Financial giants told to wise up to climate emergency

The majority of the world’s major financial institutions “don’t get the climate emergency” according to the latest version of Reclaim Finance’s Oil and Gas Policy Tracker (OGPT).

Since its launch in March by Reclaim Finance and 16 NGOs the number of financial institutions that have been assessed by the tracker has risen from 150 to 369, but the results are still; disappointing according to climate groups.

The tracker analyses to the oil and gas exclusion policies of the top global financial institutions, covering banks, insurers and investors from 32 countries. This tool revealed that despite many of them pledging to tackle climate change and halve emissions by 2030, less than 4% of those rated in the tool have restrictions in place against oil and gas expansion.

It has prompted Reclaim Finance to renew its calls on all financial institutions worldwide to align their business with the 1.5°C scenario by implementing “robust oil and gas policies”.

The tracker now covers 104 banks, 30 insurers and 235 investors. It analyses and rates their oil and gas exclusion policies based on science-based indicators: restrictions on new oil and gas projects, restrictions on companies developing new oil and gas projects and finally, strategies to phase out oil and gas.

The founders say the OGPT is designed to differentiate robust policies from ineffective pledges by financial institutions. They add despite growing pressure to stop fuelling oil and gas expansion in order to cut down on carbon emissions and align their business with 1.5°C, too few financial institutions have adequate policies in place:

  • 134 of the 369 financial institutions rated in the OGPT have adopted an oil and gas policy, which means more than 2/3 of them don’t even have a policy.
  • Only 13 financial players rated in the OGPT have a policy tackling (totally or partially) oil and gas expansion, which means less than 4% committed to align their business with climate science to stay below 1,5°C.
  • No more than 27 financial players rated in the OGPT have adopted ambitious commitments on unconventional oil and gas through the exclusion of some developers and/or a phase-out strategy.
  • Yet, 158 of them have committed to carbon neutrality by 2050 joining an alliance of the Glasgow Financial Alliance for Net Zero (GFANZ).

Clément Faul, research & analysis manager at Reclaim Finance, explained: “The outcomes of the Oil and Gas Policy Tracker are clear, most financial institutions worldwide don’t get the climate emergency. It is alarming to find out less than 4% of the financial institutions rated in the tool have a robust policy tackling oil and gas expansion. All the others, even those members of the Glasgow Financial Alliances for Net Zero, fail to align their business with a 1.5°C pathway. French players La Banque Postale, Ircantec and CNP Assurances have crossed the Rubicon and shown that it’s possible for banks and investors to phase out support for oil and gas. Their peers must follow”.

Reclaim Finance added the recommendations of the International Energy Agency (IEA), UN secretary-general Antonio Guterres and the UN Race to Zero campaign point in the same direction: no more fossil fuel projects to limit global warming to 1.5°C. However, this message has not been heard by the majority of financial institutions, which continue to support companies and their projects devastating for the climate, the environment and the population, be it gas extraction in the Arctic, mega oil pipelines in East Africa, or LNG projects in the Philippines.

“Despite Antonio Guterres’ recent call on all financial institutions to abandon fossil fuel finance and invest in renewable energy, most banks, insurers and investors continue to support companies with ruthless expansion plans. The war in Ukraine and the heatwaves hitting Europe, India and Pakistan should be a violent wake-up call and encourage all banks, insurers and investors to take real climate action and stop fuelling a fossil-fuel based future” said Lucie Pinson, founder and director of Reclaim Finance.

The tracker analyses to the oil and gas exclusion policies of the top global financial institutions, covering banks, insurers and investors from 32 countries. This tool revealed that despite many of them pledging to tackle climate change and halve emissions by 2030, less than 4% of those rated in the tool have restrictions in place against oil and gas expansion.

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