Europe’s major banks pumped billions of dollars into oil and gas expansion, despite their stated commitments to Net Zero targets, according to research from Share Action.
The research showed 25 major European banks provided US$55bn in financing to companies expanding oil and gas production last year.
The banks had spent US$400bn since 2016, with HSBC PLC (LSE:HSBA) topping the group at $59bn, followed by Barclays PLC (LSE:BARC) (US$48bn) and BNP Paribas (US$46bn).
The oil and gas companies receiving the most funding from these banks included Exxon Mobil, Pemex, Suadi Aramco and BP.
Lloyds Banking Group PLC (LSE:LLOY) had spent $5.9bn, while NatWest Group PLC (LSE:NWG) had spent $4.37bn, with BP also being a key customer for both.
This was despite climate scenarios like the International Energy Agency’s (IEA) pathway showing there was no room for further oil and gas expansion if the world were to have a 50% chance of limiting global warming to 1.5°C.
Share Action pointed out that 24 of the banks listed were part of the UN-convened Net Zero Banking Alliance.
The NGO criticized the alliance for being silent on fossil fuel expansion, with those banks providing $33bn to oil and gas expanders since joining the alliance last year.
Mark Campanale, founder and executive chair of Carbon Tracker, said: “The IEA’s ‘NetZero2050’ report tells us that for the world to avoid 1.5C of heating, then no investment is needed anywhere in any new coal, oil or gas production.
“Now is the time for banks to get real with the science, and announce a science-based moratorium on funding new fossil fuel projects.”
Share Action said that while templates existed for change, including La Banque Postale’s announcement that it would exit the oil & gas sector entirely by 2030, most big banks were not demanding transition plans from their clients.
The NGO is urging asset managers to make full use of their shareholder rights to demand that banks implement policies to restrict finance for oil and gas expansion, after its senior research manager stated that gas & oil expansion was a lose-lose bet for banks and their investors.
Xavier Lerin, senior research manager at Share Action, said: “If oil & gas demand decreases in line with 1.5C scenarios, prices will fall and assets will become stranded. On the other hand, if demand does not fall enough to limit global warming to 1.5C, the economy will suffer from severe physical climate impacts.
“Either way, value will be destroyed for energy companies, banks and their investors.”