Many Banks Committing to Climate Goals Are Engaging in Greenwashing
JPMorgan Chase tops list of world’s biggest funders of the climate crisis
Bank of the West, a wholly owned US subsidiary of the international firm BNP Paribas, celebrates itself as one of the major financial institutions that has embraced an environmental-values approach to managing money. Its “What on Earth” slogan, “climate-conscious checking account,” and “1% for the planet” credit card—championed in advertisements and on local NPR sponsorship spots—are part of a publicity campaign that promotes “the strongest environmental stance of any major US bank.” On its website, BNP Paribas declares, “We are the bank for a changing world.”
The reality, according to the newly released Banking on Climate Chaos report, is complicated.
Between 2016 and 2020, “the bank for a changing world” boosted financing of planet-destroying fossil fuel projects by a whopping 142 percent, according to the report—making it the number one funder of offshore oil and gas projects. Between 2019 and 2020, BNP Paribas actually increased its lending to fossil fuel companies by 41 percent. This past January, it joined two other major European banks, Credit Suisse and ING, in committing to stop financing the trade of Amazon oil, and has made a number of other similarly positive commitments on not financing tar sands, Arctic oil and gas, coal mining, and more. But BNP Paribas' connection to oil majors like BP, Eni, Shell, and Total continue to drive a disconnect between those policies and its overall financing.
After the original publication of this story, Bank of the West sent a statement to Sierra from Ben Stuart, Head of Growth and Transformation, about the bank's record: "Bank of the West has the strongest restrictive financing policies of any major U.S. bank. The communication we have done has been about building awareness on the topic of sustainable finance and educating the public about the importance of this issue. Bank of the West has less than 1% fossil fuel exposure in its entire portfolio. We will continue to be transparent about what we do and do not finance and work diligently to address the urgent role finance plays in climate change."
For other major banks in the United States and around the world, such as JPMorgan Chase, Wells Fargo, and Bank of America, the record on fossil fuel support could not be more clear. In the five years since the Paris Agreement was adopted, the world’s 60 largest commercial and private investment banks directed nearly $4 trillion in financing to the fossil fuel industry—a damning record that is dramatically at odds with the public stance many of those same banks trumpet in glossy green messaging.
Over that same period, while some financial institutions were embracing the long-term Paris climate goal to draw down fossil fuel emissions to net zero by 2050, these institutions increased their lending and underwriting for the very projects that produce those emissions: coal, oil, and fracked gas among them.
“Seventeen of the 60 banks have recently pledged to achieve ‘net zero’ financed emissions. But our analysis shows that for many of the world’s worst funders of fossil fuels, these plans so far are dangerously weak, half-baked, or vague,” according to the report, which was published by Rainforest Action Network in collaboration with BankTrack, the Indigenous Environmental Network, and the Sierra Club.
That trend even continued during the coronavirus pandemic. While financial support for fossil fuel projects dropped by 9 percent overall last year, in large part due to a drop in global demand for fossil fuels, it was still higher than in 2016.
Since the first edition was released in 2012, the annual Banking on Climate Chaos report (formerly known as Banking on Climate Change) has delivered one of the most comprehensive analyses on fossil fuel financing worldwide. The report examines how banks around the world lend and underwrite oil and fracked gas, coal mining, coal power, liquefied natural gas (LNG), and other fossil fuel projects.
“Banks are admitting that fossil fuel companies are major climate emitters, but they are taking no immediate steps to phase out the financing of fossil fuels across the board,” Ginger Cassady, the executive director of Rainforest Action Network, told Sierra. “Many of those banks are making 2050 commitments to align with the Paris Agreement when they need to act now on fossil fuels. Any bank that makes a ‘net zero by 2050’ policy commitment and then treats it as a license to continue with business as usual is guilty of greenwashing.”
JPMorgan Chase once again tops the list as the world’s top fossil-fuel-supporting bank by a wide margin, an ignominious honor it has held for five years in a row. The institution funneled $51.3 billion into fossil fuel projects in 2020 alone and, overall, provided nearly $317 billion in lending and underwriting for similar ventures between 2016 and 2020. That’s 33 percent more than the second-worst offender, Citibank. JPMorgan’s overall fossil fuel financing did fall by 20 percent in 2020, a reflection of a change in course, and it has recently committed to align its financing obligations with the goals of the Paris Agreement and reduce exposure to such projects as drilling in the Arctic National Wildlife Refuge.
But JPMorgan and other major banks have a long way to go, according to Ben Cushing, campaign manager for financial advocacy at the Sierra Club.
“If JPMorgan Chase is going to have any chance of making good on its promises to align its financing with the goals of the Paris Agreement, it needs to adopt immediate steps in 2021 to slash its financing of fossil fuels,” he said. “At the exact moment that we should be managing a steady decline of the fossil fuel industry in a way that upholds justice and equity, fossil fuel companies are expanding reserves and production and taking us in the wrong direction. Private banks are playing a critical role in financing that expansion.”
The top four worst offending banks are all headquartered in the United States. In addition to JPMorgan Chase and Citibank, the next worst banks are Wells Fargo and Bank of America. The report found that Citibank is the biggest funder of 100 key companies with the most ambitious fossil fuel expansion plans, such as ExxonMobil and the pipeline company Enbridge. Wells Fargo is the world’s biggest funder of the fracked gas industry, supporting companies like Pioneer Natural Resources and Diamondback Energy. Bank of America had the highest amount of LNG financing in 2020.
To the north, RBC remains Canada’s worst-offending bank. It is the top funder of tar sands oil extraction and continues to support corporations such as Suncor and Enbridge, which is fighting to expand its Line 3 tar sands pipeline over the objections of Ojibwe water protectors and environmental groups.
In Europe, Barclay’s is the worst financier of fossil fuels, and Bank of China is the worst in China, according to the report.
“Even the best overall climate impact commitments are not a substitute for explicit commitments on fossil fuels,” Cassady said. “These commitments should be met with great skepticism unless they are accompanied by clear action in 2021 on coal, oil, gas, as well as deforestation, and respecting Indigenous and human rights more broadly.”
The report provides a series of case studies that illustrate the short-term and long-term consequences of financing for fossil fuel projects—and how Native and environmental advocacy campaigns against those projects are having positive results.
In the case of the Line 3 tar sands pipeline, a number of major banks that have professed sustainability and long-term climate commitments still continue to finance Enbridge, which is building the pipeline. For banks committing to net zero by 2050, Line 3 is a living contradiction. Enbridge is trying to complete Line 3 in 2021. If the company succeeds, according to its own regulatory filings, company officials expect the pipeline to be operational for at least 30 years. That means that until 2050—the target year set by the Paris accords for drawing down climate emissions—the pipeline would bring nearly a million barrels of tar sands oil into the United States per day, produce greenhouse gas emissions for the next three decades, and impact local Indigenous communities along the pipeline route. It’s a lucid example of how a bank’s near-term financial activities can completely contradict its long-term climate commitments.
Other case studies show how grassroots advocacy targeting the fossil fuel lenders is working. For example, as the Trump administration tried to accelerate leasing and development of oil and gas in the Arctic National Wildlife Refuge, there was sustained opposition from the Gwich’in Nation and environmental activists to demand that the world’s largest banks and investors not support Arctic drilling. In response to that advocacy, all six of the largest US banks adopted policies to rule out financing for Arctic drilling projects, and approximately 30 banks worldwide adopted some form of restriction on the financing of Arctic drilling.
Just days before Trump left office, the Interior Department held a lease sale for drilling rights in the refuge, and it was a flop: Less than half the tracts offered were sold, and only two small private oil companies stepped in to buy one lease each.
Banking on Climate Chaos is a potent reminder that you have to pop the hood at your financial institution to find out whether its lending practices are truly climate-conscious. From there, according to Cushing, consumers can do their part in a variety of ways, whether that’s leaving a bank altogether or pressuring it to do better.
“People can use this report as a tool for holding their own banks accountable,” he said. “You don’t necessarily have to leave your bank in order to hold them accountable and try to make an impact. While that is one step that people can and should take if they feel they want to move to a different bank, we also need customers and investors to be speaking really loudly and demanding change, and of course, if needed, threatening to leave and take their business elsewhere if that change doesn’t happen.”
This article has been updated since publication.