High street banks still financing fossil fuel growth

The UK's high street banks are profiting from some of the world's dirtiest fossil fuel projects despite committing to deliver the Paris Agreement goals of limiting global warming to below 2C.

That is a key conclusion of a new report released by charity organisation Christian Aid. Despite backing the Paris objectives, Barclays, HSBC, Lloyds and RBS have barely changed their lending policies or actions in the two years since the deal was signed, Christian Aid claims.

It reveals that the banks are all funding companies behind Colombia’s Cerrejón coal mine, which produced more than 33 million tonnes of coal in 2015. And between them, these institutions have committed an estimated €1.5bn to loan deals for a major oil field in Kenya, which could produce about two-thirds of the country’s emissions in the future, the report claims. 

Christian Aid chair and former Archbishop of Canterbury Rowan Williams urged the chief executives of these banks to make clear and time-specific pledges to replace fossil fuel investments with cleaner solutions.

Williams said: “This year we have seen extreme weather displacing millions of people in South Asia and bringing death and destruction in the Caribbean and the United States. These communities count the cost in lives lost.  But British investors, including banks, continue to count profits from just those fossil fuel investments that contribute to climate chaos.”

‘Mounting urgency’

The report coincided with a new ComRes poll which shows that 80% of the UK public believe it is morally wrong for banks to profit from climate-wreaking investments. A further 77% said that banks should be stopped from investing their savings in projects that damage the environment.

“The moral case is clear, and the public increasingly recognise this,” Williams added. “The urgency is mounting.”

Christian Aid’s report shows that the world is still investing over three times more in fossil fuels than renewables, despite the tumbling prices of low-carbon alternatives. If this trajectory continues the global economy will have financed a stunning $23trn into fossil fuels by 2050, Christian Aid warns, leaving the Paris objectives in tatters.

Access for all

The report comes in the same week as research suggested that the World Bank must dedicate more capital to achieve its goal to reach universal energy access by 2030. The report by the Bank Information Center Europe, the Swedish Society for Nature Conservation and The Big Shift Campaign warns that the World Bank is not prioritising enough of its own budget for energy access.

World Bank delivered $1.5bn in 2016 towards improving energy access out of a total $11.5bn (13%) of the Bank’s energy budget, the report found. This figure should be ramped up to $5.75bn, claimed researchers, who also believe the World Bank should directly contribute to at least 15 million people gaining electricity annually.

While it appears that major banks are failing to seize the opportunities presented by the shift to a low-carbon economy, there are a growing number of banking models examples which focus on financing for a clean energy future.

Sustainable banking group Triodos’ new personal account is challenging the practices of many high-street banks by providing transparency by publishing details of every loan it makes online. The account reflects Triodos’ pledge to introduce a “radical new approach” to the banking system; placing environmental and social wellbeing at the heart of financial transactions.

Meanwhile, 11 of the world’s top banks, including Barclays and Santander, have jointly committed to adopt key elements of the Task Force on Climate-related Financial Disclosures (TCFD) framework which seeks to improve climate transparency in the financial industry.

George Ogleby

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