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Financial institutions are funding climate destruction

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Extinction Rebellion targeted banks last week as part of a campaign against their funding for fossil fuels. Sam Ord looks at global banks’ climate failures
Issue 2750
At an Extinction Rebellion protest
At an Extinction Rebellion protest (Pic: Neil Terry)

Global banks’ promises of turning green are overshadowed by their £2.77 trillion financing of the fossil fuel industry since 2016.

The world’s biggest 60 banks have provided £2.8 trillion of financing for fossil fuel companies since the Paris climate deal in 2016.

Banks’ funding of fossil fuel ­companies still rose 10 percent last year, despite a dip of 9 percent in overall financing since the Covid-19 pandemic began.

Big banks are attracted to the profits fossil fuels create, especially because essential services like food and transport rely on a constant supply of nonreusable fuel.

The Rainforest Action Network found that banking company BNP Paribas increased funding to fossil fuel companies by 41 percent last year.

It currently invests £29.8 billion in fossil fuels despite signing the United Nations (UN) Collective Commitment to Climate Action that requires signatories to take decisive action ­immediately after signing.

Fossil fuel companies rely on loans from banks to fund their projects.

“Banks provide the financial oxygen that allows the fossil fuel industry to breathe,” said Mark Campanale at thinktank Carbon Tracker

To win investment they must prove they have fuel reserves to extract. This leads to exploitative technologies being advanced.

Some banks have policies that block finance for coal, the dirtiest fossil fuel.

But almost two-thirds of funding is for oil and gas companies.

These technologies include ­fracking—drilling into the earth to shoot high-pressure water at rock to release gas—and research into Arctic oil and gas reservoirs.

And it includes tar sands, one of the most carbon-intensive fuels. Producing it releases three times as much greenhouse gas pollution as crude oil does.

These methods have resulted in global temperatures rising by one degree since pre-industrial levels.

We urgently need a green transformation of our energy sector that goes further than divestment and nationalisation.

One bank’s divestment would just open a space for another financier to take their space and continue ­profiting from exploiting the planet.

Richard Brooks, director of NGO Stand, described banks’ claims to combat the climate crisis as like “gorging on doughnuts and then eating an apple afterwards.

“We certainly can’t rely on banks or the private sector to lead us into ­climate safety and lead us toward emissions reductions.”

Genuinely tackling the climate crisis would mean writing off billions of pounds of banks’ investments in future fossil fuel projects.

Action to halt climate crisis is ­inextricably linked to the fight against the financial institutions that profit from the fossil fuel economy.

Capitalism—a system rigged for oil
Capitalism—a system rigged for oil
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‘Someone must raise alarm’

Barclays is the largest financier of fossil fuels in Europe despite its pledge to become net zero or carbon neutral by 2050.

In 2020 the bank invested £20 billion in fossil fuels, taking its total investment since 2016 to £105 billion.

Barclays funded the Trans Mountain pipeline, which carries oil across indigenous land in Canada.

Extinction Rebellion has targeted the bank.

A group of seven activists smashed Barclays headquarters’ windows in Canary Wharf, London last week.

Their actions are part of the “Money Rebellion” that seeks to confront the current priorities of this economic system.

Sophie Cowen, a campaigner from London, said, “You may dislike our action today but I ask you to compare a crack in a window to funding wildfires and flooded homes.

“We took action today because someone needs to raise the alarm, because broken windows are better than broken futures.”

Poor suffer as rich profit

Banks are complicit in spoiling of the environment on indigenous lands in the US. The bank JPMorgan Chase is the largest financier of fossil fuels globally.

It poured out finance of £37 billion last year, taking its total funding to £231 billion since 2016.

These investments fuelled the Dakota Access Pipeline construction, which threatens indigenous groups’ sacred sites and water supplies.

Protests led by the Standing Rock Sioux tribe who sought to halt construction were met with police brutality. But banks kept investing.

And JPMorgan Chase isn’t unique. Banks’ fossil fuel monopolies are measures often described as “environmental colonisation” in the pursuit of profit.

People in the global South have been facing environmental disaster for years. And it’s always the poor who are hit the hardest by environmental disaster.

The environmental and ecological breakdown is leading to the displacement of hundreds of millions of people.

Bankers back the polluters

Around 77 percent of board members at seven major US banks have ties to organisations destroying the climate.

This includes climate denying lobbyists and fossil fuel companies, despite US banks agreeing to help fight the climate crisis.

All ten directors for the biggest fossil fuel financier, JPMorgan Chase, are tied to firms contributing to the climate crisis.

Investigative environmentalist platform DeSmog analysed directors at Britian’s biggest banks, including Barclays, HSBC, Lloyds, Standard Chartered and Natwest.

It concluded that almost one-quarter of the directors have a current or past connection to the fossil fuel industry.

Funds for a dirty project

The Cerrejon coal mine is the largest in Latin America.

Its expansion over the last five decades has led to the destruction of whole villages populated by local indigenous and Afro-Colombian people.

The diversion of water to the mine has combined with a ten-year drought in the region. The combination is said to have left 37,000 indigenous children malnourished and caused at least 5,000 deaths from starvation. Some estimates put the toll at 14,000.

In 2013 Barclays, HSBC, Lloyds Banking Group and NatWest Group provided loans totalling over £8 billion for the mine. Banks have continued to finance its owners— Anglo American, BHP Group and Glencore.

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