Europe’s biggest banks ‘provided $33bn to oil and gas majors after making net-zero pledge’
Collectively, 24 of Europe's biggest banks provided $33bn of new financing to firms planning increased oil and gas production since the International Energy Agency (IEA) warned last year that all new fossil fuel expansion should be stopped.
That is according to a new report from ShareAction today (14 February). The report tracks how 25 of Europe’s banks have invested in fossil fuel firms with plans for expansions since 2016, and whether these investments come with conditions relating to environmental sustainability, such as the publication of transition plans.
Collectively, these banks have provided $400bn to such companies since 2016, the report concludes. HSBC provided the most finance during this period – $59bn – followed by Barclays ($48bn) and BNP Paribas ($46bn).
Back in 2016, net-zero was little more than a concept, the report acknowledges. But, since then, commitments from governments have grown to cover 90% of GDP, in the wake of the Intergovernmental Panel on Climate Change’s (IPCC) landmark report on the differences between a 1.5C and 2C temperature pathway. Building on that report, the IEA released its pathway to net-zero by 2050 last May, advising that new oil and gas expansion be halted immediately beyond what has already been committed.
With this in mind, ShareAction also looked at the finance provided by the banks since the industry-led and UN-convened Net Zero Banking Alliance launched in April 2021. 24 of the 25 banks are members of the Alliance.
Collectively, these banks provided $33bn to oil and gas firms with expansion plans since joining the Alliance, by ShareAction’s calculations. ShareAction has named HSBC, Barclays, BNP Paribas and Deutsche Bank as the worst offenders in this regard, collectively providing some $19bn of financing since April 2021. All four had, however, decreased financing year-on-year in 2021.
The Net Zero Banking Alliance requires all member businesses to set net-zero targets for financed emissions for 2050 or sooner, supported with science-based goals to reduce emissions through to 2030. It also requires the development of sector-specific decarbonisation pathways for high-emitting sectors including energy, within 36 months of members joining.
ShareAction is calling on the Alliance to set a requirement for members to end financing for fossil fuel expansion.
It is also calling on member banks to begin restricting finance to companies expanding oil and gas production of their own accord. Only three of the banks assessed – namely Commerzbank, Crédit Mutuel, and La Banque Postale – have already made this move, the report states. Banks should also, ShareAction is recommending, start asking for clients to provide climate transition plans. Its research found that only two of the banks assessed, NatWest and Danske Bank, have publicly confirmed they are doing this for oil and gas clients.
edie reached out to the 11 banks named as the worst in terms of oil and gas financing since 2016 in the report. Several of the banks argued that they would rather take an engagement-focused than divestment-led report and confirmed plans to draw up targets in line with the Net Zero Banking Alliance’s requirements and deadlines.
Others have confirmed that they are interpreting the IEA’s guidance as relating to fossil fuel expansion post-2021.
An HSBC spokesperson said: “We are committed to working with our customers to achieve a transition towards a thriving low-carbon economy. We published our thermal coal phase-out policy in December and will publish science-based targets to align financing for the oil and gas and power and utilities sectors with the goals and timelines of the Paris Agreement in our Annual Report and Accounts on 22 February 2022”.
A Deutsche Bank spokesperson said: “Carbon-intensive sectors account for only a small share of our loan book and based on publicly available data our lending and underwriting activity in fossil fuels is significantly smaller than global peers.
“Moreover, our aim is to support all of our customers as we transition to a net-zero world. We are well underway to reach our already advanced target of €200bn in ESG financing and investments even earlier than by 2023. Part of this journey is an intense dialogue with clients to move from high-carbon business models towards low and no-carbon ones.“
A BNP Paribas spokesperson said: “As the leading bank in continental Europe, BNP Paribas is a major financier of European energy companies that are largely committed to transitioning their model through strong investments in developing renewable energies. The Group is convinced that these players, due to their technical and financial capacities, have the levers necessary to accelerate transition by developing renewable energy and other transformative solutions.
“ShareAction’s report, which takes into account the financing granted from 2016 to 2021, shows a significant decrease in the support granted by BNP Paribas to oil and gas players in 2021 compared to 2019. Note that 2020 was marked by needs from all sectors of the economy totally atypical and that BNP Paribas played an important stabilising role for all sectors. It did so too, but to a lesser extent, for the oil and gas sector. This reduction in BNP Paribas’ support to the oil and gas sector will continue as we implement the commitment we announced in May 2021, following our membership in the Net Zero Banking Alliance, to reduce by 10% from 2020 the amount of credit exposure to oil and gas exploration and production activities by 2025. This commitment will be further strengthened by the end of Q1 2022.”
A Credit Suisse spokesperson said: “Our sustainability position is clear. We have made a public commitment to achieve net-zero across our operations, supply chain and financing activities by 2050. This ambition is underpinned by interim science-based targets by 2030. Importantly, our sustainability approach includes sector-specific climate strategies.
“As a high-carbon emitter, the oil, gas and coal sector has been prioritized as an area where we are committed to set science-based targets that help us to monitor the reduction of both emissions and lending exposure. This extends to supporting our clients through application of client energy transition frameworks, as we recognize the role we play in engaging our clients to participate in the low carbon transition. Detail of our latest progress will be available in our 2021 Sustainability Report which is due to be published in March.”
Credit Agricole took a stronger stance against ShareAction’s findings. A spokesperson said: “We strongly refute the statements in this report. We do not confirm the figures and do not understand how they are found as the methodology is not clear enough.
“Since the Paris Agreement, Credit Agricole is the only bank among the 30 largest in the world to have financed more green than brown activity.
“All the Group’s businesses are converging in their intention to have an impact: all of them joined the business alliances to contribute to carbon neutrality by 2050 and thus align the operational and attributable emissions of our loan and investment portfolios with trajectories aimed at reaching net zero by 2050 or earlier. By December 2022 at the latest, Crédit Agricole will publish the roadmaps and targets for 2025, 2030 and 2050, with intermediate milestones to be set every five years starting in 2030, consistent with the most recent scientific data.”
This article will be updated if more of the banks respond to edie’s request for comments.
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