We are facing an emergency: the scientists of the IPCC are agreed that our window of opportunity to limit global warming to 1.5ºC above pre-industrial levels is rapidly closing, with just a few years remaining. We must radically reduce our greenhouse gas emissions to reach global carbon neutrality by 2050. The EU and OECD countries, historically responsible for the majority of heating, must accelerate their efforts to reach this objective ten years earlier.
This can only happen with a total exit from fossil fuels, and not just from coal. Yet, according to the UNEP Production Gap report, countries’ planned fossil fuel production is 120% above the level that would limit warming to 1.5°C. If financial institutions do not act, fossil fuel companies will continue to easily access the financial services needed to not only operate existing facilities but also to develop new projects.
Indeed, an analysis of the policies adopted by banks, insurers, and investors demonstrated that not a single major financial player has adopted measures to put an end to fossil fuel development. If policies around coal exclusion are lacking, then the few adopted on certain oil and gas sub-sectors – tar sands, Arctic exploration and fracking – have even more gaps.
Banks have provided $2.7 trillion in financing to fossil fuel companies since the adoption of the Paris Agreement, with annual financing increasing since 2016. Moreover, the companies behind the biggest fossil fuel project under development have benefitted from nearly $1.6 trillion in financing, including 126 billion dollars from French banks for oil and gas projects.
This must stop. Financial institutions should adopt robust engagement and exclusion policies that prevent the expansion of oil and gas and set companies on the path to decarbonise their activities.