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Banks and the climate crisis
The climate crisis is the greatest environmental threat of our time. According to the Intergovernmental Panel on Climate Change (IPCC), continuing with business-as-usual will result in a 3-5°C average global temperature increase by 2100. To prevent the worst impacts from climate change on ecosystems and society, "rapid, far-reaching and unprecedented changes in all aspects of society" are urgently needed. Sadly, the world is quickly reaching a point of no return. Continuing on the current course will make it difficult, if not impossible, to prevent the widespread and catastrophic impacts of climate change. The costs will be substantial: hundreds of billions spent to deal with the destruction of extreme weather events, untold human suffering and the deaths of at least tens of millions.
The international community in 2015 agreed to confront this issue by adopting the Paris Climate Agreement. The central aim of the agreement is "to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius". In order to have even a 50% chance of limiting global heating to 1.5 degrees Celsius, global carbon dioxide emissions must be more than halved from 2010 levels by 2030 and reach 'net zero' by 2050.
Banks, like all companies, produce greenhouse gases (GHG) directly through their activities. However, their most important contribution to GHG emissions is indirect, through the financing of clients and projects that generate GHG emissions. Banks also continue to play a key role as major financiers of the coal, oil and gas industry, effectively delaying the much-needed transition from a fossil fuel-based to an efficiency- and renewable energy-based economy.
Fossil Banks No Thanks
To stop the climate crisis from further unfolding and end our dependence on fossil fuels, banks must stop financing the fossil fuel industry. But this is not happening! According to our latest Banking on Climate Chaos report, published in March 2022, between 2016 and 2021 the world's 60 largest private sector banks (in terms of assets) funnelled a staggering USD 4.6 trillion into fossil fuel projects and companies globally. In 2021 alone, these 60 banks funneled USD 185.5 billion into the 100 companies doing the most to expand the fossil fuel sector, such as Saudi Aramco and ExxonMobil.
Sadly, each new bank-financed oil well, coal mine, coal power plant or gas terminal is incompatible with achieving the goals of the Paris Climate Agreement. The potential emissions from the coal, oil and gas operations that are already in production will already exhaust the carbon budget for 2 degrees Celsius, let alone the stricter target of 1.5 degrees. Banks may point out that they increase their lending for renewable energy, that they ‘engage with clients on emissions reduction’, or even that they change their light bulbs. Some have taken it a step further and no longer finance coal mines, tar sands, or oil and gas projects in the Arctic, but no large private sector bank has yet committed to end its financing of the fossil fuel industry altogether.
This is why since 2018 BankTrack is waging the "Fossil Banks No Thanks" campaign. We want banks to clearly and publicly acknowledge that stopping climate breakdown requires putting an end to the exploration and burning of fossil fuels, as well as putting an end to their support for the fossil fuel industry.
Together with a global coalition of civil society organisations we demand from all banks that are still financing fossil fuels to:
- Publicly clarify their position on the relation between climate change and the extraction and burning of fossil fuels;
- Publicly commit to immediately end their support for all new fossil fuel projects, including exploration, extraction, transportation and power;
- Publish a robust plan for phasing out their support for all existing fossil fuel projects and companies on a timetable consistent with what is necessary to meet the Paris targets