Banks with climate goals continue to lend billions to oil — Quartz
In a bluegrass song by Gillian Welch, a woman, Miss Ohio, drives down the highway, convertible down. She strives to listen to her best angels, but can’t quite hear them. “I want to do well,” she says in Welch’s song, “but not now.”
It is indeed the soundtrack of the largest financial institutions in the world today. They’re ready to talk about eliminating carbon emissions from their loan portfolios, but aren’t quite there yet. More than 100 major commercial banks have set net zero targets. But many of the same banks continue to pour tens of billions of dollars into the oil, gas and coal industries, according to two new reports released this week. The reports show the scale of funding supporting companies planning to increase their fossil fuel production, at a time when scientists and analysts agree they should instead quickly switch to cleaner alternatives.
European banks provided $400 billion to oil and gas companies
Few banks provided details on how they plan to deal with the oil and gas companies they do business with. Even fewer have terminated loans or underwriting for these businesses. But 103 of the world’s largest commercial banks joined the Net Zero Banking Alliance, a group managing 44% of global banking assets, at the COP26 climate summit in November. Alliance members commit to achieving net zero emissions in their portfolios by 2050.
Yet since 2016, European members of the NZBA have provided at least $400 billion to oil and gas companies planning to increase production, according to a Feb. 14 report by UK advocacy group ShareAction. This includes $38 billion since the creation of the NBZA in April 2021. This goes directly against the International Energy Agency’s assertion that no new oil and gas fields should be opened up. to achieve the climate goals of the Paris Agreement.
The same story plays out in coal. Since January 2019, commercial banks have loaned or guaranteed $1.5 trillion to companies that mine coal, the highest-emitting fossil fuel, or burn it in power plants, according to a Feb. 15 report from the environmental association. German Urgewald. The report found this was a vital lifeline for an industry under enormous political pressure to pull out. The worst offenders were primarily in China, but also include banks in Japan, the United States and Europe that are members of the NZBA.
Institutional investors who are members of the Net Zero Asset Managers Initiative (a parallel group to the NZBA), including BlackRock and Vanguard, also continue to hold billions of dollars worth of stocks and bonds in coal companies, according to the Urgewald report.
Asset managers will have a chance to change their tune in the coming months when they vote on dozens of climate-related resolutions at the companies in which they own shares.