Banks funnel hundreds of billions into fossil fuel industry: report

Over $700 billion in loans and underwriting flowed into companies conducting business in fossil fuels last year, funneled by 60 of the world’s largest private banks, according to a report released Monday by several environmental groups.

The annual report, put together by the Sierra Club and the Rainforest Action Network among others, shows a slight decline in banks’ financing for oil, gas and coal since 2021, but researchers say it is not dropping quickly enough.

Environmental activists have for decades sought to put pressure on the money that undergirds the fossil fuel industry, in hopes of galvanizing a transition to clean energy. Climate advocates have found some success in recent years as ESG (environmental, social and governance) principles have begun factoring into business strategies for many major financial institutions.

But Monday’s report highlights how global banks continue to finance new and existing fossil-fuel-related endeavors. Since 2016, when the Paris Agreement was ratified and nations around the world agreed to cap emissions, banks have financed fossil fuel interests with an estimated $7 trillion, according to the report.

The top financier of fossil fuels for three consecutive years: JPMorgan Chase, which the report said increased its commitments to fossil-fuel-related businesses from an estimated $38.7 billion in 2022 to $40.8 billion in 2023. 

“JPMorgan has made a number of moves to try to strengthen their climate commitments,” said April Merleaux, a research manager with the Rainforest Action Network and lead researcher on the report. “But the practices and policies that they’re implementing do not move fast enough to recognize the urgency of this moment. Very few banks are scaling down their financing for fossil fuels at the pace that it needs to scale down.”

Some banks took issue with the methodologies the researchers used to compile the report, expressing concerns about data accuracy and how transactions were categorized as related to fossil fuels. 

In a statement to NBC News, a spokesperson for JPMorgan Chase said that the company’s own data “reflects our activities more comprehensively than estimates by third parties” and emphasized its commitment to “zero-carbon power.”

Satyajit Bose, a professor in sustainability management at Columbia University who was not associated with the report, said the study’s methodology was reasonable overall, though he questioned a couple elements. For one, the authors indiscriminately counted sustainability-linked bonds — a type of green financing issued by banks to encourage sustainable business — as fossil-fuel-related if the company that received the bonds works in the fossil fuel industry.

Bose also expressed concerns about the report’s categorization of refinanced loans as repeated loans, which he said could be misleading because it ignored the loan terms.

Close behind JPMorgan Chase on the report’s list of the “dirty dozen” fossil fuel financiers was Tokyo-based Mizuho Financial Group, followed by Bank of America.

Mizuho has increased its fossil fuel financing over the last few years to over $37 billion in total, with a particular interest in methane gas, also known as natural gas. According to the report, the Japanese bank committed $10.9 billion to gas expansion projects in 2023. 

A broader increase in interest in methane gas amid the energy crisis in Europe — fueled by Russia’s invasion of Ukraine — might have been a contributing factor to the global financing of gas last year, Merleaux said. 

Mizuho declined to comment on the report. 

Bank of America, meanwhile, ranked third for its almost $34 billion in financial commitments to companies conducting business in fossil fuels. In a statement to NBC News, a spokesperson said Bank of America ranks high on energy financing volume, funneling loans and underwriting in equal ratio to low-carbon and fossil fuel energy companies. 

Advocacy groups are planning an active summer of protests on Wall Street to further pressure banks to stop financing fossil fuel interests. The “Summer of Heat,” organized by groups like Climate Defenders and Planet Over Profit, began in April with protesters targeting Citigroup for its financial activities. 

According to the new report, Citigroup has supplied fossil fuel interests with almost $400 billion since 2016, though its commitments in the area have declined since 2019.  

A Citigroup spokesperson said in a statement that the company is committed to transitioning to a low-carbon economy and that since 2020 it has put over $400 billion toward its goal to invest $1 trillion in sustainable finance by 2030. The group also aims to reach net-zero carbon emissions for its operations by 2030.

At an upcoming protest in June, Citigroup will continue to be a focus, climate action organizers said. 

“Citi is one of the biggest funders that we believe we can move,” Jonathan Westin, an organizer at Climate Defenders, said. “We’re trying to send a message to Wall Street banks that they need to get off of fossil fuels and they need to make real plans to exit financing pipelines, natural gas facilities and oil rigs across the globe.”