Despite net-zero pledges, banks used $750 billion to finance fossil fuels in 2020

March 26, 2021 by  
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Despite net-zero pledges, banks used $750 billion to finance fossil fuels in 2020 Cecilia Keating Fri, 03/26/2021 – 00:05 Net-zero commitments may have ricocheted across banking sector over the last 18 months, but big banks’ attestations of climate concern did not stop many from expanding financing for the world’s top fossil fuel firms during the pandemic year. That is according to the latest edition of the Rainforest Action Network’s annual fossil fuel financing tracker, which reveals that while fossil fuel financing dropped by a record 9 percent during the pandemic-induced economic recession of 2020, the world’s top banks ramped up financing for the 100 largest fossil fuel expansion firms by 10 percent. The green groups behind the report have warned of an “alarming disconnect” between the global scientific consensus on climate change and the ongoing practices of the world’s leading banks. The analysis, ” Banking on Climate Chaos 2021 ,” underscores that while overall fossil fuel financing did tumble significantly in 2020, the total amount of financing provided to fossil fuel firms in 2020 was still more than $40 billion higher in 2020 than in 2016, at $750 billion. “Despite this significant drop from 2019 to 2020, the overall trend of the last five years is one heading definitively in the wrong direction,” the report states. Overall, the world’s leading banks have channelled $3.8 trillion to coal, oil and gas companies in the five years since the Paris Agreement was signed, it calculates. Lower levels of lending and debt underwriting to fossil fuel firms in 2020 were largely due to COVID-19 economic recession and not because banks are proactively distancing themselves from fossil fuels, according to the report. A separate score card ranking the banking sector’s climate policy commitments concludes that across the board, climate policies are “grossly insufficient” and out of alignment with global climate goals, with not a single bank surveyed racking up more than 94 points out of a total of 200. The overwhelming majority of fossil fuel financing goes unchecked by banks’ policies, it warns, given that climate pledges unveiled to date tend to focus on project-specific finance, which represents a mere 5 percent of all fossil fuel financing handed out by banks. Furthermore, the report underscores that more fossil fuel financing took place January through June than any six-month period since 2016, as large corporations around the world capitalized on low interest rates and central bank bond-buying programs to load up on cheap debt. This binge then was offset by record low financing in the second half of the year, it notes, leading to an overall fall of financing of 9 percent. Ginger Cassady, executive director of the Rainforest Action Network, one of the groups behind the analysis, said the banking sector faced a “stark choice” as it plotted its strategy for steering a global recovery from the coronavirus crisis. “The unprecedented COVID-19 dip in global financing for fossil fuels offers the world’s largest banks a stark choice point going forward,” she said. “They can decide to lock in the downward trajectory of support for the primary industry driving the climate crisis or they can recklessly snap back to business as usual as the economy recovers.” The report reveals that U.S. banks continue to be the largest drivers of global emissions, with JP Morgan Chase retaining its position as the world’s largest fossil fuel funder. U.K. bank Barclays is singled out as being the most prolific fossil fuel funder in Europe over the five-year period surveyed, with the analysis highlighting it increased fracking financing by 24 percent in 2020. Meanwhile, BNP Paribas shot up the scoreboard after increasing its financing to fossil fuel companies by 41 percent in 2020 to $41 billion, making it the fourth worst financer of fossil fuels in 2020. The analysis is the latest in a long line of reports led by the Rainforest Action Network which hammer home the banking sector’s deep ties with the fossil fuel industries fueling the climate emergency, but this year’s edition is somewhat more poignant. The past 12 months have been a calamitous period for the fossil fuel industry amid shrinking demand for oil and gas and depressed prices during the pandemic, and it is against this backdrop the banking sector finally has acknowledged the critical role it must play in ensuring that global temperature increases are capped at safe levels by ending its support of environmentally destructive sectors. “Net-zero financed emissions” pledges have swept the banking sector since January 2020, with the U.K.’s largest fossil fuel financiers —  Barclays and HSBC — and many of the largest U.S. investment banks — Goldman Sachs , Citi Group , Wells Fargo , Bank of America and Morgan Stanley — all vowing to align their lending and debt with global climate goals over the coming 30 years. And yet, even as these pledges were made, investment in fossil fuel infrastructure has continue to flow largely unimpeded. Beyond a welcome tightening of lending policies to coal and tar sand firms, many of the world’s largest financiers have failed to translate their net-zero pledges into a meaningful shift in their investment activities. Banks can decide to lock in the downward trajectory of support for the primary industry driving the climate crisis or they can recklessly snap back to business as usual as the economy recovers. As such, the green organizations behind the report have touted the latest findings as evidence of the “hollowness” of the wave of net-zero targets unveiled by the banking sector and have urged companies to match their 2050 goals with short term pledges to rapidly phase out financing for all fossil fuel infrastructure, including oil and gas projects. Policies are required to “lock in” the fossil fuel declines of 2020 and thus steer a managed decline of fossil fuel production over the coming decade, they warn. “Many of the world’s largest banks, including all six major U.S. banks, have made splashy commitments in recent months to zero-out the climate impact of their financing over the next 30 years,” said Ben Cushing, financial advocacy campaign manager at the Sierra Club. “But what matters most is what they are doing now, and the numbers don’t lie. This report separates words from actions, and the picture it paints is alarming: Major banks around the world, led by U.S. banks in particular, are fueling climate chaos by dumping trillions of dollars into the fossil fuels that are causing the crisis.” Lucie Pinson, founder and executive director of Reclaim Finance, said the numbers exposed “the hollowness of banks’ ever-multiplying commitments” to be net-zero or align with global climate targets. “BNP Paribas merits singling out as the world’s fourth-largest fossil financier in 2020, having funneled multi-billion-dollar loans to oil giants like BP and Total,” she said. “Nonetheless, it’s clear that all banks need to replace empty promises with meaningful policies enacting zero tolerance for fossil fuel developers.” The banking sector maintains that serious change is afoot, pointing to much more stringent lending policies for coal firms and the on-going development of new guidelines and policies that it is hoped will decarbonize their portfolios over the next three decades. They insist it will take time to shift investment practices in a way that delivers a managed transition for businesses and investors alike. Approached to comment on the report, spokespeople from Barclays and HSBC pointed to their respective 2050 net-zero commitments, despite the two banks being ranked the seventh and 13th largest most prolific fossil fuel lenders globally since 2016 by today’s report, having funneled $145 billion and $111 billion into coal, oil and gas, respectively. The banking sector maintains that serious change is afoot. “HSBC has announced it will propose a special resolution on climate change at its AGM in May which will set out the next phase of HSBC’s strategy to support its customers on the transition to net-zero carbon emissions,” the HSBC spokesperson said. “This includes to publish and implement a policy to phase out the financing of coal-fired power and thermal coal mining by 2030 in markets in the European Union and OECD, and by 2040 in other markets.” “We have made a commitment to align our entire financing portfolio to the goals of the Paris Agreement, with specific targets and transparent reporting, on the way to achieving our ambition to be a net-zero bank by 2050,” the Barclays spokesperson said. “We believe that Barclays can make a real contribution to tackling climate change and help accelerate the transition to a low-carbon economy.” JP Morgan Chase declined to comment on the findings, and BNP Paribas and CitiGroup did not respond for a request for comment at the time of going to press. While it is clear the banking sector has reached a turning point on sustainability over the last 12 to 18 months, today’s report provides compelling evidence that net-zero pledges need to be swiftly backed up by credible strategies that will quickly wind down bank’s exposure to fossil fuel assets and ramp up their support for clean infrastructure. Promises to establish climate-responsible investment portfolio in 30 years’ time are clearly meaningless if banks continue to channel hundreds of billions of dollars into the industries that are locking in several more decades of carbon intensive infrastructure. And yet, today’s report comes within hours of the U.K. government demonstrating how ministers are wrestling with precisely the same tensions , as they both talked up plans to slash emissions form the oil and gas industry and left the door open for new exploration in the North Sea. As the global economy rebounds from the pandemic, all eyes will be on whether major banks and governments finally can match their rhetoric on climate action with a managed decline of fossil fuel financing. Pull Quote Banks can decide to lock in the downward trajectory of support for the primary industry driving the climate crisis or they can recklessly snap back to business as usual as the economy recovers. The banking sector maintains that serious change is afoot. Topics Finance & Investing GreenFin Coal Decarbonization Business Green Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off Tar sands in Alberta, Canada. Flickr Dru Oja Jay, Dominio Close Authorship

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Despite net-zero pledges, banks used $750 billion to finance fossil fuels in 2020

New York state divests from fossil fuels in historic move

December 10, 2020 by  
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The retirement contributions of New York state workers will no longer be invested in fossil fuels. The state announced Wednesday that it is removing oil and gas stocks from its portfolio, making it the world’s largest pension fund to divest from the fossil fuel industry. The pension fund’s financial portfolio is worth $226 billion, and it disburses $1 billion to retirees every year. The new plan is to sell off the riskiest gas and oil stocks and be completely divested from fossil fuels by 2025. By 2040, the fund plans to completely axe carbon polluters. Related: BP to reduce oil, gas production by 40% to focus on clean energy “We continue to assess energy sector companies in our portfolio for their future ability to provide investment returns in light of the global consensus on climate change ,” said state Comptroller Thomas DiNapoli in a statement. “Those that fail to meet our minimum standards may be removed from our portfolio. Divestment is a last resort, but it is an investment tool we can apply to companies that consistently put our investment’s long-term value at risk.” First to go? Companies that produce ultra-dirty tar sands oil . Tar sands are a sticky mixture of sand, clay, water and bitumen that require an especially environmentally harmful process to extract. Saudi Arabia, Venezuela and Canada have the world’s largest reserves of tar sands. So Imperial Oil, Exxon Mobil Corp’s Canadian branch, is first on the chopping block. Then, the fund will review and probably eliminate frackers, such as Royal Dutch Shell and Exxon Mobil. Oilfield service companies, storage and pipeline builders are other top candidates. After that, fund managers will consider utility companies. Environmental activists have been pushing for divestment in fossil fuel companies for years. Ireland’s national government divested in 2018 and Norway’s in 2019. Oslo and New York City are planning to divest at the city government level. More than 1,200 universities, religious organizations, philanthropic foundations and other groups have also pledged to sell off their fossil fuel holdings. Via Huffington Post Image via Artem Sapegin

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New York state divests from fossil fuels in historic move

Investment analysts conclude that greener businesses rule

February 25, 2020 by  
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Investment returns on firms driving the transition to a green economy are easily outstripping those of their fossil fuel competitors, new analysis suggests.

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Investment analysts conclude that greener businesses rule

When it comes to messaging, it’s all about ESG

February 25, 2020 by  
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For the last two years, I’ve been scratching my head about something: Americans have made it very clear that they want to buy from good companies. And when you ask them what’s good and who’s good they give a range of answers that lump together “good for the planet” and “good to people.”

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When it comes to messaging, it’s all about ESG

Soil carbon is a valuable resource but not all soil carbon is created equal

February 25, 2020 by  
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There’s particulate organic matter, which is the stuff you generally can see. Mineral-associated organic matter, on the other hand, consists mostly of microscopic coatings on soil particles. They work differently.

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Soil carbon is a valuable resource but not all soil carbon is created equal

Inside Shell’s EV charging vision

July 10, 2019 by  
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This article is adapted from the newsletter Transport Weekly, running Tuesdays. Subscribe here.There was no better example of Shell’s difficult balancing act — between the fossil fuel engine that has driven its business for decades and its aims for a cleaner future — than an unexpected issue that arose at one of its recent events in the San Francisco Bay Area.  

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U.S. agriculture needs a 21st-century New Deal

July 10, 2019 by  
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How can we give power back to farmers — and out carbon back into the ground?

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U.S. agriculture needs a 21st-century New Deal

Market analysts find green economy market cap matches fossil fuel sector

June 12, 2018 by  
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A new report from FTSE Group finds that sustainable investments have grown as the fossil fuel sector has shrunk, presenting a massive opportunity.

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Market analysts find green economy market cap matches fossil fuel sector

Discovery of ancient middle finger bone completely upends what we know about human migration

April 9, 2018 by  
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Archaeologists have discovered an ancient middle finger bone in Saudia Arabia, and it could completely change what we know about human migration. An 85,000-year-old bone belonging to Homo sapiens marks the first evidence of humans that scientists have found in the Nefud Desert. This is also the first time Homo sapiens bones of that age have been discovered anywhere outside Africa. The current theory of human migration posits that Homo sapiens migrated en masse in a movement known as “Out of Africa” about 60,000 years ago in a single, contained wave. But this newly-discovered bone suggests that people migrated out of Africa in multiple different phases, at least 20,000 years earlier than we thought. Related: Incredible fossil discovery rewrites the history of human migration out of Africa Archaeologists unearthed the 1.25-inch middle finger bone in 2016, and researchers used a CT scan to form a 3D model of the entire bone, which showed conclusively that it belonged to Homo sapiens.  Nature  published news of the discovery this week. “What our discovery shows is that the early spread of Homo sapiens was much more spatially widespread than we thought,” said lead study author Huw Groucutt of the University of Oxford . Via CNN Images via Flickr  and Nature

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Discovery of ancient middle finger bone completely upends what we know about human migration

Trump administration prioritizes rural areas over cities in infrastructure spending

April 9, 2018 by  
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The Trump Administration has re-prioritized which kinds of communities, and what kinds of projects, receive funding from the popular $500 million transportation grant program known as TIGER (Transportation Investment Generating Economic Recovery). “More than 64 percent of this round of TIGER funding was awarded to rural projects, a historic number that demonstrates this Administration’s commitment to supporting the country’s rural communities,” the Transportation Department said when it announced the grant recipients in March. Democratic strongholds such as New York City , Chicago and Los Angeles received zero funding from these grants, while projects in blue states that were funded focused primarily on those states’ Trump-supporting regions. This means much more money for rural roads and rail projects, and less for bike infrastructure, green-ways, and sustainable urban design projects. The TIGER grant program was first established through the American Recovery and Reinvestment Act of 2009, also known as the stimulus package or economic recovery bill, under President Obama . While the discretionary funds are an important tool for the White House, they represent only a small percentage of the Department of Transportation’s distribution of $50 billion each year through the highway trust fund. After trying to eliminate the program twice, Trump recently signed a massive spending bill into law that tripled the program’s budget. Now, it seems, his administration has found a use for TIGER. Related: 69% of Republicans believe global warming’s seriousness is “generally exaggerated” Trump is not the first president to be accused of using the program to favor his political supporters. In 2013, at the start of President Obama’s second term, two-thirds of the TIGER infrastructure funding went to districts represented by Democrats in Congress. Much of this Obama-era funding went towards projects such as bike and pedestrian infrastructure while sometimes giving only the bare minimum required by law to rural areas. In addition to its shift towards rural communities, the Trump Administration, with its well-publicized focus on trade, is also prioritizing upgrades to port infrastructure in Alabama, Maryland and Louisiana. Via ABC News Images via Depositphotos   (1)

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Trump administration prioritizes rural areas over cities in infrastructure spending

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