Posted Jan 17, 2023, 9:51 AM
The account is still not there. The largest financial institutions that have joined coalitions aimed at achieving carbon neutrality and compliance with the Paris Agreement continue to finance companies that launch new oil and gas projects, denounce nine NGOs in a study published on Tuesday.
About 550 companies, weighing $150 trillion in assets, or 40% of the global total, are members of the Glasgow Financial Alliance for Net Zero (Gfanz). It is itself divided into seven sectoral alliances bringing together, for example, banks, insurers or asset managers.
“Business as usual” for the majority of banks
“Between the date each bank joined the alliance and August 2022, the 56 largest members of the Banking Alliance for Carbon Neutrality [le NZBA est membre du Gfanz, NDLR] brought in loans and issues of bonds or shares 269 billion dollars to 102 major fossil energy developers”, underlines in their study the NGOs Reclaim Finance, 350.org, BankTrack, Rainforest Action Network, Recommon, Urgewald, Friends of the Earth, Sierra Club and Stand Earth.
“It’s ‘business as usual’ for the majority of banks and investors who continue to support booming fossil fuel companies without restriction, despite their high-profile commitments to carbon neutrality,” annoys, in a press release, Lucie Pinson, founder and director of Reclaim Finance. For her, this “greenwashing is all the more damaging as it casts doubt on the sincerity of all net zero commitments and undermines the efforts of those who really act for the climate”.
Citigroup and Bank of America bad students
In the lead is the American group Citigroup, with $30.5 billion in funding since August 2022, followed by Bank of America ($22.8 billion) and Japan’s MUFG ($22.7 billion). French banks BNP Paribas, Société Générale and Crédit Agricole come in 15th, 16th and 17th respectively, with $6 billion to $7 billion in funding. On the asset manager side, 58 of the alliance’s largest members held at least $847 billion in stocks and bonds in 201 fossil fuel developers, the study found.
The problem is that “there is now an agreement [sur le fait qu’il] there is no place in a +1.5 degree scenario [d’ici à 2100 comparé à la période préindustrielle, NDLR] for new supplies of fossil fuels,” explained Paddy McCully, author of the study and analyst for Reclaim Finance, during a presentation to the press.
Regularly singled out for their support for the oil and gas sector, financial players often claim that their financing contributes to the energy transition of this sector, and that they finance the world as it is. Financial institutions thus find themselves caught in a vice between the old world and the new.
The new trend of “greenhushing”
For the most ambitious, who have decided to make sustainable finance a competitive advantage, this is almost good news. For the most hesitant, it starts to get complicated. So much so that, according to a study by South Pole, a specialized consulting firm, more and more companies are now doing “greenhushing”, which consists of keeping their green commitments silent for fear of being accused of “greenwashing”. For those who are pinched, like Deutsche Bank, they suffer the first backlash.
In France, the French Banking Federation (FBF) estimated in October that loans to fossil fuels represented only 25 billion euros, or 0.27% of the total balance sheet of banks. Conversely, the funding of renewable energies and green and sustainable activities increased to more than 100 billion euros at the end of 2021. But these figures are only estimates and in the eyes of NGOs, they remain insufficient.