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A comprehensive assessment of the world's 30 largest listed financial institutions shows a clear disconnect between the concrete short-term targets and actions needed to address the climate emergency and the limited, long-term targets currently being set by the financial sector. This research, a product of InfluenceMap's FinanceMap platform, seeks to compare the sector's stated climate policies and commitments to its climate-relevant financing and policy lobbying activities. The report, downloadable on the right, is accompanied by the release of the FinanceMap Finance and Climate Change platform, allowing in-depth investigation of the analysis and findings for each of the financial institutions assessed.
The research finds that despite an increase in long-term climate targets and voluntary climate-related reporting by these groups, financial institutions continue to show a significant lack of meaningful short-term action in the face of the climate crisis. This is evidenced by memberships in industry associations opposing policymakers' attempts to implement sustainable finance policies, continued and considerable financing to fossil fuel value chains, and a lack of short-term roadmaps and milestones to meet their long-term targets.
Despite 29 of the 30 assessed financial groups having set 2050 climate goals in line with the Glasgow Financial Alliance for Net Zero (GFANZ) initiative, all 30 FIs remain members of financial industry associations which are opposing emerging sustainable finance policy, including finance sector disclosure requirements in the EU and requirements to consider ESG as part of investment duties in the US. Furthermore, 15 of the 30 are members of real-economy industry associations which have lobbied directly in line with fossil fuel interests, including the US Chamber of Commerce and the American Gas Association. A small number of financial institutions, most notably BNP Paribas, AXA and Allianz, are bucking industry trends and engaging on sustainable finance policy with mostly ambitious positions.
The 30 assessed FIs cumulatively enabled at least $740 billion in primary financing to the fossil fuel production value chain in 2020 and 2021, equivalent to 7% of their total primary financing in this period. This financing stands in direct contrast to science-based guidelines from the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA), making clear the need for the rapid scale-down of coal, oil and gas exploration and production and halve global emissions by 2030. The largest enabler of fossil fuel financing was J.P. Morgan with $81 billion in 2020-2021.
It is unclear whether or how the institutions plan to address these disconnects, with only 11 financial institutions having set targets across multiple sectors and climate-related reporting by financial institutions containing significant gaps across the board. Only 7 of the 30 FIs have set thermal coal exit plans in line with IPCC 1.5° C guidelines, while only Barclays, BNP Paribas, ING and Societe Generale have committed to reducing oil and gas exposure by 2025.
It remains likely that the financial sector will continue to enable real-economy activities misaligned with 1.5 °C climate scenarios as long as they remain legally and economically viable in the short term. It is also likely that finance as a whole will continue to lag on concrete climate action while the necessary binding climate policy and regulations remain absent. This is further exacerbated by finance's indirect opposition to climate finance regulations through its industry associations. The GFANZ initiatives' statements reflect this, noting policy advocacy as a priority.