Understanding the Energy Supply Financing Ratio (ESFR) and decyphering banks’ publications

In response to the climate crisis, banks are increasingly highlighting their “climate strategies.” A new metric is gaining traction among regulators, investors, and the banks themselves as a way to measure banks’ actions regarding the energy transition: the Energy Supply Financing Ratio (ESFR). In a single figure, it compares a bank’s financing of fossil fuels to its financing of sustainable alternatives (renewable energy—primarily solar and wind—electricity grids, and batteries).

However, methodologies vary significantly from one institution to another, opening the door to misleading ratios regarding banks’ actual support for the energy transition. This memo aims to provide keys to understanding the importance of the ESFR and identifying methodological flaws in order to decipher banks’ announcements and assess their real impact.

Featured in several publications (World Energy Outlook, Net Zero Roadmap) by the International Energy Agency (IEA), this ratio is derived from the “Net Zero Emissions by 2050” scenario (NZE), which is based on two simultaneous trends by 2030, compared to 2023:

• a 60% decrease in annual investments in fossil fuels, to US$400 billion;
• a doubling of annual investments in clean energy (primarily electricity), to US$2500 billion.

Combined, these two trends result in a 6:1 ratio by 2030: for every dollar invested in fossil fuels, six dollars must be invested in “clean” [1] energy (essentially electricity) supply. The IEA itself states that “these economy-wide ratios provide an important guide for financial actors looking to assess their equity and lending portfolios against net zero targets”.

The ESFR is useful because it condenses financing for the energy transition into a single figure that is comparable over time and (in theory) across banks. A ratio that remains stagnant and well below 6:1 reveals that, in reality, a bank continues to finance fossil fuels far more than the energy transition, regardless of its public rhetoric. It therefore allows us to move beyond mere statements (commitments, intentions, talking points) and examine verifiable figures—provided we understand the methodology behind them.

According to research by Reclaim Finance, between 2021 and 2024, the world’s 65 largest banks allocated, on average, only 42 cents to sustainable electricity for every dollar allocated to fossil fuels—a ratio of 0.42:1, which is far from the necessary trajectory. The table below summarizes the three indicators evaluated for each bank:

Shareholder pressure played a decisive role across the Atlantic. In 2024 and 2025, the New York City Comptroller (NYCC), which oversees the city’s pension funds, and the NGO SHARE filed resolutions at the annual shareholder meetings of the largest North American banks to demand the disclosure of a “clean energy supply ratio.” These negotiations led to the publication of the ratio by the largest North American banks (JPMorgan Chase, Citi, Scotiabank, and RBC), as well as a commitment from CIBC. The NYCC believes that “energy supply ratio disclosure will become a new standard for the banking sector”.

In France, three banks (BNP Paribas, Crédit Agricole, and BPCE) have published their ratio, and two of them have set a target based on this ratio. However, the methodologies used by the three banks—which are very similar—contain significant biases that render the ratio meaningless. In its state, it is impossible to assess whether these banks are making a real change in their financing activities in the energy supply sector or aligning with a decarbonization trajectory based on their ratios.

An ESFR is credible only if its methodology is transparent and robust. Although there is currently no standard, Reclaim Finance has identified several basic criteria that help distinguish a credible ESFR from an attempt at greenwashing.

Currently, eight banks publish their ratio and/or its methodology, or have committed to doing so in the medium term. A regional divide is emerging: North American banks generally cover a broader scope (coverage of the entire fossil fuel value chain, bonds are included) but also include fossil fuel technologies (CCUS, fossil hydrogen) and bioenergy to the “low-carbon” scope; only French banks publish a ratio with a target, but with a much narrower scope (partial coverage of the fossil fuel value chain, only loans are included) and without a publicly disclosed methodology, with the exception of Crédit Agricole.

To better understand a ratio reported by a bank, these questions help assess its robustness:

• Has the bank set a specific, time-bound target, or does it simply publish a current ratio without a trajectory?
• Is the full methodology published and verifiable, or is only the final figure disclosed? If multiple figures are published, why?
• What portion of the fossil fuel value chain is covered by the ratio (extraction and production only, or also the midstream—particularly LNG—and gas-fired power plants)? If certain stages of the chain are excluded, why?
• Which financial instruments are included: loans only, or also bonds, which account for a significant portion [2] of support for fossil fuels?
• How is the “low-carbon” scope defined? Specifically:

• • Are fossil fuels, such as gas, or technologies that extend their use (CCUS, fossil hydrogen) excluded from the “low-carbon” scope?
  • Are power grids and batteries included?
  • Are sectors with no direct link to energy supply (charging stations, cement, other “decarbonization activities”) added to the “low-carbon” side, without a counterpart on the fossil fuel side?

In May 2026, as it does every year, the FBF portrayed French banks as “leaders in financing the ecological transition”, citing one figure in particular: for every €1 of financing for fossil fuel production, €3.4 goes toward renewable energy. In reality, these figures are based on a limited sample of financing: only outstanding loans are taken into account, and only those for fossil fuels production—that is, the upstream portion of the value chain.

Bond issuances—which are thus excluded from the calculation—nevertheless accounted for 29% of French banks’ support for fossil fuels between 2021 and 2025 (or US$71 billion, according to the Banking on Climate Chaos report). Similarly, financing allocated to liquefied natural gas (LNG) or gas-fired power plants is excluded from the calculation. French banks, however, provided US$11.2 billion to companies developing new gas-fired power plants worldwide between 2021 and 2024 (according to The Price of Gas report, published in April 2026).

Such omissions make this ratio meaningless, as do those published by French banks that follow the same methodology.

Other organizations refer to the ESFR:

• Bloomberg New Energy Finance (BNEF) has published an annual “Energy Supply Banking Ratios” report since 2023; its most recent editions conclude that banks have made virtually no progress in this area.
• The European Banking Authority (EBA) has included this ratio as a monitoring indicator in its guidelines on ESG risks, which took effect in January 2025.
• Science Based Targets initiative (SBTi) has recommended that financial institutions calculate and disclose this ratio as part of its Net-Zero standard in July 2025.
• Climate Policy Initiative (CPI) has included this ratio in its “Net Zero Finance Tracker” since November 2025.
• World Resources Institute (WRI) has included it in its “Financial Institutions Net Zero Tracker” since August 2024.
• Louis Bachelier Institute (ILB), a leading academic network in finance, published a detailed methodology in April 2025 to establish a robust foundation for calculating the ratio and limit the proliferation of approaches that are difficult to compare.

More content from Reclaim Finance:

• The First Edition of the “Banking on Business-as-usual” Report (September 2025)
• Scotiabank publishes Canada’s first energy supply financing ratio (April 2026)
• 2025 banks’ energy financing ratios: the good, the bad and how to move forward (January 2026)
• Energy supply financing ratios: the next milestone in banks’ climate strategy (October 2024)