Banks Are Driving the Climate Crisis | Opinion

Until banks take strong and swift action to curb fossil fuel investments, their public commitments on tackling climate change are at best empty promises and at worst intentional doublespeak.

Banks say they exclude projects in sensitive areas, yet fund companies like ConocoPhillips and use loopholes to support the Willow oil project in Alaska.

The International Energy Agency is clear about what must be done to avoid a catastrophic climate crisis—no new oil and gas fields should be developed. Yet, the Alaska Willow Project includes 200 oil wells, several new pipelines, and a central processing plant for oil extraction. In 2020, both Bank of America and Citigroup enacted policies to restrict financing of Arctic oil and gas. Since that time, together they supplied $1.6 billion in financing to ConocoPhillips, the company behind the Willow Project.

These policies do not restrict financing to companies exploiting the Arctic. They only exclude financing designated for specific projects in the Arctic. Companies only ask for project-specific financing in rare cases, overall, only 4 percent of fossil fuel financing is project-specific. This loophole, on average, allows $750 billion in financing to fossil fuel corporations every year. Without this company financing, projects like Willow would be incredibly difficult to fund.

A recent report puts this hypocrisy on full display. The money flowing out of the biggest banks, each of which claims to have policies restricting Arctic activities, is staggering. In 2021 and 2022 alone, Bank of America provided $232 million to the fossil fuel industry, Royal Bank of Canada gave $190 million, and JPMorgan Chase supplied $1.2 billion. These numbers are how much money each bank financed to arctic oil and gas drilling activities alone through this loophole.

Policy loopholes allow banks to underwrite environmental disasters while claiming otherwise. This is just as true for the Amazon as it is with the Arctic. While some banks have restriction policies to protect the Amazon, new data showed these same banks continue to fund fossil fuel companies operating in the Biome. This included BNP Paribas with $5.5 million invested, Société Générale with $7.2 million, and Intesa Sanpaolo with $5.5 million spent in 2022. The Amazon Biome is covered mainly by thick moist tropical forest, with small areas of vegetation like savannas, floodplain forests, grasslands, swamps, bamboos, and palm forests.

Corporate bonds are another way banks employ loopholes in their own policies to avoid taking meaningful climate action. Citibank publicly committed to reducing financed emissions across their portfolio, including from companies like Enbridge. At the same time, in 2022, Citibank underwrote $275 million worth of bonds to Enbridge because their commitment applies only to loans, not to bonds. This annual general meeting season, they face shareholder resolutions to honor the rights of Indigenous Peoples and to phase out financing for fossil fuels. Citibank's support of Enbridge demonstrates the need for these resolutions, as Indigenous leaders have been fighting Enbridge projects for decades, such as the Line 3 and Line 5 pipelines.

This is a common pattern of behavior. In 2022, 36 percent of all bank financing to fossil fuel companies was in the form of bonds.

Last year, banks dumped $673 billion dollars into major fossil fuel companies, even as those same oil giants earned $4 trillion in profits, the highest ever recorded. Since the Paris climate agreement went into effect in 2016, which the majority of the finance sector claims to support, banks have funneled $5.5 trillion dollars to fossil fuel companies. All the while banks run massive public relations campaigns claiming to be focused on their climate commitments.

The evidence is clear. We know where the money is going. Banks must do better for the environment and human rights. We still have a window of opportunity to avoid the worst impacts of climate catastrophe. But we must act now. That includes cutting off irresponsible investments. We must transition away from fossil fuels. But as long as banks keep placing profits before people, we will continue to head toward a climate emergency.

Ginger Cassady is executive director of Rainforest Action Network.

The views expressed in this article are the writer's own.