A new tracker launched today by 13 NGOs, including Reclaim Finance and BankTrack, reveals the biggest global banks do not have the basic policies and financing targets needed to support decarbonization of the power sector (1). While some European banks have a target for financing sustainable power supplies, they are leaving the door open to financing false solutions in the name of the transition and  almost all continue to support the expansion of fossil fuels. This is at a time when annual funding for the energy transition needs to be multiplied by 2.5 between now and 2030 to achieve net zero by 2050, according to the International Energy Agency (2). The NGOs are calling on the banks to massively increase their support for sustainable power and to immediately stop supporting the expansion of fossil fuels.  

The new Sustainable Power Policy Tracker (SPPT), which is intended to encourage the banks to commit to financing sustainable power, looks at whether the 60 biggest global banks have the targets and policies in place to ensure a transition to decarbonised power. 

While 2/3 of the assessed banks have adopted targets for decarbonising power supplies, following the International Energy Agency’s Net Zero Emissions scenario, the scenario also says that a significant increase in finance for sustainable power is required.  

The tracker, which finds that none of the world’s biggest banks are currently on track, examines:  

• the definition of sustainable power used by the banks (3); 
• whether the banks had specific financing targets for sustainable power;    
• whether they had a target for delivering  financed new installed capacity for sustainable power;  
• whether there was transparent reporting of their activities linked to sustainable power. 

Reclaim Finance analyst Remi Hermant: "The shift from fossil fuels cannot happen without significant investment in the development of sustainable power supplies. Banks must redirect their finance and investments away from the fossil fuel sector and also away from “false solutions”.  Given the urgence of the climate emergency, banks must end their love affair with the fossil fuel sector and rapidly  embrace sustainable power."

According to the new tool, just eight banks globally have a target for financing sustainable power supplies: the French banks BNP Paribas, BPCE, Crédit Agricole, Société Générale, La Banque Postale, the German bank DZ Bank and Dutch banks ING and Rabobank. Yet, none of the banks excluded “false solutions” such as biomass or fossil fuel related technologies from their definition of “sustainable” and none of the banks had clear targets for increasing installed capacity.

European banks all scored weakly for transparent reporting, with UK banks HSBC, Standard Chartered and Lloyds scoring zero.

In the United States, none of the banks, which include Citi, Bank of America and JP Morgan  have capacity targets or financing targets for sustainable power.

While finance for the energy transition remains well below what is needed, almost all banks continue to finance the expansion of fossil fuels (4). Only two banks – La Banque Postale and Danske Bank – have made a committment to stop financing oil and gas expansion (5).

Brigitte Alarcon, Campaigner at Beyond Fossil Fuels: "So many European banks claim to be a leader of the energy transition, but the reality is that the vast majority still favour financing coal and fossil gas over sustainable power. For Europe to deliver on its climate responsibilities, it needs to transition to a renewables-based power system by 2035 at the latest. Time is running out. Banks have a responsibility to provide financing at the speed and scale needed to protect the climate and deliver a power system that  is in harmony with  people, nature and communities."

Reclaim Finance and partners are encouraging banks to step up and support the energy transition by adopting policies to support power generation from sustainable sources by committing to a 6:1 financing ratio by 2030 for sustainable power compared to fossil fuels (with six dollars for sustainable power supply for every one dollar spent on fossil fuels) and by immediately ending support for fossil fuel expansion.

Jeanne Martin, Head of Banking Programme at ShareAction: "Despite talking a great deal about the need to transition, this tracker demonstrates that banks seem to be falling at the first hurdle. They are failing to publish a transparent roadmap for how they will finance the urgently needed transition in the energy sector. There is much more that banks should be doing to align their green finance strategies with their green rhetoric."

David Hayman, Campaign Director at Make My Money Matter: "This tracker powerfully shows that despite shifting public expectations and a growing climate emergency, UK banks are still failing on climate action. In the face of the IEA’s guidance that we can have no new oil and gas if we are to prevent climate catastrophe, our banks continue to finance fossil fuel expansion, and lag behind in financing climate solutions.

UK high street banks – notably Barclays, HSBC, Santander, NatWest and Lloyds – must wake up to the economic and environmental reality that fossil fuel expansion must stop, and financing of climate solutions must urgently scale up. It’s what the public expects, and the planet demands."

Adele Shraiman, Senior Campaign Strategist with the Sierra Club’s Fossil-Free Finance campaign: "For all their talk about financing the transition, banks are not doing nearly enough to meaningfully drive decarbonization. As usual, US banks are the worst of a bad bunch, with no major US bank having set a target for financing renewable energy. The Wall Street majors are all over the map, with haphazard disclosures and vague promises of ‘sustainable finance.’ Meanwhile, these same banks are among the world’s worst financiers of oil, gas, and coal expansion. If banks want us to believe they are serious about their net-zero commitments, they need to ramp up their financing for renewables and stop financing fossil fuel expansion."

April Merleaux, Research Manager of Rainforest Action Network: "Banks in the US are the worst climate offenders and the largest funders of fossil fuels. We hear many empty promises from these banks about being committed to green financing. Reclaim Finance’s new policy tracker gives us a tool to cut through the spin. The truth is that banks don’t have policies in place that make their words anything more than greenwashing. We call on major US banks like Bank of America to stop financing fossil fuel expansion and to make credible commitments to scale up financing for urgently needed solutions, including sustainable power."

Notes:

1. The Sustainable Power Policy Tool analyzes the 60 biggest global banks as identified in the 2023 Banking on Climate Chaos report. The new tool scores banks for their targets and policies on sustainable power with banks scored from 0-5 for each criteria, with 0 reflecting no policies / targets, and 5 equal to best practice. It is launched with the support of Beyond Fossil Fuels, Sierra Club, Bank on Our Future, Rainforest Action Network, ShareAction, Friends of the Earth France, Climate Action Network France, WWF, Make My Money Matter, BankTrack, ReCommon, FinanceWatch. See here.
2. International Energy Agency, Net Zero Roadmap: A Global Pathway to Keep the 1,5°C Goal in Reach.  
3. The term “sustainable energy” emphasises the long-term sustainability of the use of energy resources to enable a rapid and fair energy transition and limit global warming to below 1.5°C. These sources include solar, wind, mini-hydro and geothermal energy. This does not include CCUS technology (CO2 capture, storage, transport and recovery), nuclear energy, biogas/biomass power stations, certain hydroelectric power stations and hydrogen if it is not produced directly from sustainable energy. 
4. See the Banking on Climate Chaos: Fossil Fuel Finance Report 2023, April 2023. 
5. The new tool highlight banks’ scores for coal policies and oil & gas policies as identified in Reclaim Finance’s Coal Policy Tool and Oil & Gas Policy Tracker.

This article was originally published on Reclaim Finance's website here.