A damning new analysis of the energy investments of the world’s 30 biggest listed financial firms has revealed that they collectively provided $740bn to the fossil fuel industry in 2020 and 2021 – often with limited requirements on climate.
Published today (25 March) by InfluenceMap, the analysis looked at the climate promises of the 30 companies and whether they were in keeping with their energy investments.
Promisingly, 29 of the 30 companies have committed to achieving net-zero financed emissions by 2050 or sooner. Only Chinese firm Ping An Group had not made this commitment.
But InfluenceMap found that all 29 companies with net-zero pledges are members of industry associations that have lobbied to weaken sustainable finance policies in the US, UK and EU. Moreover, 15 of the companies are members of associations that have strongly opposed climate policy progress more broadly.
The report also reveals slow progress on phasing out financing for fossil fuel firms with expansion plans and without credible climate targets.
The banking arms of the businesses assessed collectively facilitated at least $740bn of primary financing to the fossil fuel sector in 2020 and 2021 – equivalent to 7% of their total primary financing during this period. This figure comprises $697bn for oil and gas and £42bn for coal.
InfluenceMap believes that the majority of the oil and gas funding went to companies that are planning to increase exploration and development for years to come. This is concerning in terms of net-zero, because the International Energy Agency’s (IEA) global net-zero by 2050 pathway is predicated on there being no opening of new oil and gas projects after what had already been confirmed in 2021.
J.P. Morgan is named as the biggest enabler of fossil fuel financing in the two-year period assessed, having provided $81bn. Citigroup comes in second with $69bn and the Bank of America comes third with $55bn. Of the companies assessed, J.P. Morgan was the one that increased its financing of coal production to the greatest extent between 2020 and 2021, the report claims.
More broadly, only seven of the 29 companies have drawn up thermal coal exit plans in line with the UN’s 1.5C guidelines.
Not all of the companies assessed have banking arms. To that end, InfluenceMap also assessed the work of their asset management functions.
25 of the businesses assessed have asset management businesses, and, promisingly, 22 of them are involved with the Climate Action 100+ (CA100+) initiative.
However, the report reveals that, collectively, the equity portfolios of these firms are still misaligned with a 1.5C temperature pathway. This is largely due to over-exposure to fossil fuels and a low exposure to clean technologies.
It claims that, in 2027, the average company in this cohort will invest in companies that produce 50% too much coal, 12% too much oil and 55% too much petrol and diesel road transport. It will also be under-investing in renewables by 60% and under-investing in electric vehicles by 25%.
InfluenceMap’s senior analyst Eden Coates, who contributed to the report, said: “These global financial institutions have significant economic and political influence, and they are delaying action that is essential to respond to the climate crisis.
“There is a stark disconnect between what they say about climate change and what they’re actually doing – particularly when it comes to pushing back on policymakers’ attempts to align financial regulation with climate goals. If they are serious about achieving their net-zero targets, they should set concrete and actionable short-term targets across all aspects of their operations.”
Growing pressure for exclusions and divestment
InfluenceMap’s report comes after a separate piece of research, published by ShareAction last month, revealed that 25 of Europe’s biggest banks have provided $400bn to fossil fuel companies with plans for expansion since 2016.
While many of the banks assessed by ShareAction have set their own net-zero targets and joined collaborative net-zero initiatives, ShareAction believes they are yet to match talk with action. It named HSBC, Barclays and BNP Paribas as the worst offenders.