Is your bank funding global warming?
If you are with one of the major banks, your money is likely funding fossil fuels. Here's how to find out more and consider making a switch.
By Elizabeth Landau and Ella Lungstrum
September 8, 2022
What happens to your money when it is deposited in a bank? Chances are you never worry about it as long as you think your money is safe and sound. But as the global climate crisis escalates, you may want to take a closer look at your bank and how it uses your money to fund fossil fuel projects worldwide.
According to Rainforest Action Network, the top 60 U.S. banks have provided $4.6 trillion to the fossil fuel industry since 2016. Compare that to the $203 billion in bonds and loans that have gone toward renewable projects – a mere 5% of what has gone into fossil fuel financing. Even as the International Energy Agency (IEA) has made it clear that there can be no new coal, oil, and gas projects to remain under 2 degrees Celsius of warming, banks continue to provide a staggering amount of cash to finance them.
You are not alone if you have no idea how your bank is positioned on climate change. Except for a few dedicated "green" banks and, notably, First Republic Bank, the first major bank to commit to ending all lending to fossil fuels, most banks are not forthcoming about investing in or servicing fossil fuel companies.
Discussions about fossil fuel lending are typically reserved for investors and government policymakers through dense policy documents written by well-paid lobbyists usually working to delay or defeat climate regulation in Washington, D.C., or at the state and local level. Big banks have been doing their best to keep this information from you with misleading marketing campaigns for quite some time.
We'll walk through how to find out more about whether your bank is good or bad on climate change and provide you with ways to adjust your banking to match your values. But first, some background.
Banking has a fossil fuel problem
When you deposit your paycheck in the bank, it doesn't just sit in some large digital vault or savings account. Instead, your money is lent to other businesses. One of the most significant users of bank capital is America's fossil fuel industry. "Despite the known risks of climate change to the economy and humanity, many banks are accelerating their fossil fuel funding," says Vanessa Fajans-Turner, executive director of BankFWD, a network dedicated to persuading banks to phase out financing for fossil fuels and fund clean energy.
Together, the top six banks headquartered in the U.S. provided 29% of fossil fuel financing identified in 2021 — and 31% of fossil fuel financing since 2015, when global leaders signed the Paris Agreement, charting a course away from carbon-emitting fossil fuels.
Oil and gas loans have been a lucrative business for banks for over a century since J.P. Morgan did business with Standard Oil founder John D. Rockefeller in the late 19th century. And fossil fuel lending remains an essential source of revenue and profit. Last year alone, banks facilitated more than $742 billion in financing, according to annual tracking by the Rainforest Action Network's (RAN) report, "Banking on Climate Chaos."
Setting your money on fire
If you have a bank account with one of America's largest banks, that is your money at work. According to climate activist Bill McKibben, individual bank deposits used to finance fossil fuel projects produce more carbon than all the cooking, flying, driving, heating and cooling you do in an average year.
"It's just sitting there in the bank spewing carbon," McKibben writes. "Depending on how much money you have, your bank account is two, three or four furnaces chugging all day... Without knowing it, you're setting your money on fire, over and over and over, and that fire is filling the atmosphere with greenhouse gasses."
But the climate crisis has prompted growing scrutiny of carbon pollution bank lending, particularly among a new generation of fintech savvy customers increasingly concerned about their climate footprint. That's significant: U.S.household assets of our generations (Millennials and Gen Z) are expected to increase from $47 trillion to $140 trillion just between now and 2030.
Painting the banking industry green
Banks are acutely aware of this issue and spending millions on "green" messaging to reassure depositors that they are part of the climate solution, not the source of the problem. Bank CEOs, like JPMorgan Chase's Jamie Dimon, are trying to have it both ways - aggressively lend to carbon-based industries while urging the world to be more sustainable and green. It is a practice that futurist and writer Alex Steffen has dubbed "predatory climate delay."
All of this makes it very confusing for the average banking customer. Yet, understanding what banks do with your money has never been more critical.
Holding banks accountable for their fossil fuel footprint
We want you to know where your money is going, how it may impact efforts to fight climate change, and how banks use sophisticated marketing and public relations to project an environmental image that may not match their lending practices. After giving this a read, it's worth considering if your current bank matches your values or if you should consider a better option.
We chose to focus on the most significant four banks — JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America — because they account for more than 25% of all fossil fuel financing identified over the last six years. The "big four" have collectively lent more than $1 trillion since the Paris climate agreement was signed in 2015. Plus, if you haven't already moved your money to a climate-friendly bank, odds are you have an account with one of them.
We then looked at how the banks communicated to their customers earlier this year on Earth Day.
JPMorgan Chase: America's largest bank is also the world's largest lender to fossil fuels
We start with America's largest bank, JPMorgan Chase & Co., which has been the world's largest financier of fossil fuels every year since 2015. While J.P. Morgan has promised to provide $1 trillion in green financing initiatives by 2030, it is still ranked No. 1 in financing fossil fuels between 2016 and 2021, providing $382 billion in lending and capital market activity. That is 34% more than the second-ranked bank.
Yes, the bank financed $106 billion in green projects in 2021. However, that was easily offset by its fossil fuel lending. In the 11 months following the COP26 United Nations climate talks in Glasgow last November, the bank lent more than $60 billion to fossil fuel companies, including Exxon, Russia's Gazprom, and Saudi Arabia's Aramco.
For its retail customers, Chase feeds a steady stream of ads promoting bank convenience and consumptive lifestyles. Climate & Capital reviewed Chase's consumer advertising and could not find any reference to climate change. At best, there were a few references to "green" or "sustainable" practices.
Given its size and impact on the future global economy, J.P. Morgan will play a critical role in financing the carbon transition. What CEO Dimon decides today will have a huge bearing on the lives your children live in 2050.
Citigroup: Increased virtue signaling while protecting long-established fossil fuel clients
JPMorgan Chase's closest carbon finance competitor is Citigroup, ranked No. 2 in financing for fossil fuels between 2016 and 2021, providing $285 billion in lending and capital market activity.
These facts contradict the environmental commitments and values promised in Citigroup's marketing and social media. To "Celebrate Earth Day," they chose to focus on the work of explorer, environmentalist, and conservationist Robert Swan, the first person to venture to the north and the south poles.
Readers quickly called out the greenwashing: "You don't get to celebrate earth day when you continue to kill our planet with your investments in fossil fuel!!," said one angry reader, @RealityBent.
That did not stop Citigroup from proudly touting its green credentials in an Earth Day Blog with a graphic of a plant sprouting from a jar of coins, tweeting a misleading claim: "Our commitment to sustainable finance spans our business & supports collective action with our clients."
To help offset the billions of dollars it lends for fossil fuel development, Citi launched an employee group called "Green Champions," hosted a firm-wide "Earth Day challenge," and proudly announced that over two weeks, it had saved an estimated 148,000 pounds of waste, 286,000-kilowatt hours of energy and 792,000 bottles of water through this challenge. "We challenge ourselves to extend our efforts to accelerate toward a more sustainable and climate-resilient future," Citi said on Earth Day.
However, the emissions generated by Citi and other global financial firms' investing, lending, and underwriting activities are, on average, more than 700 times higher than their direct operational emissions. This is a classic example of greenwashing.
Wells Fargo: Ramping up fossil fuel lending
Moving on, we come to our next bank, Wells Fargo, which ranked No. 3 in financing for fossil fuels between 2016 and 2021, providing nearly $272 billion in lending and capital market activity.
Despite pledging $500 billion by 2030 for sustainability initiatives, Wells Fargo increased financing for fossil fuels significantly in 2021 to $46.2 billion, representing a 26% increase compared to 2016 levels and putting it in the No. 2 spot for 2021. As a comparison, over the same period, the top 60 banks financing fossil fuels increased their financing of fossil fuels by a much lower 2.5%. Wells Fargo's policy on financing coal power generation and coal mining remain weak even compared with other large banks.
You would not know from Wells Fargo's social and promotional content, which seeks to construct a different narrative. This past Earth Day, Wells Fargo decided to solicit a greenwashed call to action in an Instagram post, which featured a woman in a Wells Fargo shirt gardening with the caption: "It is our responsibility to make sure #EarthDay is not just another day. Whether you're joining a big group event or doing a solo cleanup, we encourage you to get involved and be a part of the change because the risk of inaction is too great to ignore." Clearly, advice they should listen to as well.
Bank of America: Fossil fuel financing on the decline but still digging coal
Bank of America (BofA) is another large bank that has joined the commitment to strive for net zero carbon emissions by 2050. Similar to BofA's peer financial institutions, we are left with gaps in how this pledge will become a reality.
BofA, in its environmental reports, targets reducing emissions intensity in its energy, power, and auto manufacturing portfolios by 2030, as well as providing $1 trillion in finance to renewable energy, energy efficiency, sustainable transportation, sustainable water, agriculture, and other low carbon solutions.
Still, BofA sits high on the charts as the fourth-ranked financier of fossil fuels between 2016 and 2021, providing $232 billion in financing. Yes, Bank of America's financing did fall by 18.6% in 2021 compared with 2016, a decline that outpaced most of its peers. However, despite this notable decline, BofA's financing of the world's dirtiest fossil fuel energy source, coal power, increased dramatically in 2021 compared to 2016, making it the second largest U.S. bank lender.
BofA took to social media to flex its environmental commitments and concerns this Earth Day. They shared a flashy green video on multiple social platforms warning that "climate change could be catastrophic for most of the world." Yet, they continue to lend to the chief culprits of global warming.
Put your money where your values are
The banks we highlighted are lending billions of dollars for planned oil, gas, and coal production that are not in line with the companies' pledges to reduce greenhouse gas emissions. Unfortunately, it doesn't seem like funding for these projects will stop anytime soon.
If what you just read is making you see red, then it's time to take action! Here are some ways you can make your money count in the fight against climate change:
1) First, understand what your bank is up to
If your bank isn't one of these big four, you should check and see what they are planning regarding net zero targets, their historical financing for fossil fuel projects, and their current climate initiatives. Their annual reports are an excellent place to start, but if you want to jump directly to fossil fuel financing, you can look at this report from the Rainforest Action Network, which tracks the 60 largest fossil fuel financiers.
2) Make your voice heard
Contact your bank and tell them they need to make a change. Tell them they will lose you as a customer if significant decreases in fossil fuel financing aren't made. Third Act has resources for you – talking points, email drafts, ways to engage your friends – in their Banking on our Future Toolkit and Outreach Guide.
3) Probably time to switch
The good news is there are other banks out there that prioritize environmental values. Generally, these options are either more locally focused, like credit unions, or started with climate in mind. Check our list of climate-friendly banking options.
Any action you can take is a positive step towards the world we want to see.
Editor's Note: This article is a collaboration between Climate & Capital Media and GreenPortfolio as part of our ongoing partnership.
Climate & Capital Media was founded to accelerate climate action by raising awareness about the critical role of money in financing climate solutions, and the role capital has played in supporting carbon-producing industries.
GreenPortfolio is focused on helping people avoid greenwashing and leverage their financial decisions to fight climate change by providing transparent assessments about the climate impact of investments, bank accounts, and other financial products.
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