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Banking on Climate Change report 2020 - Fossil fuel expansion. Photo: Rainforest Action Network (RAN)Go directly to: fossil fuel expansion policy table
Fossil fuel expansion
The Paris climate agreement, which was signed in 2015, aims to “avoid dangerous climate change by limiting global warming to well below 2°C and pursuing efforts to limit it to 1.5°C”. The scientific basis for limiting global warming to 1.5°C instead of 2°C was further strengthened in 2018 by the IPCC’s special report on global warming of 1.5°C. This report clearly showed that all negative effects of global warming such as sea level rise, water and food insecurity, damage to ecosystems and ocean acidification are less severe at warming of 1.5°C compared to 2°C.
To estimate the amount of carbon dioxide that still can be emitted until reaching a certain temperature threshold, like 1.5°C of warming, climate scientists work with ‘carbon budgets’. Analysis by Oil Change International shows that the currently developed fossil fuel reserves for gas, oil and coal are already double the remaining carbon budget for a 50% chance of staying below 1.5°C of global warming.
Based on this analysis, it can be concluded that all fossil fuel expansion is incompatible with the goals agreed upon in the Paris climate agreement. (Fossil fuel expansion encompasses all development of untapped fossil fuel sources and building the infrastructure to bring these fossil fuels to the market.) In this context, any further exploration for new reserves and the construction of new fossil fuel infrastructure is indefensible and should not be pursued by any government or company, or financed by any bank. Unfortunately, many banks continue to finance fossil fuel expansion, while the policies of most banks to limit or stop their finance for expansion remain weak or often even non-existent.
Banks and fossil fuel expansion
The severity of the climate crisis requires that banks must urgently take steps to disengage from financing all business activities and projects that continue the world's reliance on fossil fuels. Banks must therefore immediately end support for expansion of fossil fuel extraction or infrastructure, whether through project finance or general corporate support.
The world’s top four financiers of fossil fuel expansion are all based in the United States. JP Morgan Chase is the number one, having financed fossil fuel expansion with a total of USD 102 billion since signing of the Paris climate agreement (2016-2019). JP Morgan Chase is followed by Citigroup, Bank of America and Wells Fargo which each financed the fossil fuel expansion with USD 52-72 billion over the same period.
Bank policies on coal power are scored below. These scores were originally published in our Banking on Climate Change 2020 report, published in March 2020. Any policy changes implemented since then have been assessed using the same methodology. The details section in the table contains further detail on the exact scoring per bank, as well as an overview of relevant policies.
See here for banks' exposure to fossil fuel expanders in 2016-2019.
Bank policy score on fossil fuel expansion
The scores for a bank's policies restricting expansion of fossil fuels - in each area, prohibitions against financing projects and/or companies expanding that area - are aggregated into a fossil fuel expansion policy score.
The point-based policy ranking for fossil fuel expansion consists of the following distribution:
- Coal mining: 14 points
- Coal power: 14 points
- Other coal: 7 points
- Tar sands: 9 points
- Arctic oil and gas: 9 points
- Offshore oil and gas: 9 points
- Fracked oil and gas: 9 points
- LNG: 9 points
- Other oil and gas: 9 points
A bank can obtain a total of 89 policy points for its fossil fuel expansion policy. Based on this score, banks are then classified as laggards (0-22.25 points), followers (22.25-44.5 points), front runners (44.5-66.75 points) or leaders (66.75-89 points).
Banks excluding finance for fossil fuel expansion
A number of banks have already taken steps to fully or partially exclude financing fossil fuel expansion. The table below lists banks that have taken such steps.
Exclusion table fossil fuel expansion
This table lists banks that have adopted a full ( ) or partial ( ) exclusion policy for fossil fuel expansion. For each bank, prohibitions against financing projects and/or companies expanding in the different subsectors are aggregated. Click on 'details per bank' for the rationale of this assessment.
Feedback welcome
Our policy assessments are always a work in progress and we very much welcome any feedback, especially from banks included in them. Please get in touch at climate@banktrack.org.