Status: 03/25/2022 11:18 a.m
According to a study, the largest financial institutions recently invested $740 billion in fossil fuels. Whether they violate the climate goals or ensure more sustainability is controversial.
According to an analysis by the British initiative InfluenceMap, the 30 largest listed financial groups in the world continue to invest immense sums in oil, gas and coal. In 2020 and 2021, these 30 companies’ combined investments in fossil fuel projects and energy industry services totaled $740 billion, according to InfluenceMap.
This includes, for example, the development of new oil wells and gas fields. In addition, according to InfluenceMap, asset management companies in the financial industry hold shares in energy companies worth a good $222 billion. The main sources of the study are the publications of the companies themselves and publicly available information for the capital markets and financial regulators.
Accusation: Financial sector violates climate targets
Two German groups are also among the top 30 global financial companies: Allianz in 9th place and Deutsche Bank in 23rd place. The list is headed by the US companies JP Morgan, Bank of America and Wells Fargo. Criteria for the order included sales, net profits, market value and assets under management. State financial groups such as large Chinese banks were not examined due to a lack of transparency.
According to InfluenceMap, five major oil and gas companies in the US and Europe received $145 billion of the $740 billion in loans and other funds: ExxonMobil, Shell, Chevron, BP and Total. The London-based institute, which is financed by donations, accuses the financial sector as a whole of violating the largely self-declared climate goals with its investments. In addition, all 30 financial institutions are members of industry associations that have consistently lobbied in the EU, UK and US to weaken key sustainable finance policies.
A prime target of this criticism are US banks. In contrast, the authors at least partially positively emphasize Allianz, together with the French groups AXA and BNP Paribas, because of its more ambitious climate goals.
Exit or leverage for transformation?
Banks and other financial institutions play a crucial role in the transformation of the economy towards sustainability. “Climate protection is only possible with the banks,” writes the Association of German Banks on its website. Because these would finance companies with their loans and would have a central lever in their hands to support projects for climate protection or sustainability.
Many large banks have also committed to a net zero target by 2050. They want to reduce their direct greenhouse gas emissions and those of their customers in order to limit the increase in global temperatures to below 1.5 degrees Celsius compared to pre-industrial levels. According to InfluenceMap, while many financial institutions have committed to extensive decarbonization goals, only a few have adopted meaningful measures to exclude fossil fuels.
A study by the environmental organization Urgewald had already caused a stir in February, according to which banks had issued 400 billion dollars in loans to coal companies in the past three years alone. Financial experts are controversially discussing how they should assess the commitment. Some are calling for a quick exit. Others, on the other hand, also see credit as an opportunity to influence companies in the direction of sustainability and to support them in their transformation.