Banks Not Keeping Net-Zero Promises

Banks Not Keeping Net-Zero Promises

Despite the Paris Agreement and net-zero pledges, twenty-five European banks have provided $400 billion dollars for fossil fuel projects since 2016, according to a new report from ShareAction. The report examined European members of the Net-Zero Banking Alliance (NZBA), an "industry-led, UN-convened" group launched by sustainable investment expert Mark Carney.

"I don't think the people at NZBA are in favor of fossil fuel expansion or delaying climate action," Kelly Shields, report co-author and ShareAction's senior officer for banking standards, told The New Republic, "but when people see the contrast, it gives the impression that membership in the alliance is being used to greenwash."

Our Eden: Your Bank is Funding Climate Change, November 13, 2021.

Al Jazeera: Should fossil fuel advertising be regulated?, October 20, 2021.

Why This Matters

In order to keep the world within the Paris Agreement's 1.5 degrees Celsius of warming, there can't be any new oil and gas development beyond those already committed last year. Banks providing funds to continue developing oil and gas projects are working against that target. Like any net-zero, climate-friendly pledge, actions matter more than what's on paper. And the specifics matter as well: it's possible to be a member of the NZBA without promising to stop funding fossil fuel projects.

Other Failing Climate Promises

This week, the Guardian covered The Private Equity Dirty Dozen, a new report exposing firms that are pumping money into fossil fuel projects despite having announced commitments to invest in clean energy and infrastructure. The problem isn't only institutional though. The discretion of private equity is such that high-net-worth equity executives can personally impact the climate crisis while also sitting in board seats for influential organizations and institutions.

Co-author of the report Derek Seidman notes, "It's a serious problem when super-rich private equity executives who invest billions in harmful fossil fuels can greenwash their reputations through acquiring coveted board seats at prestigious universities and cultural institutions."

Major corporations are another part of the private sector eager to make climate commitments and slow taking climate action. A report released earlier this month found that most major companies have minimal proof that they're making changes to hit net-zero targets, and many are relying on carbon offsets, which don't require the company to make changes to their business and have minimal oversight. Combined, the 25 companies surveyed are responsible for 5% of global greenhouse gas emissions, which according to the BBC, "means although they have a huge carbon footprint, they have enormous potential to lead in the effort to limit climate change."

Reuters: 2021 saw jump in greenhouse-gas emissions, says report, January 10, 2022.

Guardian: Why we need to keep fossil fuels in the ground | Keep it in the ground, March 16, 2015.