130 banks, including Deutsche Bank, Citigroup, and Barclays, adopt new UN-backed climate policies to shift their loan books away from fossil fuels.
Banks worth $47T adopt UN-backed responsible banking principles
Banks representing more than $47 trillion in assets and one-third of the global industry signed up to the United Nations’ Principles for Responsible Banking on Sunday. As part of the principles, 130 banks committed to align their business with the goals of the UN’s Paris Agreement on Climate Change, along with its Sustainable Development Goals. — However, one report reveals that 33 top global banks have provided $1.9 trillion to fossil fuel companies since the adoption of the Paris climate accord at the end of 2015, and the amount of financing has risen in each of the past two years.
130 banks worth $47T adopt UN-backed responsible banking principles
The UN’s launch of the initiative on the eve the UN Climate Action Summit in New York comes as more banks emphasise their commitments to socially responsible investing. — report BANKINGDIVE.
In July, Citigroup became the first major US bank to sign on to the initiative, with Citi CEO Mike Corbat saying the principles mirror the bank’s philosophy and approach "to developing sustainable solutions alongside our clients and setting clear and ambitious targets."
Other major global banks to commit to the initiative include Deutsche Bank, Barclays and BNP Paribas. However, the signatories include just three of the worlds 10 biggest banks, American Banker reported.
Simone Dettling, banking team lead for the Geneva-based United Nations Environment Finance Initiative, told Reuters the principles mean banks have to consider the impact their loans have on society and not just on their portfolios.
Dettling said banks can also be stripped of the signatory status if they fail to demonstrate they are making progress within a given timeline.
"Ultimately, banks that are not in line with their commitments and do not make progress can be stripped of their signatory status," she said.
During Sunday’s launch event, UN Secretary-General Antonio Guterres called on financial institutions to "invest in climate action and divest from fossil fuels and pollution in general."
While banks could feel the negative effects of dropping accounts for certain businesses that don’t align with the UN’s principles, there are reputational advantages to be gained by promoting lending to certain industries such as alternative energy, Pen Pendleton, a partner at CLP Strategies specialising in communications and media relations for the banking industry, told Banking Dive last month.
"I think you’re going to see many more banks positioning themselves as partners to environmental and sustainable commercial activities," he added.
33 global banks have poured $1.9 trillion into fossil fuel financing since Paris Agreement adopted
A report released by BankTrack, Rainforest Action Network, Indigenous Environmental Network, Oil Change International, Sierra Club and Honor the Earth, and endorsed by 163 organisations around the world, reveals that 33 global banks have provided $1.9 trillion to fossil fuel companies since the adoption of the Paris climate accord at the end of 2015. The amount of financing has risen in each of the past two years.
Of this $1.9 trillion total, $600 billion went to 100 companies that are most aggressively expanding fossil fuels. Alarmingly, these findings reveal that the business practices of the world’s major banks continue to be aligned with climate disaster and stand in sharp contrast to the recent IPCC special report on global warming. That report, Global Warming of 1.5 °C, clearly outlined the critical need for a rapid phase-out of fossil fuels and estimates that the world’s clean energy investment needs are $2.4 trillion per year up to 2035.
Banking on Climate Change 2019 is the tenth annual fossil fuel report card and the first ever analysis of funding from the world’s major private banks for the fossil fuel sector as a whole.
Banking on Climate Change 2019 reveals that the four biggest global bankers of fossil fuels are all U.S. banks —
- JPMorgan Chase
- Wells Fargo
- Bank of America.
Barclays of England, Mitsubishi UFJ Financial Group (MUFG) of Japan and RBC of Canada are also massive funders in this sector.
Notably, JPMorgan Chase is by far the worst banker of fossil fuels and fossil fuel expansion – and therefore the world’s worst banker of climate change.
Since the Paris Agreement, JPMorgan Chase has provided $196 billion in finance for fossil fuels, 10% of all fossil fuel finance from the 33 major global banks.
JPMorgan’s volume of finance for fossil fuels 2016-2018 is a shocking 29% higher than the second placed bank, Wells Fargo. The bank stands out even more from its peers in its volume of financing for the top companies expanding fossil fuel extraction and infrastructure: since the Paris climate agreement, JPMorgan Chase’s $67 billion in finance for the expanders is fully 68% higher than that of Citi, in distant second place.
With Morgan Stanley and Goldman Sachs in 11th and 12th places respectively in the fossil fuel financing league table, all of the big six US banking giants are in the top dirty dozen bankers of climate change.
- Together, US banks account for 37% of all global fossil fuel financing. Collectively, the US banks are the biggest source of funding for fossil fuel expansion since the Paris Agreement was adopted.
- Barclays, the top European banker of fracking and coal, leads as the worst European bank, with $85 billion poured into fossil fuels and $24 billion into expansion.
- Japan’s worst fossil fuel bank, MUFG, funded $80 billion in fossil fuels overall and $25 billion in fossil fuel expansion.
- RBC, the world’s top banker of tar sands, leads in Canada, banking fossil fuels at $101 billion.
- The world’s top banker of coal power, Bank of China, qualifies as China’s worst banker of fossil fuels, with $17 billion funnelled into expansion from 2016-2018.
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