13 May 2024

Is your bank funding climate change?

Banks named and shamed for financing fossil fuels

Chiara CavaglieriSenior researcher & writer

JPMorgan Chase and Barclays have been named in a damning new report exposing the banks that dominate funding of fossil fuels.

Co-authored by a network of environmental organisations including Rainforest Action Network and Reclaim Finance, the annual Banking on Climate Chaos report offers a detailed picture of global financing of fossil fuels such as oil, gas and coal – and it’s not a pretty one.

The analysis of global financing in 2023 shows that the banking industry continues to fund climate change at staggering levels.

It found that lending and underwriting to over 4,200 fossil fuel companies by the world’s 60 largest banks reached $705bn in 2023, up from $669bn in 2022.

Who are the biggest fossil fuel financiers?

JPMorgan Chase was named the biggest fossil fuel financier in the world, having increased its financing from $38.9bn in 2022 to $40.8bn in 2023.

It ranked among the worst banks in terms of financing to companies involved in fossil fuel expansion. It was also one of the biggest financiers of: racked oil and gas; Amazon oil and gas; and methane gas power.

Barclays was labelled the number one fossil fuel funder in Europe, lending $24.5bn in 2023 up from $16.58bn in 2022.

It was singled out for financing what the report describes as 'deadly' coal power plants in the United States, despite high profile climate commitments.

You can read the full Banking on Climate Chaos report for more details on global fossil fuel financing.

What do JPMorgan Chase and Barclays say?

A JPMorgan Chase spokesperson told Which?: 'As one of the world's largest financiers to both traditional and clean energy companies, we help power today's global economy.

Reflecting our strategy of supporting the build-out of zero-carbon power, we released a net-zero aligned Energy Mix target and will disclose a clean energy supply financing ratio this year.

We believe our data reflects our activities more comprehensively and accurately than estimates by third parties.'

A Barclays spokesperson said: 'We sought to engage the Rainforest Action Network about their methodology prior to the report publication. We do not recognise the classification or attribution of some transactions. For example, RAN appears to be attributing finance raised for national companies involved in UK grid decarbonisation as fossil fuel finance.

'In the absence of their full methodology, it appears the figures in this report capture all general corporate finance provided to a company and attribute it based on their revenue streams, not on the transaction’s use of proceeds or the company’s actual investment activity.

'With a target to provide $1trn of Sustainable and Transition Finance by 2030, Barclays continues to support an energy sector in transition, focusing on the diversified energy companies investing in low-carbon and with greater scrutiny on those engaged in developing new oil and gas projects. We are ranked the number two clean energy adviser globally by BloombergNEF, and our financed emissions for the Energy sector reduced by 44% between 2020 and 2023, exceeding our 2030 target.'

We put Barclays comments to Rainforest Action Network, which told us it has had extensive back and forth with Barclays on the methodology.

It said Barclays own annual report shows an increase to financing oil & gas companies, including a 41% increase in financing to midstream oil & gas between 2022-23. It added that it is 'ironic' that Barclays refers to its BloombergNEF rankings, as this openly uses an approach borrowed from Banking on Climate Chaos.

Rainforest Action Network's analysis includes finance to diversified companies, eg one that generates renewable energy but also distributes gas – regardless of the company's industry classification – and adjusts the value to reflect how much fossil fuel business a company does.

To illustrate, if 20% of the company's revenue comes from distributing gas, it would apply a 20% adjuster and reduce the value of the transaction attributed to the bank.

A spokesperson added: 'We report on deals with a variety of “uses of proceeds,” including general corporate purposes, which is by far the most common use of proceeds in this sector. Bank policies that only apply to project finance are virtually meaningless given how little finance is designated that way.'

How to find a greener bank

Which? has only named three Eco Providers for current accounts – Co-operative Bank, Nationwide and Triodos.

To find them, we took a deep dive into banks' fossil fuel policies and statements on agricultural commodities such as beef, soy, timber and palm oil. We considered transparency levels and whether banks had credible targets to reduce exposure to environmentally damaging sectors.

We also checked whether they publish independently verified data and have signed up to commitments such as the UN-led Net-Zero Banking Alliance (NZBA), or committed to standards such as the Partnership for Carbon Accounting Financials (PCAF) and Science Based Targets Initiative (SBTi).

If you’re looking for a greener bank, be warned that subsidiaries can catch you out, for example, HSBC owns both First Direct and M&S Bank, and TSB is owned by Spanish banking group Sabadell. It was also announced earlier this year that Tesco Bank has been sold to Barclays.

Find out more: six ways to see through bank greenwashing

What about savings providers?

Last month, Bank.Green published its own climate performance analysis of 101 UK banks and building societies, including dozens of savings providers.

It ranks savings firms on a scale from 'Great' to 'Worst', looking at lending to the fossil fuel sector, financial support for renewable energy projects, measurement and disclosure of financed emissions and exclusion policies for coal, oil and gas.

Bank.Green said not enough banks are ramping up renewable energy lending to meet the urgency of the climate crisis. It also wants to see banks provide favourable terms for green loans, such as those for electric cars, heat pumps or other fossil fuel reducing opportunities.

Ratings are available through its League Tables.