The Fossil Fuel Finance Report 2022 has been released, and the figures are astounding.
In the 6 years since the adoption of the Paris Agreement, the world’s 60 largest private sector banks financed fossil fuels with $4.6 trillion.Fossil Fuel Finance Report 2022
Despite many banks marketing that they offer ‘ethical’ investments and have a ‘commitment to climate action’, 26 banks increased their financing of fossil fuels in 2021, with big names like Wells Fargo and RBC adding USD ~$20 billion each since 2020. But what’s the big deal? Why do we care about fossil fuels? Obtaining, transporting, and using fossil fuels is extremely carbon-intensive and detrimental to the Earth’s stability. The IPCC has stated that emissions from fossil fuels are the dominant cause of global warming – in 2018, 89% of global CO2 emissions came from the fossil fuel industry. Fossil fuel emissions need to be halved in the next decade if global warming is to be managed, and the Paris Agreement signified a commitment to carbon emission reduction. However, recent research shows that globally, we are actually set to produce more than double that quota by 2030. It’s time to call out the fossil fuel funders. It’s time to hold them accountable.
Who are the Dirty Dozen?
The Dirty Dozen refers to the top 12 banks funding fossil fuels. The Fossil Fuel Finance Report 2022 shows each private bank’s amount spent on fossil fuels from 2016 to 2021 in billions USD. They are as follows:
The top 4 fossil fuel funders are all American banks. In comparison, the largest European funder, Barclays, ranks in 7th place with $167 billion – approximately $70 billion less than the next ranking American bank and about half the highest-ranking American bank. JPMorgan Chase has been the world’s highest funder of fossil fuels since the Paris Agreement and continues to stand far ahead in 1st place. Not only are they the biggest supporter of fossil fuel industries globally, but they lead by 34% – that is just shy of $80 billion more than the next rank, Citi Bank. All bar 2 banks of the Dirty Dozen are considered Western, and all are part of the Global North. What does this tell us about the power certain nations hold over the climate crisis and, therefore, climate solutions? Well, the power is imbalanced – it’s held by the wealthy and privileged, the historically high emitters, and by those who are best positioned to transition to a green economy. So, if these nations hold power, what does that mean for the people that live there? Dig a little deeper, and you can see that the power lies with the people. More on this later…
2021 A Year of Hypocrisy
In 2021 we saw companies pledging their commitment to “net-zero by 2050”, but at the same time, banks were also pledging their alliance to the fossil fuels industry. JPMorgan is a classic example – in recent weeks, they released their 2021 ESG Report, claiming to have “financed and facilitated $285 billion towards sustainable development including $100 billion to support climate action”. But not all is what meets the eye. Much like the rest of the Dirty Dozen, JPMorgan greenwash their sustainable achievements and hide their massive involvement in financing fossil fuels. In 2021 JPMorgan Chase funded ~$62 billion into the fossil fuel industry, a $10 billion increase since 2020. To some degree, their investments in “sustainable” things are futile when they also actively fund the problem, causing the need for climate solutions! Citi Bank is another big offender of greenwashing their achievements. Their ESG report says the bank more than doubled its efforts in sustainable finance activity, but this barely sizes up to their 2nd place ranking on the Dirty Dozen. In 2021 their investments did decrease by ~$7 billion, but in comparison to their $41.351 billion vote for the fossil fuel industry, it is clear where their priorities lie.
The difficulty is that these big corporations rely on the financial illiteracy of the average person and the misinformation spread to employees.
It is not our fault, nor the fault of the employees at these institutions, that we often are misled and convinced by sustainability reports and corporate commitments when you appreciate how much money goes into marketing these faux achievements. The problem is not just banks but fossil fuel companies as well. In 2019, BP spent millions on an advertising campaign about its low-carbon energy, when over 96% of their annual expenditure was spent on fossil fuels. To read more about the anti-greenwashing campaign for fossil fuel advertisements, check out ClientEarth. Big corporations and banks are letting us down, but the power remains in our hands. This is the new age of financial activism, and it’s time to mobilize.
What can we do?
So, what can we do? The average person does not have millions of dollars to shift out of fossil fuels and into sustainable investments, but that doesn’t mean to say we have no power at all. There is a real force in many people committing to voting with the dollars they can. Often that can have the same (if not more significant) impact as one person doing one big thing. You’re going to need some tools from your financial activist belt and refresh your memory see our full post on this 10 Tools for Financial Activism. To tackle fossil fuel funding, we recommend focusing on the following:
- Financial literacy: read the Fossil Fuel Finance Report and spot the section on 2021: a year of hypocrisy. We believe that with knowledge comes power, take agency over your finances and understand your place in the wider economy. This will help break the gatekeeping of impact investing and financial autonomy by the rich and make voting with your dollars accessible.
- Boycott: this can look like boycott campaigns like People & Planet’s Barclays Boycott across the UK, or it can be high profile employer boycotts like our very own Alejandro. He has boycotted his employer and quit the largest funder of fossil fuels to found FLIT Invest, an automated impact investment app bringing the platform for change to the people.
- Divest: opt-out of the fossil fuel industry where you can. Check your investments, check your bank accounts, and check your pension. Where is your money going? Check your universities to consider where you are indirectly a part of the fossil fuel industry. Are they investing in fossil fuels with your tuition money? Maybe there’s a divestment campaign you can get involved in.
- Ethical banking: check the status of your bank account. Even if you don’t have an investment account, banks operate by loaning out the deposits you have with them. If you’ve got an account with JPMorgan Chase, then with their current records, you are financing the climate crisis. Take action now and place your money with institutions that care about social, ecological, and humanitarian impact and show it.
Use your financial activism tools and start putting pressure in the right places. We can be conscious consumers, but banks need to do their part. It’s time to tip the power balance back onto our court – why should big corporations and banks decide the state of our future? Join the financial activist movement in this Decade of Action and sign up to our waitlist to start making a difference today. Invest today for a better future.