Memo on Financial Institutions and Fossil Fuel Financing Ahead of Yellen Roundtable

Treasury Secretary Janet Yellen is traveling to New York City on Tuesday for a series of events with the United Nations General Assembly during Climate Week. The events include a 2:45 p.m. roundtable with leaders of a range of financial institutions that “have committed to significant climate-related actions.” 

Despite much talk of "climate action", very little action has been taken by financial institutions to reduce their real / financed emissions or financing of the fossil fuel industry. This memo provides some key information about the existing fossil fuel financing policies and practices of major US asset managers and banks, as a reference for understanding what meaningful and substantive terms of discussion look like during the roundtable session. 

US asset managers invest heavily in fossil fuels

The four largest US asset managers continue to invest heavily in coal, oil, and gas despite their commitments with the Net Zero Asset Managers Initiative (NZAMI). BlackRock’s bond and share holdings in just the top 12 oil and gas expansion companies total approximately $133 billion USD. None of these asset managers have committed to restrictions on investing in or underwriting coal, oil, or gas. See more: 2022 Asset Manager Scorecard & Table 1

Table 1. Total shareholdings and bond holdings ($mln) in coal, oil and gas of the largest US asset managers (Source: 2022 Asset Manager Scorecard)

US banks among largest financiers of fossil fuels

The six largest US banks provide billions of dollars in lending and underwriting to oil, gas, and coal companies every year. Even as the banks have publicly pledged to align their financing with the goal of net-zero by 2050, they continue to finance fossil fuel expansion, even increasing financing for some high-emitting energy sectors. See more: 2023 Banking on Climate Chaos Report & Table 2

Table 2. Total financing (lending and underwriting) by major US banks for 100 top fossil fuel expanders (Source: 2023 Banking on Climate Chaos Report)

Asset managers among top bondholders of oil and gas

Bonds are a critical source of funding for companies seeking to expand fossil fuel development. BlackRock and Vanguard are among the top bondholders of oil and gas companies, each holding $34 billion in bonds issued by 300+ oil and gas companies around the world as of March 2022. See more: 2022 Asset Manager Scorecard

US banks lack policies to restrict financing for fossil fuel expansion

No major US bank has adopted a policy restricting financing for companies expanding coal, oil, or gas. Despite publishing targets for reducing emissions in several key sectors by 2030, only two major US banks have set absolute emissions reduction targets. See more: 2022 US Banks Progress Report

Below are some experts who can comment on Yellen’s roundtable with financial institutions. 

• Adele Shraiman, Senior Campaign Strategist, Sierra Club’s Fossil-Free Finance Campaign, adele.shraiman@sierraclub.org (cc ginny.cleaveland@sierraclub.org)
• Anne Perrault, Finance Policy Counsel, Public Citizen’s Climate Program, aperrault@publiccitizen.org