Is your hard-earned cash funding fossil fuel development?
Large US banks are investing in fossil fuel projects. Find out if your bank is one of them and why you should switch to green banking.
By GreenPortfolio Team
Last Updated: November 21, 2023
Originally Published: January 27, 2021
Any time you leave your cash sitting in a bank account, it doesn’t just sit there idly. The bank holding it for you puts it to work. It takes your cash and lends it to a wide variety of companies, businesses, and projects, ideally placing it in the best investment opportunities. Our economy is fueled by your capital – jobs are created and infrastructure is improved because of this lending system. However, you may not want your cash funding all types of projects. Many people would prefer that their deposits not be used for things like expanding fossil fuels, manufacturing guns, or funding private prisons.
Sustainable banking doesn’t have to be hard. While it can be difficult to determine where exactly your deposits are being placed, there are ways to find out – especially when it comes to fossil fuels.
What kinds of fossil fuel projects are being funded?
Every year, the Rainforest Action Network works with BankTrack, Indigenous Environmental Network, Oil Change International, Reclaim Finance, the Sierra Club, and Urgewald to record which banks are providing funding to a variety of fossil fuel industries. They keep track of financing completed for oil extraction from tar sands, the arctic, fracked oil and gas, offshore oil and gas, coal mining, and coal power plants. To do this, they follow over 3,200 parent companies and subsidiaries to see which banks and investors are financing their projects every year. We review that report annually and share its key takeaways.
Despite the fact that the risks of climate change have received more attention and focus, funding for fossil fuels has increased annually, with fossil fuel financing totaling $669 billion in 2022 just from the world’s 60 largest banks alone.
The continued influx of fossil fuel financing from 2016 to 2022 reinforces the need for individuals to be aware of how their chosen banking institutions are behaving. Since the Paris Agreement’s adoption at the end of 2015, over $5.5 trillion has gone towards fossil fuel financing from 2016 to 2022. Although fossil fuel financing has decreased by over $65 billion in 2022 relative to 2016, we need to stay vigilant. Despite an urgent need to reduce fossil fuel financing, this year’s reduction represents only about a 9% decrease in over 6 years. People must research beyond the bank’s marketing claims and corporate sustainability statement to make well-informed choices. GreenPortfolio is here to help by performing the research for you, making it clear that sustainable banking, green investing, and green funds can deliver on their promise.
Which banks are funding the most fossil fuel projects?
Although Canadian bank RBC topped the list for total fossil fuel financing for the first time this year, American banks remain the world leaders in funding fossil fuels since the Paris Agreement. You can check out the report for yourself here. To put it mildly, it’s unfortunate that American banks are not green investing or providing green investment opportunities for their clients. Last year, JPMorgan Chase, Wells Fargo, Bank of America, and Citi were in the top five world leaders in fossil fuel financing. Together, those three banks financed $146 billion in projects from oil extraction to coal-fired power plants.
If you’re a Chase customer, you might be shocked to learn that Chase is one of the worst offenders. In the last seven years, Chase alone has funded over $434 billion in fossil fuel financing. If you look at the total fossil fuel financing since 2016, American banks take the top four spots, funding an astounding $1.36 trillion. JPMorgan Chase is joined by Citi, Wells Fargo, and Bank of America at the top of the podium. And if you keep your cash in one of these banks, they might have been using your dollars.
You might feel encouraged by some recent announcements that JPMorgan Chase is making what seem to be significant financial contributions to mitigate their negative impact on the planet. But this report reminds us that “as in every year since the adoption of the Paris Agreement at the end of 2015, JPMorgan Chase was again the world’s worst fossil bank last year,” after reviewing the bank’s policies and actions. The numbers don’t lie: Chase has poured over $100 billion more into fossil fuel financing than any other bank on this list from 2016 to 2022. JPMorgan Chase’s future commitment is a step in the right direction as they have decreased fossil fuel financing by $28 billion from 2021 to 2022, but only if it’s coupled with a steep decline in fossil fuel investment is it a signal of real change.
Make sure your bank isn’t on the list of top fossil fuel financers, but also learn how a handful of players are facilitating the most fossil fuel expansion worldwide.
What should you do if your bank is on the list?
Take a minute to review some of the sustainable banking options that we recommend. The banks we have listed do not fund fossil fuel projects, and instead, actively support renewable energy generation through green investment opportunities.
If you close your account at your previous bank, consider taking a few moments to let them know why you are no longer banking with them. It’s important that your former bank understands that you care about how your money is used while it’s in their care and sustainable banking is a priority. Explain that you want your deposits used in an ethical manner that works to slow climate change, not to accelerate it. You can even suggest that renewable energy investment opportunities are what you’re looking for.
It may seem like your one account doesn’t make a difference, but individual actions do add up, especially when they are used to finance a cleaner green future. Together, we can make a difference and grow clean returns.
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