Photo: BankTrack

- Check bank policy responses to Putin's invasion of Ukraine here -

The world looks on in horror as Vladimir Putin's army invades Ukraine, causing massive death and destruction and forcing millions of residents to flee their homes in search of safety. Thankfully, the abhorrent actions of the Russian president have been met with an unprecedented global response, with countries and companies alike exerting maximum pressure on Russia to end the war.

It is crucial that banks globally act upon the Russian aggression and contribute to global pressure on Russia, by publicly condemning the Russian aggression, by halting operations in Russia (and its vassal state Belarus), and most importantly by ending all their support for the Russian coal, oil and gas industry. Efforts are underway globally to make banks do exactly that.

A fossil fuel driven war

Putin would not have been able to invade Ukraine without the revenues of Russia's coal, oil and gas exports to Europe and the rest of the world paying for his army. Revenues from state-owned companies and oil and gas-related taxes and export tariffs accounted for 45% of Russia’s federal budget in early 2022. Russia is the world’s third-largest producer of oil, behind the United States and Saudi Arabia. It exports about 5 million barrels a day of crude oil, or about 12% of global trade. Russia is also the world’s second largest gas producer, after the United States, producing 761 billion cubic metres (bcm) in 2021, or 18% of the world’s gas output. It is the world’s largest gas exporter: in 2021, Russia supplied 32% of the total gas demand in the European Union and United Kingdom and the export value of Russian piped gas to the EU alone amounts to USD 400 million per day. Finally, Russia exports around 200 million tons of coal each year, with China, Korea and Europe being the biggest export markets.

Fossil fuel boycott

With the Russian state so reliant on revenues from fossil fuel exports, this is clearly the Achilles' heel of the country, thus leading to calls globally to boycott the import of fossil fuels from Russia. The United States has already prohibited such imports while the European Union accelerates its efforts to become less dependent on Russia for its energy needs (but drags its feet about a full boycott). Meanwhile, even oil companies such as Shell, BP, Equinor and ExxonMobil have announced that they will withdraw from Russia, depriving the Russian fossil fuel sector of access to capital and technology.

But such a boycott of Russian fossil fuels can not be successful when banks and investors continue to finance Russian coal, oil and gas companies. Alongside 75 NGOs, BankTrack has called upon banks, insurers and investors to exclude Russian coal, oil and gas companies from all financial services. In particular, we call on them to commit to no longer provide new financing, investment, insurance coverage and other financial services to these companies, and divest from existing assets. Reclaim Finance keeps track here of whether such commitments are forthcoming.

A global call on banks to act

Crucial as the fossil fuel sector is for Russia, this should not be the only focus of action for banks. It is a moral imperative for banks to not provide financial services to the Russian state, its vassal state Belarus, or sectors of the Russian economy as long as the war rages on and peace is not restored. Some banks (for example Citi, ING, Goldman Sachs, Nordea and Danske Bank) have already announced plans for suspending all or part of their operations in Russia, but too many others have not yet done so. 

This is why BankTrack and other civil society organisations in an open letter call upon banks globally to move further. The letter of 30+ organisations (which can still be supported by groups here) calls on banks to:

1. Take a clear public stance against the Russian invasion of Ukraine: Banks should not just deplore the situation but publicly condemn the Russian aggression against Ukraine as unacceptable.

2. Report publicly on business activities in Russia, with as much detail and transparency as legally permitted: This includes overall exposure via lending and investment services, investments in Russian government and corporate bonds, and investment funds (e.g. ETFs) and mutual funds offered to retail customers. Banks should also report on losses resulting from their own policy response to the crisis.

3. Cease any and all provision of financial services to Russian and non-Russian companies operating in the Russian coal, oil and gas sectors. This includes all services to Russian coal, oil and gas companies as well as to non-Russian fossil fuel companies that have not yet decided to cease their operations in Russia.

4. Suspend all corporate and investment banking activities in Russia: This should include new loans and underwriting services and the exclusion of Russian shares and bonds from bank indices. Such a suspension of activities must take place with due respect for human rights and following established principles of responsible disengagement.

5. Engage with clients and investee companies with ongoing operations in Russia to heed the call of the Ukrainian government to cease their operations in Russia. Banks should consider suspending their finance for companies that opt to continue their operations in Russia.

Tracking policy responses of banks

BankTrack is keeping close track of how banks globally respond to the Russian invasion in Ukraine. Click on the picture below for the latest findings. The table is regularly being updated.