A criticism often levelled at Mark Carney’s Glasgow Financial Alliance for Net Zero initiative (GFANZ) and in particular its banking arm, the Net Zero Banking Alliance (NZBA), is that member banks are not required to set firm policies limiting fossil fuel investment.
New figures published by NGO the Rainforest Action Network (RAN) in its annual ‘Banking on Climate Chaos’ report reveal that the world’s 60 largest banks by asset size, the majority (49) of which have made net-zero commitments, have invested $5.5trn dollars in the fossil fuel industry since the Paris Agreement was signed seven years ago.
This new data, which records banks’ lending, debt underwriting and equity capital market activities, adjusting each transaction according to how much exposure the borrower or issuer has to a specific sector, shows that in 2022 alone, the 60 banks provided $673bn to more than 3,000 companies engaged in fossil fuel activities, including $150bn specifically to the top 100 companies expanding fossil fuels.
The total sum for 2022 represents a 9% decrease compared with 2021 financing, although RAN’s report dismisses the idea that this reduction indicates “a positive, long-term trend”. This is because a more significant trend observed over the past year, given the current context of “rising interest rates, a strong dollar, and wartime profits”, is that several large oil majors that often account for a significant share of bank loans no longer need banks’ support following a year of bumper profits.