European banks and transition: time for a reality check

Reports

7 November 2024

Three years after the International Energy Agency drew a red line outlawing fossil fuel expansion, and as new European legislation is about to come into force, Reclaim Finance wanted to check whether European banks were ready to shift away from financing the expansion of oil and gas.

This new report focuses on the 20 major European banks and their financing to oil and gas expansion to denounce these financial institutions’ lack of climate action. While banks will have to publish transition plans in 2025, it exposes those holding back the possibility of this transition. Last, a focus on banks’ recent support to the largest integrated oil and gas producers of the continent tackles the argument that they are supporting these clients in their transition.

Key findings:

  • With their involvement in 982 deals to upstream or midstream oil and gas developers since 2021, the 20 largest European banks are hindering the energy transition.
  • Over 2021-2023, 72% of the financing from these banks to the top 6 European oil and gas majors was for fossil fuels.
  • European banks’ sectoral policies are too weak overall, as only four restrict financing to companies developing new oil and gas fields, and only one prohibits financing to LNG export terminal developers.

Based on these conclusions, Reclaim Finance calls on legislators and governments to make the halt to oil and gas expansion a strict criterion of transition plans and ensure that supervisors have the means to enforce it.