Banks ramp up fossil fuel funding in defiance of net zero pledges
The world’s largest banks have significantly increased their support for the fossil fuel industry, despite pledging to align their financing practices with the Paris Agreement
Two-thirds of the 45 biggest banks globally increased their financing of the fossil fuel industry between 2023 and 2024, despite many having signed up to net zero pledges, new research finds.
In total, the 65 largest banks worldwide committed $869bn to fossil fuel firms, of which $429bn was directed to the expansion of oil and gas operations, according to the latest Banking on Climate Chaos report. The report is produced jointly by a coalition of climate NGOs including Rainforest Action Network, Urgewald, Reclaim Finance, and Sierra Club.
The report highlights JPMorgan Chase as the worst offender among banks backing fossil fuel expansion, with its financing commitments rising from $17.1bn in 2022 to $19.3bn in 2023. Mizuho ranks second, lending $18.8bn to fossil fuel companies with expansion plans.
This continued backing for fossil fuels comes amid a wave of exits from the Net Zero Banking Alliance (NZBA), whose membership has halved over the past year with US, Japanese and Canadian Banks leaving the coalition.
In January, Bank of Montreal (BMO), National Bank of Canada, Toronto-Dominion Bank (TD), and the Canadian Imperial Bank of Commerce (CIBC) all announced their withdrawal from the coalition. Last month, RBC also scrapped its C$500bn climate finance target.
In response to these exits, the NZBA has scaled down its ambitions, instead of being Paris aligned, NZBA members are now only expected to to commit to keeping temperatures to “well-below 2º C.
Investors have raised concerns with lenders, most notably at RBC’s annual general meeting (AGM), but a resolution calling for a “Say on Climate” was rejected by more than 80% of shareholders.
Similarly, although New York City Retirement Systems successfully filed a resolution at Bank of America’s AGM asking the bank to disclose its energy supply ratio, the call for transparency was ultimately rejected by a majority of shareholders.
With banks showing little incentive to take climate concerns on board, climate networks stepping back from net zero targets, and investors struggling to make their voices heard, campaigners are now calling on policymakers to step in with tighter regulations on fossil fuel lending.
“The significant increase in fossil fuel finance by global banks in 2024 – especially the increase in fossil fuel expansion finance – demonstrates clearly that the banking sector will not voluntarily take the necessary steps to transition out of fossil fuel finance at the pace and scale needed for the world to reach the Paris Agreement goals. Therefore, it is vital for policymakers to put regulatory muscle behind their Paris Agreement commitments and hold financial institutions accountable,” the report concludes.
