COP27 can’t implement Paris Agreement while banks expand fossil fuel financing

Last Wednesday (9 November) was billed as 'Finance Day' at the COP27 Climate Summit in Egypt. Yet it is literally cognitive dissonance, at a global level, to hear world leaders talk about the urgent need to cut emissions and the dangerous impacts of climate change while massive amounts of public and private finance continue to be pumped into expanding the fossil fuel sector, writes Aditi Sen, climate and energy programme director at Rainforest Action Network.

A major theme of this year’s COP has been the implementation of the Paris Climate Agreement. Yet new data shows that since that Agreement was adopted seven years ago, the world's biggest banks have poured more than a trillion dollars into companies actually expanding the fossil fuel sector.

The world’s climate and energy scientists have been clear: to maintain a livable planet we must rapidly and dramatically slash greenhouse gas emissions. To meet this goal, the vast majority of oil, gas, and coal must stay in the ground. We cannot continue to extract oil and gas reserves. And we simply must stop building new infrastructure that relies on fossil fuels.

In the oil and gas sectors, expansion means the exploration of new oil and gas fields by opening currently undeveloped oil and gas reserves for extraction, building new or expanded pipelines, constructing LNG terminals, and new or expanded oil or gas-fired power refineries. 

The glaring, irrefutable fact is that over the past five years, the top 60 banks in the world have pumped $1.3 trillion to the biggest companies responsible for this continued fossil fuel expansion. The six biggest banks in the United States alone provided 33% of that funding, approximately $445 billion. That includes Bank of America, JPMorgan Chase, Citi, Wells Fargo, Morgan Stanley, and Goldman Sachs.

Nations and communities that have done the least to contribute to the climate crisis are now bearing the highest human and monetary costs of climate related disasters. And these nations have been unable to get the financing they need to cope with these impacts or transition to a regenerative energy economy.

Financing for loss and damage, which are the costs associated with climate disasters, has become another strong theme of COP27. It is incumbent upon wealthy countries responsible for the largest emissions to shoulder the responsibility of both cutting emissions and providing the financial support that vulnerable countries need. However, the private sector also needs to be held accountable. Specifically the world’s biggest, most profitable banks that are pushing us to the brink of catastrophe through their fossil fuel funding. 

Clearly, there is no shortage of money in this arena, especially considering subsidized public financing for these projects. A financial facility must be established to assist nations to recover from ever-increasing disasters and support their sustainable energy structures. These are the initiatives that need to be a global priority, created with environmental justice and a just transition to a regenerative economy as guiding principles.

In 2021, over 100 banks signed on to the Net Zero Banking Alliance, thereby committing to achieving net zero emissions by 2050, with transparent emissions reporting, and interim targets for a transition to a low carbon future. But virtually every single one of the world’s top banks by assets continues to fund fossil fuel expansion.

Each new oil, gas or coal infrastructure project not only has massive implications for the ability to limit warming to below 1.5 degrees, but also perpetuates environmental and human rights harm on Frontline communities. Frontline and Indigenous communities have been calling for an end to fossil fuel expansion for decades. These projects cause irreparable harm most often felt sooner and with greater intensity by low-income communities and people of colour.

The reality is that to achieve anything close to the goals of the Paris Agreement it will require an all in approach from both governments and the private sector. Neither can use the excuse of waiting for the other to act. It also calls for a massive shift of finance, both public and private, away from the fossil sector and towards communities to support a just transition.

Share this article: