Friday, February 9, 2024 — Pressure is mounting on US and Canadian banks following an announcement by Barclays that it will end funding for new oil and gas projects, exclude financing of unconventional oil and gas projects including those in the Amazon, and restrict financing for some energy companies expanding fossil fuels including oil sands operators.
The policy change will also see pressure on energy companies like Shell and Exxon to produce transition plans, reduce methane and end dangerous gas flaring. The policy will especially impact pure play energy companies and those actively expanding fossil fuel infrastructure. The new policy, while still not strong enough, stands in stark contrast to backsliding by US banks and inaction by Canadian banks.
Bank of America recently lifted bans on funding for Arctic drilling and coal. JP Morgan Chase introduced a misleading new “energy mix” target to replace its original oil and gas target, which could make it harder to assess the bank’s progress toward reducing financed emissions. Citi’s chief executive Jane Fraser has also signaled a shift in priority, unilaterally renaming the S in ESG to stand for ‘security,’ in a clear disregard for communities and workers.
RBC, the largest Canadian fossil fuel financier, remains under investigation by federal law enforcement agency, the Competition Bureau, for allegedly misleading consumers about their climate claims.
Canada’s major banks are facing securities complaints over allegations of misleading investors through its use of terms like ‘sustainable finance’, without providing the requisite data. They consistently rank near the bottom of global banks when comparing low carbon to fossil fuel energy supply financing.
Over 100 organizations have written to the major US, Canadian, European and Japanese banks, insurance companies and private equity, calling on them to follow the US decision on pausing new export permits for liquefied methane gas (LNG) and end funding for the sector.
The backsliding by US banks is seen as a snub to the recent global agreement by governments at COP to transition away from oil, gas and coal. Ironically, US banks sent large delegations to the climate talks at COP 28 in Dubai: Citi sent 26 staff and Bank of America sent 18, including chief executive Brian Moynihan.
The top 60 global banks provided $5.5 trillion in lending and underwriting to oil, gas and coal companies from 2016 to 2022. Four US banks were the biggest funders globally over that period – JP Morgan Chase ($434 billion), Citi ($333 billion), Wells Fargo ($317 billion) and Bank of America ($280 billion). Royal Bank of Canada was also one of the largest funders in 2022 at over $38 billion for just one year ($250 billion since 2016); Barclays is the seventh largest funder at $190 billion since 2016.
Other global banks have made major policy changes in line with climate action: In 2022, HSBC announced it was ending funding for new fossil fuel projects, while Danske Bank said last year it would stop financing oil and gas projects and companies.
Roishetta Ozane, the founder of Vessel Project of Louisiana, a mutual aid organization and Gulf Fossil Finance Coordinator for Texas Campaign for the Environment:
“Methane leaks and gas flaring are a part of daily life for my family and my community in Louisiana so I welcome Barclays’ move to push their clients to address this. It is a disgrace that the US and Canadian banks instead of matching policies like this are backsliding. Citi, Bank of America, JP Morgan Chase and Royal Bank of Canada are continuing to shamelessly fund an industry that is hurting American families.”
Bill McKibben, co-founder of Third Act, a climate action group for people over 60
“This makes Bank of America’s backsliding last week look even more craven. It’s high time for all the big banks to say, ‘enough and no more’.”
Richard Brooks, Climate Finance Director, Stand.earth
“It’s not near everything we want but Barclays is acknowledging that banks must be part of the climate solution by introducing this policy change. In North America, we either see inaction or willful backsliding. This move by Barclays is going to increasingly put US and Canadian banks at a competitive disadvantage and is something that all shareholders and customers of these banks need to take into consideration as they contemplate continuing their relationship with banks like Citi and Royal Bank of Canada.”
Evelyn Austin, Executive Director, Change Course, a youth-led movement to end fossil financing
“This past year, 10 Student Unions signed an open letter to major Canadian banks, calling on them to stop funding fossil fuels, and integrate FPIC into their financing decisions. Canadian banks continue to ignore student concerns and tell us that dropping fossil fuels isn’t possible or responsible. But this updated policy from Barclays, while far from perfect, sets a welcomed higher precedent for North American banks to step up and do better on climate policies.”
Alice Hu, Senior Climate Campaigner, New York Communities for Change
“Families in New York and across the US are being impacted by climate change through flooding, storms, extreme heat and toxic air. Banks should be on notice that the level of frustration is rising with their lies and their backsliding and that they can expect mass action as a result.
Adele Shraiman, Senior Strategist, Sierra Club Fossil-Free Finance Campaign
“Barclays’ updated policy continues the growing trend of major banks around the world taking steps to align with a net-zero future, while major US banks kowtow to pressure from the fossil fuel industry and its political allies to continue supporting the energy of the past. While it’s clear that Barclays still has much work to do to actually deliver on its own climate commitments, these moves further widen the climate ambition gap by banks across the Atlantic.”
Mary Mijares, Fossil Finance Campaigner, Amazon Watch
“U.S. and European financial institutions that pump capital into eroding oil industries have long jeopardized the Amazon rainforest and climate, contaminating Indigenous peoples and poisoning ancestral lands. Barclays’ decision to provide no financing for production in the Amazon signals a beginning to mitigate such harms. Citi, JPMorgan Chase, and Bank of America must now heed the calls from Indigenous nations demanding an end to the financing of Amazon destruction and commit to a just transition out of fossil fuels globally.”
Aditi Sen, Director, Climate and Energy at Rainforest Action Network
“Barclays’ policy shift is a step towards responsible climate action. It stands in sharp contrast to the unacceptable policy regressions we are seeing from U.S. Banks who continue to prop up a fossil fuel economy that threatens the planet and violates human and indigenous rights around the world. Bank of America’s policy backsliding is dangerous and misguided. There is just no more room for financing fossil fuel expansion – that is a message that Wall Street needs to hear.”
###