Finance giants undermining own net zero targets, says report

The report has named Barclays, HSBC and Lloyds Banking Group in a list of 30 finance giants that are continuing to fund fossil fuel expansion and lobbying against attempts to align financial regulation with climate goals.

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Financial institution giants are continuing to fund fossil fuel expansion and lobbying to weaken emerging sustainable finance policies, undermining their net-zero goals, says a new report.

Analysis undertaken by the climate think tank InfluenceMap found there is a “stark disconnect” between what finance giants are saying about climate change and what they are doing.

In the firing line in the report are Barclays,HSBC and Lloyds Banking Group which are included in a list of 30 financial institutions identified by the think tank as not walking the walk.

All of the 30 except China’s Ping An Bank have committed to achieve net-zero by 2050 with substantial 2030 decarbonisation targets, the report says.

The report shows that the finance sector has helped at least $740 billion of financing into the fossil fuel production sector between 2020 and 2021.

The report also points out that the 30 giants are members of industry associations that have “consistently” lobbied to weaken key sustainable finance policies in the EU, UK and US, which demand more transparency around the financing of fossil fuels.

The report authors picks out BNP Paribas, AXA and Allianz as institutions that are “engaging positive” on sustainable finance.

Furthermore, it says that half of the 30 firms are members of industry associations that are “key blockers of action on climate change”, including the US Chamber of Commerce and the American Gas Association.

The report says that the finance giants “remain reluctant to introduce meaningful fossil fuel exclusion policies" and their banking and asset management arms remain highly active in the financing of coal, oil and gas.

The report says that JP Morgan was the biggest fossil fuel financing offender, with $81bn of fossil fuel financing between 2020 and 2021, ahead of Citigroup ($69bn) and Bank of America ($55bn).

Despite setting a 2030 target to reduce power sector emissions, JP Morgan upped financing of coal production from $1.28bn in 2020 to $3.08bn in 2021, the report says.

Further findings in the report include that the equity portfolios of those finance giants with asset management arms were heavily overweight in companies that are not transitioning from brown to green technologies fast enough to be aligned with keeping temperatures below the 1.5 °C target. 

The report says that Lloyd’s has the biggest equity exposure to fossil fuel production at 17 per cent, followed by Banco Bradesco (13 per cent) and Itaú Unibanco (12 per cent).

InfluenceMap Senior Analyst and report author Eden Coates said: "These global financial institutions have significant economic and political influence, and they are delaying action that is essential to respond to the climate crisis. "There is a stark disconnect between what they say about climate change and what they're actually doing - particularly when it comes to pushing back on policymakers' attempts to align financial regulation with climate goals. "If they are serious about achieving their net-zero targets, they should set concrete and actionable short-term targets across all aspects of their operations.”

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