Rating Banks on their Climate Change Effect

Banking on Climate Change

FOSSIL FUEL FINANCE REPORT CARD 2018

 

EXECUTIVE SUMMARY

Banking on Climate Change 2018

This ninth annual fossil fuel finance report card grades banks on their policy commitments regarding extreme fossil fuel financing and calculates their financing for these fuels from2015 to 2017. The report also assesses the shortcomings of the Equator Principles for ensuring banks respect human rights, and Indigenous rights in particular. The report assesses 36 private banks from Australia, Canada, China, Europe, Japan, and the United States, with policies from additional banks in these countries and Singapore included for comparison. As in previous editions of the report card, extreme fossil fuels refer to extreme oil (tar sands, Arctic, and ultra-deepwater oil), liquefied natural gas (LNG) export, coal mining, and coal power. The report card calculates how much banks have financed the top 30 companies in each of these subsectors (in addition to six tar sands pipeline companies) over the past three years. Lending and underwriting amounts are weighted based on the fossil fuel company’s activities in a given subsector.

It is environmentally, reputationally, and often financially risky for banks to back these fossil fuel projects and companies. More and more, the public is tying the impacts of fossil fuels to the financial institutions backing the sector. The authoring organizations of this report — BankTrack, Honor the Earth, Indigenous Environmental Network, Oil Change International, Rainforest Action Network, and the Sierra Club — demand that banks end financing for extreme fossil fuels, and all expansion of the fossil fuel industry, while ensuring that their financing does not contribute to human rights abuses.

Findings

Financing for extreme fossil fuels overall went from $126 billion in 2015, to $104 billion in 2016, then up to $115 billion in 2017. 2016, the first year after the adoption of the Paris  Climate Agreement, was a year of progress. 2017 was a year of backsliding.

». The single biggest driver of the overall increase in extreme fossil fuel financing came from the tar sands sector, where financing grew by 111 percent from 2016 to 2017. Tar sands financing totaled $98 billion and was led by RBC, TD, and JPMorgan Chase.

». Banks financed Arctic oil with $5 billion from 2015 to 2017, led by BNP Paribas, Deutsche Bank, and CIBC. Financing was cut nearly in half over the three years.

». Financing for ultra-deepwater oil totaled $52 billion, led by JPMorgan Chase, HSBC, and Bank of America.

». Banks financed $45 billion for LNG activities of companies involved with enormous LNG export terminals in North America, though the financing is on a hopeful downward trend. Morgan Stanley, Société Générale, and MUFG are the top bankers of this false solution to the climate crisis.

». After dropping post-Paris Agreement, coal mining financing has leveled off globally. But outside of China, coal mining financing more than doubled over the past year. Of the $52 billion poured into coal mining over the past three years, China Construction Bank and Bank of China are at the top of the league table, with Goldman Sachs and Deutsche Bank as the biggest Western bankers of coal mining.

». Globally, coal power financing has stagnated over the past three years, though it remains one of the more highly funded sectors at $94 billion from 2015 to 2017. ICBC, China Construction Bank, and the other Chinese banks are the biggest backers of coal power, followed by MUFG and JPMorgan Chase.

The policy assessment shows that no bank has yet truly aligned its business plan with the Paris Climate Agreement, whose temperature goals require banks to cease financing expansion of the fossil fuel sector.1 Banks also must end their support for extreme fossil fuels. French bank BNP Paribas has the best grades on average, with restrictions for not just coal financing, but for some parts of oil and gas as well. The lack of comprehensive policies from all banks on extreme fossil fuels means that last year’s increase in financing could continue and even accelerate in the years to come.

Click here for the complete 86 page report.

 

 

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