Data showed that Europe’s largest banks, led by HSBC, Barclays and BNP Paribas, have provided 24 billion pounds (29 billion euros) to oil and gas companies expanding production, in less than a year since pledging to target net zero carbon emissions.
The report said that investments in drilling new oil wells and tapping into gas reserves, backed by money from major banks, appear to contradict commitments to international agreements and undermine efforts to speed up the transition to renewable energy sources.
This comes following banks acknowledged their important role in moving away from conventional fuels, and last April several banks signed up to the UN-backed Net-Zero Banking Alliance (NZBA), which requires Set goals to reduce carbon emissions.
However, analysis by campaign group ShareAction showed that the 25 banks that signed the agreement to reduce emissions have provided $33 billion (£24 billion) in loans and other financing to 50 companies with big plans to expand the oil and gas business.
Among the oil companies are US ExxonMobil, which has tried to defy shareholders’ demands to cut emissions, and Saudi Aramco, Shell and London-listed BP, which have made huge profits from gas price increases in recent months.
Since 2016, European banks have provided $406 billion in financing to the oil sector, according to the Guardian newspaper and seen by Al Arabiya.net.
Climate scientists and economists have warned that halting the expansion of oil and gas production is vital to reducing global carbon emissions, the main driver of the climate crisis.
For its part, the International Energy Agency said in May that no new oil and gas fields should be exploited to give the world a chance to reach net zero emissions by 2050 and avoid a global warming of more than 1.5 degrees Celsius above pre-industrial levels.
Highlighting opposition from international investors keen to reduce the costs of switching away from conventional fuels, a report last week by international accounting firm EY found that 70 percent of British companies admit they have faced resistance from investors and shareholders over their plans to reduce emissions. 42% of shareholders demanded to wait for competitors’ steps first before starting anything.
ShareAction Senior Director of Research Xavier Liren said: “If demand for oil and gas falls in line with 1.5°C scenarios, prices will fall and assets will become stuck. On the other hand, if demand does not fall enough to limit global warming to 1.5°C, on the other hand, if demand does not fall enough to limit global warming to 1.5°C. Centigrade, the economy will suffer severe physical climate impacts. In either case, value will be destroyed for energy companies, banks and their investors.”
4 banks from the founders of the alliance acquired more than half of the financing directed to oil companies, with a value of $19 billion, namely HSBC, Barclays, French BNP Paribas and Deutsche Bank of Germany.
Alliance Defense
A spokesperson for the NZBA secretariat defended that members who joined the coalition in April 2021 were due to set their first 2030 goals in the fall of 2022, focusing on the biggest climate polluters including oil and gas companies.
An HSBC spokesperson said the bank will publish scientific targets for oil, gas and energy companies on February 22. “We are committed to working with our customers to achieve a transition towards a thriving low-carbon economy,” they said.
A Barclays spokesperson explained that the bank had set a “target for an absolute reduction of 15% in financing to the carbon-emitting energy sector, including coal, oil and gas, by 2025,” as well as restrictions on conventional fuel exploration in the Arctic, as part of of “ambition to become a net-zero bank by 2050”.
A BNP Paribas spokesperson said it mainly funded “European energy companies that are largely committed to transitioning their model” and that will “accelerate the transformation through the development of renewable energy and other transformative solutions”.
A Deutsche Bank spokesman defended that the carbon-intensive sectors were only a “small share of the bank’s loan size” and were lower than their peers. The spokesperson added that the bank will have an “extensive dialogue with clients to move from high-carbon business models to low-carbon and zero-carbon models.”