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Extinction Rebellion protesters staged a protest against JP Morgan Chase, New York City, September 17, 2021.Karla Ann Cote/NurPhoto via ZUMA Press
This story was first published by Grist and is reproduced here as part of the Climate Desk collaboration.
A flurryAccording to a report, climate promises made by financial institutions in recent years have not been met with meaningful action. Report from InfluenceMap, a corporate accountability nonprofit published on Friday.
None of the top 30 financial institutions in the world has implemented fossil fuel finance policies that align with science-based guidance for stabilizing climate at safe temperatures. All of them are members of industry associations that regularly lobby against climate finance regulations and policies.
“It remains likely that the financial sector will continue to enable real-economy activities misaligned with 1.5°C climate scenarios as long as they remain legally and economically viable in the short term,” the report says.
The report’s authors compiled data on corporate lending and equity and bond underwriting as well as asset management activities at the 30 largest financial institutions between 2020 and 2021. (For banks, underwriting refers to arranging sales of stocks or bonds for companies. They then analyzed whether these activities aligned with the banks’ own climate commitments, as well as industry-recognized, science-based benchmarks. In those two years, $697 billion was lent or underwritten by banks for oil and gas production. $42 billion was for coal production. J.P. Morgan, with $81 billion, was the largest financier.
About 20 percent of the money went to oil giants ExxonMobil, Chevron, Shell, TotalEnergies, and BP—all of which plan to continue exploring for new reserves. The International Energy Agency, an international research organization that advises countries on energy policy, concluded that the development of new oil and gas fields was a major challenge. Incompatible with achieving global net-zero emissions by 2050.
The InfluenceMap report found that around 5 percent of assets under the management of these financial groups (or $222 billion) are in fossil fuel production. This report builds on previous research that showed that fossil fuel production accounts for about 5 percent of assets under management by these financial groups. Recent years have seen major banks pour trillions of US dollars into fossil fuels..
Currently, there’s no easy way to assess the extent to which banks’ portfolios align with climate targets. Every financial institution uses Different criteria can be used to identify their targets and different methodologies to report their progress toward those targets. Sometimes, banks may use different methods to report on the progress of each sector they finance.
InfluenceMap used 2 methods to cut through the chaos. It evaluated whether financial institutions’ governance, strategies, risk management, and targets were in line with guidelines from the Task Force for Financial Disclosures, an organization formed to develop a consistent disclosure system for the industry. It also used a well-known method called PACTA to evaluate financial disclosures and generate scores for how well each bank’s financing activities align with the Paris Agreement. Every bank assessed received negative scores indicating misalignment with the treaty’s aim of limiting warming to well below 2 degrees Celsius.
One possible explanation for the disconnect between pledges and action is that most banks’ pledges are still relatively new, and the industry is still figuring out what aligning their portfolios with climate goals actually entails. While 29 of the 30 firms have pledged to align their investment and lending portfolios to a transition to zero-economy by 2050 (of which 29 were involved), many of those pledges were not made until recently. As recently as November 2021, during the United Nations climate summit at Glasgow.
Eden Coates, who is the lead author and senior analyst at InfluenceMap told the truth. GristMany of these financial institutions, including J.P. Morgan and Barclays, announced net zero ambitions for 2020. Others, Like French bank BNP ParibasThey pledged to align their portfolios and the Paris Agreement years before. “And yet their fossil fuel policies remain misaligned with their climate goals in 2022,” Coates said. For example, last May, J.P. Morgan has set 2030 emission reduction targets for certain sectorsThese include power and auto manufacturing. Despite a goal of reducing the carbon intensity of its finance for the power industry by 69 percent the bank more than doubled its financing coal production between 2020-2021.
“If they are serious about net zero, you’d also expect them to lobby in favor of sustainable finance policies designed to help the sector make that transition,” said Coates. “And yet, these institutions continue to be members of industry groups which have a long history of blocking climate action.”
The authors analyzed the industry’s record on policy engagement, and while few financial institutions appeared to be engaging directly with climate finance policy, all 30 had links to industry associations that have lobbied to weaken sustainable finance regulation. Half of them are also members in good standing of groups like Chamber of Commerce lobbyists against federal climate policy in the U.S. Recently, the Chamber helped to stop the Build Back better Act, which would have put $550 billion into clean-energy over the next ten decades.
The Chamber also raised concerns about one of President Joe Biden’s nominees to the Federal Reserve BoardSarah Bloom Raskin, who wanted climate disclosure rules to be improved. Raskin eventually withdrew when these attacks led Senator Joe Manchin, the swing vote in the Senate, to announce that he would not vote for her.
“Policymakers around the world are working on various options for making it easier for investors and regulators to know how companies and financial institutions are performing when it comes to climate,” said Rebecca Vaughan, a co-author of the report. But she said that many banks “are still resisting the push towards sustainable finance policies in the US and Europe, particularly via industry associations.”
