The world’s largest benches finance fossil fuel companies: Here’s the behind the scenes

There are two main problems that the world has experienced in recent years: High carbon emissions and the climate crisis associated with it. After various measures taken and dozens of steps taken, signs of improvement are observed gradually, but of course, it will take many years for the damage to be reversed. As companies and countries shift their energy needs away from fossil fuels, banks seem to be providing trillions of dollars in finance to fossil fuel companies.

Banks give $4.6 trillion to ‘fossil’ energy companies

Of course, it has nothing to do with banking and ethical issues. Just like companies, banks want to maximize their profits. Banks give loans, make a profit with the interest on the loan and give more loans. However, these loans apparently affect the whole world negatively. According to the report of Banking On Climate Chaos, the world banking industry has provided $4.6 trillion in financing to the fossil fuel industry in the six years since the Paris Climate Agreement was adopted in Paris in 2015. The banks that provided the most financing were JPMorgan Chase, Citi Bank, Wells Fargo, Bank of America and RBC.

Banks have no meaningful policy against fossil fuels

Following the International Energy Agency’s goal of net zero carbon emissions for 2050, 44 of the 60 banks covered in the Report agreed to the “no new oil and gas fields” target. However, many of these banks continue to fund oil and gas companies. According to the report, 27 of the 44 banks identified still do not have a meaningful counter policy to the fossil fuel industry. In fact, these financial institutions were sometimes accused of “pouring gasoline on the fire”.

The leading banks, asset owners and managers of the seven industry alliances that make up the Glasgow Financial Alliance for Net Zero (GFANZ) continue to pour hundreds of billions of dollars into the expansion of the coal, oil and fossil gas industries, according to data compiled by Reclaim Finance. “Things are as usual for most banks and investors [involved in GFANZ], who continue to support fossil fuel developers without restriction, despite their high-profile commitment to being carbon neutral,” said Lucie Pinson, founder and managing director of Reclaim Finance. According to Pinson, these financial resources, which combine for carbon neutral goals but carry out activities on the contrary, do great harm to those who really act for the climate.

Finance companies merging for carbon neutral are not very successful at this

HSBC, one of the largest banks involved in GFANZ, imposed restrictions on oil and gas financing last month. However, despite joining this alliance in 2021, it has financed fossil fuel companies worth $12 billion. According to an HSBC spokesperson, decarbonisation still requires more regular investments in oil and gas fields.

As a result, we see that investments in fossil fuels will not decrease, at least in the near future. It is envisaged to invest in fossil fuels by 2030. However, GFANZ says that by 2030, investment in renewable energy will be four times that of investment in fossil fuels.

António Guterres, Secretary-General of the United Nations, said, “Nothing is more clear or present than the danger of the expansion of fossil fuels.” but the economic systems that people choose do not take such dangers into account. Therefore, it seems that this industry will continue to feed without comprehensive legal regulations for fossil fuels.