Today marks the 5th anniversary of the signing of the Paris Accords, the first and only global agreement to establish a framework for immediate actions and long-term strategies to mitigate climate change. To achieve the goals of the Agreement requires an immediate end to fossil fuel expansion, and a rapid transition of the existing carbon-based economy towards energy, employment, and prosperity derived from sustainable resources. Banks must lead the way.
Recent years have brought a growing recognition that the financial industry plays a determinant role in the global response to climate change, and many banks have made early steps toward facing the reality of a carbon-limited world. Yet with less than 10 years to cut global emissions by nearly half, their pace of progress continues to lag far behind what is required to stave off runaway disruption to the climate and the global economy.
In 2019 and 2020, several major financial institutions made commitments to achieve net zero financed emissions by 2050, measure and disclose their overall carbon footprint, and ban financing for coal and Arctic oil and gas projects. These commitments are welcome, but far from sufficient — especially as bank financing for fossil fuels continues to rise.
Every year since the Paris Agreement was signed, the world’s top 35 banks have increased their fossil fuel financing, for a total of over $2.7 trillion. U.S. banks are the dominant source of this funding, with the country’s four largest — JPMorgan Chase, Wells Fargo, Citi, and Bank of America — accounting for 30 percent of all fossil fuel financing from major global banks. This torrent of money into the fossil fuel industry guarantees not only the continuation of the sector’s business-as-usual trajectory, but also the expansion of its extractive activities.
As of today, not a single major bank has committed to aligning its financing, particularly its lending and underwriting practices, with the Paris Agreement’s target of keeping warming below 1.5 degrees Celsius. While many local credit unions and smaller banks are now fossil-free, the executives of the world’s major banks have yet to declare their commitment to leading the transition to a zero-carbon economy by phasing out new and existing fossil fuel finance.
As a network of high-net-worth individuals, foundations, and businesses, BankFWD exists to demonstrate the business opportunity of climate leadership. The banking industry has taken important steps to acknowledge the role it must play in combating catastrophic climate disruption. On this 5 year anniversary, BankFWD urges all major banks to lead the world’s response to the climate crisis by committing to phase out fossil fuel finance, and innovate the financial models that will ensure a stable, prosperous, and zero-carbon future for our world.