Too fossil! European banks continue to massively support new oil and gas projects, reveals NGO Reclaim Finance. Investments in renewables remain a very small minority.
“Funding from European banks does not help the energy transition of companies, since the majority goes to financing the fossil fuel activities of these companies,” explain to Vert Noam-Pierre Werlé, political analyst at Reclaim Finance. In a report published this Thursday, the NGO specializing in the analysis of financial sector practices in the face of the climate crisis reveals that the 20 largest banking establishments have carried out 985 transactions (loans, bond issues, etc.) to of companies at the forefront of oil and gas expansion since 2021.
Between 2021 and 2023, European banks – the British Barclays and HSBC in the lead – have financed the extraction and transport of fossil fuels to the tune of 200 billion dollars (around 186 billion euros).
Shell and TotalÉnergies are among the oil and gas companies most spoiled by European banks, with more than 48 billion dollars (around 44 billion euros) in financing between 2021 and 2023. Reclaim Finance notes that 72% of the funds allocated to these firms fuel their fossil fuel activities and not the development of alternatives such as investment in renewable energies or biomass.
In an open letter, the organization, along with thirteen other NGOs, calls on banks to no longer grant loans or bonds to companies developing new oil or gas projects.
By 2021, the International Energy Agency had ordered companies to no longer launch new fossil fuel extraction projects to limit global warming to 1.5°C. In 2022, the body extended this recommendation to new gas and oil transport infrastructure, such as liquefied natural gas (LNG) pipelines and terminals.
Last April, BNP Paribas and Crédit Agricole announced that they would end support for oil or gas extraction projects, unlike Société Générale and the Banque Populaire-Caisse d’Epargne (BPCE) group. According to Reclaim Finance, BNP payments to the fossil sector increased from just over eight billion dollars in 2021 to three billion in 2023, for example. A commitment that the NGO welcomed.
However, BNP’s commitment only concerns the extraction of fossil fuels. This still finances the transport of the latter, including LNG terminals, just like the other banks, with the exception of the Postal Bank.
According to Noam-Pierre Werlé, while most of banks’ financial flows are directed towards the fossil sector and not the development of alternatives, “the diversification of companies into the production of other types of energy, including renewables, serves as an argument for banks who say that they must support companies in their transition.”
In 2025, banks will be required to publish their climate transition plan, as part of the European directive on reducing financial risks. The NGO Reclaim Finance is calling on regulators to “make stopping funding for oil and gas expansion a strict criterion” for these plans, to avoid any attempts at greenwashing.
Cover photo: Getty images
