The world’s biggest banks are still pouring money into fossil fuels | CNN Business (2024)

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Banks have pledged to go green, but last year they poured billions of dollars into expanding the capacity of fossil fuel production despite the accelerating climate crisis.

Banks provided $673 billion to finance the fossil fuel industry last year, even as oil and gas companies made $4 trillion in profits, according to the annual Banking on Climate Chaos report, authored by a group of nonprofits including The Rainforest Action Network and the Sierra Club.

While Canadian banks are providing a rising share of the money, US lenders still dominate the market and accounted for 28% of all fossil fuel financing in 2022, said the report.

At the top of that list is JPMorgan Chase, the largest funder of fossil fuels cumulatively since the Paris Agreement on climate change was signed in 2016, according to the report. Citi, Wells Fargo, and Bank of America are also among the top five fossil financiers since 2016, the report found.

“Major US banks stalled on their net-zero plans and failed to adopt stronger and more robust financing restrictions for companies pushing unsustainable fossil fuel expansion,” said Adele Shraiman, senior campaign representative for the Sierra Club’s Fossil-Free Finance Campaign, in a statement.

Oil and gas companies have seen skyrocketing growth as the energy crisis triggered by Russia’s war in Ukraine sent prices soaring, challenging people’s quality of life and financial stability.

The global oil and gas industry’s profits jumped to $4 trillion in 2022, up from an average of $1.5 trillion in recent years, International Energy Agency chief Fatih Birol said in February.

High prices have swelled profits for energy companies, leaving them flush with cash. And their shareholders are feeling that windfall thanks to huge stock buyback programs.

The record profits come after the world’s 60 largest private banks provided $5.5 trillion in finance for fossil fuels over the past seven years, according to the report.

JPMorgan Chase, Citi, Wells Fargo and Bank of America are all members of the UN’s Net-Zero Banking Alliance, a group of banks committed to achieving carbon neutrality in their operations by 2050.

“By turning their backs on their climate pledges and doubling down on their support for the fossil fuel industry, Wall Street banks are increasing the likelihood of systemic risks to the economy, including a coastal property values collapse, a carbon bubble crash, and insurance market turmoil,” Sen. Sheldon Whitehouse, chairman of the Senate Budget Committee, said in a statement.

A spokesperson from the Net Zero Banking Alliance previously told CNN that comprehensive transitional plans “will require years to plan and execute.”

An immediate divestment from existing fossil fuel positions could lead to “extreme market shocks” that could “profoundly impact the world’s most vulnerable people,” the spokesperson added.

“We provide financing across the energy sector: supporting energy security, helping clients accelerate their low carbon transition and increasing clean energy financing with a target of $1 trillion for green initiatives by 2030,” Charlotte Powell, head of sustainability communications at JPMorgan told CNN.

The Banking on Climate Chaos report, which has been published for 14 years, examines the fossil fuel funding of the 60 largest banks in the world. Its authors also include BankTrack, Indigenous Environmental Network, Oil Change International, Reclaim Finance, and Urgewald.

Tesla is a victim of the price war it started

Tesla helped kick off an EV price war, reports my CNN colleague Chris Isidore. Now, those lower prices are hitting the company’s sales and profits.

The automaker earned about 22% less in the first quarter than it did last year and its profits fell even more compared to the third and fourth quarters of 2022. That comes after Tesla cut its prices four times this quarter, and twice this month alone.

Even with record car deliveries, the lower prices caused revenue to fall $1.3 billion compared to the fourth quarter.

Asked about the future direction of its profit margins, Tesla executives declined to give any guidance.

“This is a difficult environment to make a projection like this. There’s a lot of macro uncertainty,” said CFO Zachary Kirkhorn. “There’s also headwinds and tailwinds.”

On a call with investors, CEO Elon Musk defended the price cuts, even if it means lower profit margins in the near term.

“While we reduced prices considerably in early Q1, it’s worth noting that our operating margin remains among the best in the industry,” he said. “We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margins.”

A warning about strong early earnings reports

Investors are expecting an earnings recession this quarter. But so far, the companies reporting have largely beaten estimates. That’s lead to some early optimism about how the first quarter may shake out.

Those investors should put away their party hats, said Bryan Reilly, a portfolio manager at CIBC Private Wealth US, in a note on Wednesday.

“While the first quarter earnings of large cap financials have come in reasonably strong and better than feared, investors should not get a false sense of security from these early reports,” he wrote.

“Weakening in retail sales, industrial production, and services as the first quarter progressed has shown that the Fed rate hikes have begun to bite at economic growth. That slower growth coupled with higher costs remaining sticky for most companies has forced a rethinking of the path of corporate profit margins.”

And even though companies are beating estimates, they’re not beating by as much as they usually do.

S&P 500 companies are surpassing earnings-per-share estimates by 7.9% in aggregate, according to recent FactSet data. That’s below the 5-year average of 8.4%.

As of FactSet’s most recent report, the overall earnings decline for S&P 500 companies this quarter is expected to be around 6.5%. That would mark the largest earnings decline since 2020.

The world’s biggest banks are still pouring money into fossil fuels | CNN Business (2024)


The world’s biggest banks are still pouring money into fossil fuels | CNN Business? ›

Since the Paris Agreement in 2016, the world's 60 largest private banks financed fossil fuels with USD $6.9 trillion. Nearly half – $3.3 trillion – went towards fossil fuel expansion. In 2023, banks financed $705 billion in fossil fuel financing with $347 billion going to fossil fuel expansion alone.

Are banks still investing in fossil fuels? ›

In 2023, banks financed $705 billion in fossil fuel financing, with $347 billion alone going to top fossil fuel expanders. JPMorgan Chase was the #1 fossil fuel financier in the world last year, committing $40.8 billion dollars to fossil fuel companies in 2023. Chase is also #1 for fossil fuel expansion in 2023.

Who are the largest fossil fuel financing banks? ›

Another report this past summer by the Sierra Club found that the four biggest banks in the United States–JPMorgan Chase, Citi, Wells Fargo, and Bank of America, and the British-based Barclays–are the top five financial institutions propping up the coal power industry in the United States.

Does the US Bank fund fossil fuels? ›

U.S. Bancorp

Your money is likely funding the climate crisis at an alarming rate. US Bank is one of the world's biggest funders of fossil fuels. * In the 7 years since the Paris Agreement, the banks in this category have funneled $5.5 trillion into coal, oil, and gas, rapidly accelerating the climate crisis.

Who are the biggest investors in fossil fuels? ›

The two biggest fossil investors, Vanguard and BlackRock, account for 17% of all institutional investments in fossil fuel companies. Vanguard's CEO, Tim Buckley, has made abundantly clear that he has no intention of putting restrictions on investments in climate-destructive business models.

Who makes money from fossil fuels? ›

Exxon, Chevron and Shell reported robust earnings and large payouts to investors as they continued to expand their fossil-fuel production.

Which banks don't invest in fossil fuels? ›

The Co-operative Bank

The Co-operative Bank has had an ethical policy since 1992, meaning it doesn't lend to companies that don't fit with its values, so it doesn't do business with the oil, coal or gas industries.

Who is the biggest user of fossil fuels in the US? ›

Fossil fuel primary consumption in the U.S. 1990-2023, by sector. The transportation sector is the largest consumer of primary fossil fuel energy in the United States.

Why do banks give money to fossil fuels? ›

In reality, your institution makes money on your money by lending it elsewhere, including to the fossil fuel companies driving climate change, as well as emissions-heavy industries like manufacturing. So just by leaving money in a bank account, you're unwittingly contributing to worsening catastrophes around the world.

Which Bank invests in fossil fuels? ›

London-based Barclays was Europe's biggest fossil fuel financier, with $24.2bn, followed by Spain's Santander at $14.5bn and Germany's Deutsche Bank with $13.4bn. Overall, European banks stumped up just over a quarter of the total fossil fuel financing in 2023, according to the report.

What is the least ethical Bank? ›

In the US, the four least ethical banks are easy to spot. It's Chase, Wells Fargo, Bank of America, and Citi Bank.

How much money does the US government make from fossil fuels? ›

Our analysis finds that, on average from 2015 through 2019, fossil fuels generated $138 billion per year for governments across the United States in 2019 dollars (all figures are in 2019 dollars unless otherwise noted).

What are the most ethical banks? ›

Here are our top nine ethical banks and building societies in 2024:
  • Triodos Bank.
  • Charity Bank.
  • Ecology Building Society.
  • The Co-operative Bank.
  • Coventry Building Society.
  • Nationwide Building Society.
  • Starling Bank.
  • Gatehouse Bank.
Apr 3, 2024

Who will dominate the global fossil fuel trade? ›

Canada, USA, Venezuela, and China are projected to dominate the global trade network, with Canada-USA remaining the most dominant fossil fuel trade link up to 2050.

What are the unethical outcomes resulting from fossil fuels? ›

Air pollution from fossil fuels can cause acid rain, eutrophication (excessive nutrients that can harm aquatic ecosystems by lowering oxygen levels), damage to crops and forests, and harm to wildlife. Water pollution: From oil spills to fracking fluids, fossil fuels cause water pollution.

Who owns fossil fuels? ›

The world's proven fossil fuel reserves are controlled by state-owned enterprises (such as Saudi Aramco), privately held companies or companies listed on the world's stock exchanges (like ExxonMobil, BHP and Peabody Energy).

How much money do banks invest in fossil fuels? ›

“If you look at the top 10 banks in North America, each of them lends out between $20 billion and $40 billion to fossil fuel companies every year.” The new report finds that on average, 11 of the largest US banks lend 19.4 percent of their portfolios to carbon-intensive industries.

Does JP Morgan Chase invest in fossil fuels? ›

JPMorgan is the largest global funder of fossil fuels, with nearly $39 billion in fossil fuel financing in 2022 and $434 billion between 2016 and 2022.

Which banks do not support ESG? ›

The American banks – Citi, Bank of America, JPMorgan Chase and Wells Fargo – are listed as having left the group of institutions that have signed the principles. The news was condemned by climate groups as “shocking” and “cowardly”.

Do credit unions invest in fossil fuels? ›

Credit unions do not invest deposits directly into fossil fuels because they do not make these type of investments. Credit unions are allowed to invest in public instruments like federal bonds only.

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