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Banking on Climate Change – Fossil Fuel Finance Report Card 2020
New report reveals global banks funneled USD 2.7 trillion into fossil fuels Since Paris Climate Agreement, with financing on the rise each year
Banks and offshore oil and gas
BankTrack
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Banking on Climate Change 2020 - Offshore oil and gas. Photo: Rainforest Action Network (RAN)Go directly to: offshore oil and gas policy table and offshore oil and gas exclusion table
Offshore oil and gas
Offshore oil and gas refers to all exploration taking place at sea. Oil and gas can be extracted by drilling a borehole below the seabed and transporting the oil or gas to onshore facilities by either a pipeline or via oil/LNG carrying ships. Offshore oil and gas production is more challenging than land-based installations due to rough seas, lack of pre-existing infrastructure and the need to anchor the platform to the seabed or keep it in place using GPS systems, called dynamic positioning. Drilling at sea is also very expensive - up to many hundred millions of US dollars per well - and can only be profitable when the oil or gas price is high. Recent exploration has opened new areas for offshore oil and gas drilling in Guyana, Suriname, the Mediterranean and South Africa.
Drilling offshore for oil and gas is dangerous and several disasters have occured in the last decades, of which the blowout and oil spill of Deepwater Horizon in 2010 remains arguably the most dire example. But even when oil or gas spills do not occur, offshore operations have a negative impact. The drilling itself, its production water (which contains oil and suspended solids), and daily operations on the platform all negatively affect the environment. Finally, the costs of decommissioning an oil platform at the end of operations can cost up to a couple of hundreds of millions of US dollars per platform, which oil companies are often not willing to pay. As a consequence, companies often leave these platforms, or parts of them, to deteriorate.
Banks and offshore oil and gas
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 end support for all new offshore oil and gas projects and implement a full phase-out for financing offshore oil and gas, in line with the Paris climate agreement.
Four out of the six biggest biggest financiers of offshore oil and gas, all having financed the offshore oil and gas sector with more than USD 10 billion since signing of the Paris climate agreement (2016-2019), are US banks: JP Morgan Chase (1st), Citigroup (2nd),Bank of America (4th) and Morgan Stanley (6th). The remaining two banks in the top six are French BNP Paribas (3rd) and British HSBC (5th).
Bank policies on offshore oil and gas are scored below. These scores were originally published in our Banking on Climate Change 2020 report, and any policy changes implemented since then have been assessed using the same methodology, the details of which can be found at the bottom of the table. 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 the offshore oil and gas sector in 2016-2019.
Bank policy scores on offshore oil and gas
BankLast update
Country
Details
Laggard
Follower
Front runner
Leader
Agricultural Bank of China
2020-03-01
CHN
0
0
0
ANZ
2020-03-01
AUS
0
0
0
Bank of America
2020-03-01
USA
0
0
0
Bank of China
2020-03-01
CHN
0
0
0
Bank of Montreal (BMO Financial Group)
2020-03-01
CAN
0
0
0
Barclays
2020-03-01
GBR
0
0
0
BBVA
2020-03-01
ESP
0.5
0.5
0
BNP Paribas
2020-03-01
FRA
0.5
0.5
0
China Construction Bank
2020-03-01
CHN
0
0
0
CIBC
2020-03-01
CAN
0
0
0
Citigroup
2020-03-01
USA
0.5
0.5
0
Commerzbank AG
2020-03-01
DEU
0
0
0
Commonwealth Bank of Australia
2020-03-01
AUS
0.5
0.5
0
Crédit Agricole
2020-03-01
FRA
0
0
0
Credit Suisse Group
2020-03-01
CHE
0
0
0
DBS Bank
2020-03-01
SGP
0.5
0.5
0
Deutsche Bank
2020-03-01
DEU
0
0
0
Goldman Sachs
2020-03-01
USA
0.5
0.5
0
HSBC
2020-03-01
GBR
0
0
0
Industrial and Commercial Bank of China (ICBC)
2020-03-01
CHN
0
0
0
ING Group
2020-03-01
NLD
0
0
0
Intesa Sanpaolo
2020-03-01
ITA
0
0
0
JPMorgan Chase
2020-03-01
USA
0
0
0
Mitsubishi UFJ Financial Group (MUFG)
2020-03-01
JPN
0
0
0
Mizuho
2020-03-01
JPN
0
0
0
Morgan Stanley
2020-03-01
USA
0.5
0.5
0
National Australia Bank
2020-03-01
AUS
0
0
0
Natixis
2020-03-01
FRA
0.5
0.5
0
NatWest Group (formerly RBS)
2020-03-01
GBR
3.5
3.5
0
OCBC
2020-03-01
SGP
0
0
0
Royal Bank of Canada
2020-03-01
CAN
0
0
0
Santander
2020-03-01
ESP
0.5
0.5
0
Scotiabank
2020-03-01
CAN
0
0
0
Société Générale
2020-03-01
FRA
0
0
0
Standard Chartered
2020-03-01
GBR
0
0
0
Sumitomo Mitsui Banking Corporation (SMBC)
2020-03-01
JPN
0
0
0
TD bank Financial Group
2020-03-01
CAN
0
0
0
UBS
2020-03-01
CHE
0.5
0.5
0
UniCredit Group
2020-03-01
ITA
3.5
3.5
0
United Overseas Bank
2020-03-01
SGP
0
0
0
Wells Fargo
2020-03-01
USA
0.5
0.5
0
Westpac Banking Corporation
2020-03-01
AUS
0
0
0
Explanation
The point-based policy ranking assesses bank policies in four ways:
1) Restriction on direct financing for offshore oil and gas projects.
- None (0), weak exclusion (1.5), strong exclusion (4)
2) Restriction on financing for companies that expand offshore oil and gas.
- None (0), weak exclusion (3), strong exclusion (5)
3) The bank’s commitment to phase-out financing for offshore oil and gas.
- None (0), reduction (1.5), weak phase-out (3), strong phase-out (5)
4) The bank’s commitment to exclude companies active in offshore oil and gas above a certain threshold.
- None (0), enhanced due diligence (0.5), weak exclusion threshold (2), strong exclusion threshold (5), full exclusion (6)
A bank can obtain a total of 20 policy points for its offshore oil and gas policy. Based on this score banks are then classified as laggards (0-5 points), followers (5.5-10 points), front runners (10.5-15 points) or leaders (15.5-20 points).
Banks excluding finance for offshore oil and gas
A number of banks have already taken steps to fully or partially exclude offshore oil and gas projects or companies involved in offshore oil and gas operations from their investments. The table below lists banks that have taken such steps.
Exclusion table offshore oil and gas
BankLast update
Country
Details
Project
Company
NatWest Group (formerly RBS)
2020-03-01
GBR
3.5
3.5
-1
UniCredit Group
2020-03-01
ITA
3.5
3.5
-2
Explanation
This table lists banks that have adopted a full ( ) or partial ( ) exclusion policy for offshore oil and gas projects and/or companies. Click on 'Details' for the rationale of this assessment for each bank.
Feedback welcome
Our policy assessments are always a work in progress and we very much welcome any feedback, especially from banks included in them. You can of course also contact us for more information on specific scores and the latest policy changes. Please get in touch at climate@banktrack.org.
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