World's Biggest Banks Make Climate Change Promises, Invest in Fossil Fuels Anyway

“Everyone is talking about net zero, but nobody is talking about exiting fossil fuels.”
Extinction Rebellion campaigners protest outside an HSBC bank in Manchester, northern England, in 2019. Photo: Andy Barton/Alamy Live News

The world’s biggest banks are still investing billions in fossil fuels, despite years of pledges on climate change.

Campaigners are urging banks to resolve to reduce their investments in fossil fuels but according to a new report, investments are actually growing as time to tackle the climate crisis runs out.

Even the most hardened cynic could be forgiven for feeling a flicker of optimism about the climate crisis recently. In the past six months alone, the United States has rejoined the Paris Agreement, China has pledged to go carbon neutral by 2060 and some of the world’s largest banks have promised to align their activities with global climate targets. But ambitions for the future are still failing to align with actions in the present.


It has been almost three years since the UN’s Intergovernmental Panel on Climate Change (IPCC), issued a stark warning: By 2030, the world must cut its carbon emissions by almost half of 2017 levels to keep global warming to 1.5 degrees above pre-industrial temperatures. Beyond this point, the risk of droughts, floods, famines and other ecological disasters becomes significantly higher. To adhere to the 1.5 degree target, the IPCC said the global economy must reach the point of carbon neutrality by 2050 – a date that has since become a de facto finish line for countries and corporations.

These days, almost everyone has a net zero by 2050 target, even airlines and oil majors. However, very few governments or companies have detailed exactly how they’ll get nearly halfway to carbon neutral in the coming decade. If the transition away from fossil fuels was truly underway, you’d expect to see financiers retreating from oil and gas and shifting ever-greater sums of capital towards renewable energy. That just isn’t the case for now.

According to Banking on Climate Chaos 2021, a report authored by the Rainforest Action Network and five other NGOs, fossil fuel financing from the world’s 60 largest commercial and investment banks was higher in 2020 than it was in 2016. For the fifth year in a row, JPMorgan Chase was the world’s single largest fossil fuel funder, followed by fellow US firms Wells Fargo and Bank of America. Of the 60 banks analysed in the report, 17 have made some kind of pledge to achieve “net zero” emissions in their financing activities. Among them is Europe’s biggest fossil fuel banker, Barclays, which has vowed to account not just for the impact of its lending and investing activities, but its underwriting as well.


On the surface, this looks like real progress, especially because banks have tended to set targets for their lending practices alone. But between January and September of last year, Barclays lent and underwrote $24.58 billion (£17.66 billion) to fossil fuels – more than $200 million more than in the same timeframe in 2019. It was also the biggest non-US banker of fracking, the controversial practice that involves fracturing bedrock formations to extract oil or gas. “Everyone is talking about net zero, but nobody is talking about exiting fossil fuels,” says Lucie Pinson, the founder of Reclaim Finance, one of the NGOs behind Banking on Climate Chaos.

In Pinson’s view, there are no “good” financial institutions at this stage, only good practices within them. Even banks that have ostensibly made progress in one area still lag behind in others. “French banks like Crédit Agricole and BNP Paribas have very good coal policies, but they have terrible oil and gas policies,” she says. “From the perspective of managing the carbon budget, they are still worsening the climate situation.”

Coal, the most polluting fossil fuel, has been an obvious area of focus for climate campaigners. To date, more than 100 financial institutions have announced their divestment from coal mining and coal power – a sure sign that the industry is beginning its decline in many countries. China remains the exception, with its financial institutions leading global investment in the sector. The top 11 coal mining banks in the last five years were all Chinese, as were the top 10 coal power banks.


The authors of Banking on Climate Chaos observed that the banks most likely to adopt strong policies in any given sector were the ones that didn’t have a significant presence there to begin with. It’s only logical that firms with a strong vested interest in the continued growth of coal will be the least likely to get on board with divestment initiatives. This is why the campaign group ShareAction has directed its energies towards HSBC in recent years.

“Often [HSBC’s] excuse was that they were an emerging markets bank and therefore they perhaps shouldn’t be held to the standards of other European banks,” says Jeanne Martin, Senior Campaign Manager at ShareAction. “They were initially quite reluctant to tighten their coal policy, and that’s one of the reasons why we escalated our engagement with them, which culminated in the shareholder resolution we filed in January this year.”

In the UK, any shareholder can attend a company’s annual general meeting (AGM) and ask a question of its executives. ShareAction holds a single share in each of the companies in the FTSE100 index, and uses this share to engage in conversations about governance and accountability. It began campaigning on climate issues at HSBC in 2016, and this year coordinated a resolution with 15 institutional investors and 117 individual shareholders, asking the bank to reduce its exposure to fossil fuels, starting with coal.

In response, HSBC’s board put forth its own resolution committing to phase out financing of coal-fired power and thermal coal mining by 2030 in the EU and OECD (and 2040 elsewhere). Shareholders will vote on the proposal on the 28th of May – and ShareAction is prepared to push back if it isn’t satisfied with HSBC’s implementation of its promises. “We often see big fossil fuel financiers committing to net zero by 2050, and then failing to provide any information about what they’re planning to do in the next couple of years,” Martin says. “Those are the years that really matter.”

Of course, it isn’t realistic to expect the entire global financial sector to sever its existing relationships with longstanding fossil fuel clients overnight. But until banks announce concrete short-term plans – such as banning investments in new coal or tar sands projects – Pinson urges the public to view 2050 targets with scepticism.

“The day that banks tell clients like BP or Shell or Total that they want them to stop developing new fossil fuel resources, and put a hold on financial services until they do, is the day we will really see they’re serious about net zero pledges,” she says.

VICE Word News approached Barclays and HSBC for a comment on this article but they did not respond.