Nordic banks in the firing line over fossil fuel lending
The largest banks in the Nordics are continuing to finance the expansion of coal, oil, and gas production, despite their commitments to the Paris Agreement, new research finds
The nine largest Nordic banks have provided approximately $4.9bn in financing for the expansion of oil, gas, and coal operations, despite their public commitments to the Paris Agreement, according to a new report, Banking on thin ice by the Nordic Center for Sustainable Finance. They have also invested around $6bn in fossil fuel companies that plan to expand their production of oil, coal, and gas.
DNB, SEB, and Nordea account for 95% of the total loans granted to fossil fuel expanders, while DNB and Nordea together hold 60% of the fossil fuel investments among the nine banks, the research finds. Nordea alone has lent more than $400m to the coal industry, despite being a member of the Net-Zero Banking Alliance Steering Group.
Among the projects funded are oil exploration activities that threaten sensitive Arctic ecosystems and the expansion of a coal mine in the Czech Republic, which could lead to the emission of at least 60 million additional tonnes of CO₂e. Other projects include the controversial East African Crude Oil Pipeline (EACOP), which will reportedly force 100,000 people to leave their homes or farmland and destroy habitats for endangered species.
“The message from climate science is clear. There is no room for new coal, oil, and gas in a 1.5°C world. Banks should also require their remaining clients in the coal, oil, and gas sectors to immediately publish Paris-aligned fossil fuel phase-out plans and withdraw finance and investments from any company that fails to do so,” the report’s authors state.
NZBA exits
DNB, Norway's largest bank, and Swedish SEB are also members of the Net-Zero Banking Alliance (NZBA), which is facing persistent challenges due to banks withdrawing from the network. In January, six major US banks announced their departure from coalition, followed by some of Canada’s largest banks. Earlier this week, Japan’s second-largest bank, Sumitomo Mitsui Financial Group, also announced its exit.
While these departures were primarily driven by US regulatory pressures, heightened reporting expectations for NZBA members may have also played a role. To be part of the NZBA, banks must be accredited by the UN’s Race to Zero campaign, use science-based guidelines to achieve net-zero emissions, cover all emission scopes, set interim 2030 targets, and commit to transparent reporting and accounting standards.
However, amid growing backlash against climate targets, the Glasgow Financial Alliance for Net Zero (GFANZ), the umbrella body for UN-convened climate alliances that includes the NZBA, has now significantly revised its membership criteria, lowering the threshold for participation. This could make it even harder for investors to hold banks accountable for fossil fuel financing.
