.
- Scale up financing for a just and fair transition to local and distributed clean energy.
What you can do: Take action!
Big banks are driving climate chaos, but you don’t have to. You have a choice to do better – and fortunately there are lots of better banking options to choose from.
- Take action: Tell big banks to fund people and planet, not climate chaos.
- Find banks and credit unions that reflect your values on 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, whose 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 minority.)
Together, by using better banks while holding big banks accountable for fueling the climate crisis, we can build an equitable and sustainable economy based on respect for both people and planet.
Cathy Cowan Becker is the Responsible Finance Campaign Director at Green America. Contact her at email@example.com.