Are big banks ignoring the Paris climate agreement?
The recent Fossil Fuel Finance Report Card reveals that global financial institutions are lagging badly in exiting the financing of fossil fuels and human rights.
Since 2010, Rainforest Action Network (RAN) has collaborated with BankTrack and the Sierra Club in the production of the annual Coal Finance Report Card, which studied the financing by major global banks of mountaintop removal coal mining and coal-fired power generation.
By now however, even major global banks — that often give the impression that they have never met a fossil fuel project they didn’t like — are beginning to shy away from financing coal projects, especially new mining. Nevertheless, this year’s report, entitled Shorting the Climate, reveals that banks still financed more than $42 billion in coal mining projects in 2015.
The amount of financing of coal power plants remains alarming, with $154 billion counted last year.
“Under pressure from global civil society, several US and European banks have announced restrictions on financing for coal since last year,” the report states. “However, most of these policies fall well short of the necessary full phase-out of financing for coal mining and coal power production.” The amount of financing of coal power plants remains alarming, with $154 billion counted last year. The US-based Citigroup alone furnished $24 billion to the largest coal-fired power producers.
“Many banks announced a move away from coal in the run up to COP21 and after, but most of these focused only on coal mining,” Yann Louvel of BankTrack stated. “Our assessment clearly shows that they still have a long way to go to concretely exit this industry.”
The US-based Citigroup alone furnished $24 billion to the largest coal-fired power producers last year.
As financing for coal projects decline, the nongovernmental organizations (NGOs) responsible for the annual Report Card have expanded their coverage to include three new categories: extreme oil (including Arctic drilling, tar sands and ultra-deep offshore drilling), liquefied natural gas (LNG) export and human rights. To help address the new fossil fuel categories, the NGOs enlisted the participation of with Oil Change International, another NGO with expertise in analyzing externalized costs associated with fossil fuels.
“Banks are locking the world onto a path of major climate instability,” report authors bluntly state. Over $300 billion in financing of the aforementioned extreme oil projects, and almost $300 billion in LNG exports, indicate “banks continue to finance these sectors on a nearly unrestricted basis,” the report states. The highest grade earned by any of the 25 global banks analyzed was D+ in the two new fossil fuel categories.
The highest grade earned by any of the 25 global banks analyzed was D+ in the two new fossil fuel categories.
Furthermore, banks were no better at ensuring that human rights would be safeguarded; again, the highest grade earned was D+. The report rightfully relies on the United Nations’ Guiding Principles on Business and Human Rightsas a basis for its grades; sadly, none of the banks “even have comprehensive human rights policies and report on human rights due diligence,” according to the report.
“After the Paris agreement, financing extreme fossil fuels amounts to shorting the climate,” Jason Opeña Disterhoft of RAN said. “These bets are also at the expense of some of the most vulnerable communities living in fossil fuel ‘sacrifice zones’ around the world. We need banks to move now to help pivot the economy away from extreme fossil fuels for the sake of the planet and its people.”
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