A number of financial institutions are working to fund clean energy solutions to help mitigate the climate crisis. But even more are still financing fossil fuels. Will they swap places? And when?
A growing number of financial institutions claim to be steering capital toward climate solutions. But most are still channeling billions into fossil fuel development, and some are now doing so more aggressively than before.
In 2021, the International Energy Agency (IEA) warned that any hope of capping global heating at safe levels required an immediate halt to the development of new oil and gas fields and coal-fired power stations. The agency projected that annual global energy investment needed to rise to $5 trillion to accelerate a clean energy future.
Despite this directive, banks around the world have continued to fund the expansion of fossil fuels. That same year, hundreds of them joined the Glasgow Financial Alliance for Net Zero (GFANZ) at COP26, pledging to align their investments with the 1.5°C climate goal. But the reality, critics argue, falls far short of those promises.
Paddy McCully of Reclaim Finance put it bluntly in a 2022 interview with The Guardian: “GFANZ and its member alliances will only be credible once they up their game and insist that their members help bring a rapid end to the era of coal, oil, and fossil gas expansion.”
That disconnect is now wider than ever. In 2024, fossil fuel financing surged by $162.5 billion year over year, according to the 16th annual Banking on Climate Chaos report released last month. The study, compiled by the Rainforest Action Network, Sierra Club, Reclaim Finance, and other watchdog groups, found that the world’s 65 largest banks committed $869 billion to fossil fuel companies last year alone — reversing two consecutive years of declining investments.
U.S. banks led the charge. JPMorgan Chase, Bank of America, and Citi ranked as the top three financiers of fossil fuel expansion and overall fossil fuel funding in 2024, with all three boosting their fossil fuel financing by more than $10 billion each. Barclays, based in the U.K., joined them in that category. Altogether, American banks accounted for $289 billion — nearly one-third of all fossil fuel financing tracked in the report.
“It’s a pretty significant year for the report given the reverse in trajectory,” said RAN Senior Research Strategist and report co-author Caleb Schwartz in an interview with ESG Dive. “Banks are putting money into fossil fuels, they’re putting money into fossil fuel expansionism.”
Finance and the fossil fuel industry
The findings underscore what climate advocates have long said: many banks are still heavily embedded in the fossil fuel economy, regardless of public net-zero claims. The same four U.S. banks that top the 2024 report — JPMorgan Chase, Bank of America, Citi, and Wells Fargo — were already identified as the worst offenders in the 2022 Banking on Climate Chaos report. That report also flagged a $10 billion transaction involving Citi and JPMorgan Chase with Saudi Aramco just months after the Net-Zero Banking Alliance (NZBA) launched.
Jessye Waxman, senior strategist at the Sierra Club’s Fossil-Free Finance campaign, called the reversal “unacceptable, deeply irresponsible, and a clear capitulation to political pressure.” In a June 17 press statement, she added: “Banks must shift away from risky financing and commit to reducing emissions via the companies they finance, with a genuine focus on helping to decarbonize the economy.”
Although many banks now prohibit direct project-level financing for fossil fuels, they often leave loopholes that allow general corporate financing to continue. RAN Policy Lead Allison Fajans-Turner told ESG Dive that banks are failing to adequately assess the credibility of their clients’ transition plans. “Either banks are not doing their due diligence… or they have decided that they’re going to lend to them anyways [sic],” she said.
There are still some signs of progress. In 2022, global investment in the energy transition reached $1.1 trillion for the first time. The following year, the World Bank allocated $311 million to renewable projects across Sierra Leone, Liberia, Togo, and Chad. Major players like Goldman Sachs have also launched climate-focused funds — including a $1.6 billion vehicle dedicated to clean tech.
Yet even these moves seem modest against the scale of fossil funding. In the U.K., HSBC and Lloyds promised to end funding for new oil and gas fields in 2022 — but as recently as 2021, both banks had provided billions to fossil expansion. Barclays continues to be a top global lender to fossil fuels, even as public pressure intensifies.
Activist-led campaigns such as Make My Money Matter, backed by filmmaker Richard Curtis and celebrities like Stephen Fry, Emma Thompson, and Chris Packham, are pushing U.K. banks to turn pledges into action. “We hope this weird and wonderful coalition of activists and actors, businesses and brands, celebrities and climate champions puts a fire under the banks to stop them setting fire to the world,” Curtis said in a statement.
The future of finance and energy
Tools like Bank.Green are helping consumers make those choices easier by offering transparency on banks’ fossil fuel involvement. Spring Bank, Atmos Financial, and Amalgamated Bank are some institutions that meet the certification’s criteria by rejecting new fossil fuel investments. U.K. options include Triodos, Algebra, and the Co-operative Bank.
Meanwhile, the Net-Zero Asset Owner Alliance (NZAOA) — which includes Allianz, Avia, and BNP Paribas — is taking steps to close some of the loopholes in net-zero commitments. The alliance plans to require expanded climate disclosures, including on privately held assets, and will ban the use of carbon offsets in lieu of actual emissions reductions.
“It is past time to stop financing fossils. Oil, gas, and coal companies will not manage their own decline,” said David Tong of Oil Change International. “The simple reality is that the fundamental arithmetic of 1.5°C requires oil and gas production to decline by at least 3-4 percent per year, starting now. But no major oil and gas company has committed to ending expansion, and banks around the world continue to pour billions into fossil fuels.”
Still, efforts face headwinds in an industry increasingly backpedaling on climate promises. As banks distance themselves from climate coalitions and quietly escalate fossil fuel investments, advocates are asking a hard question: how much longer can financial institutions pretend to support decarbonization while bankrolling its opposite?
For now, the numbers speak louder than the pledges.
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