While the window for avoiding the most catastrophic consequences of climate change narrows, the global banking sector continues to funnel huge sums each year into fossil fuels, finds a new report. Last year alone, the 60 largest banks financed fossil fuels to the tune of $673 billion.

That’s according to a new analysis released today by Rainforest Action Network and partner organizations. The latest Banking on Climate Chaos report, which annually examines global fossil fuel financing from major commercial and investor banks, reveals the extent to which banks are backing various categories of fossil fuels and their expansion. 

Royal Bank of Canada (RBC) topped the list of the biggest fossil fuel financiers for 2022, pouring $42.1 billion into the sector. 

“It’s obscene that the Royal Bank of Canada is now the world’s dirtiest banker for fossil fuels — CEO Dave McKay should be ashamed. While we work to advance climate action at all levels, RBC is moving in completely the wrong direction, dragging our climate ambitions backwards and positioning Canadian banks as fossil fuels’ lenders of last resort,” Richard Brooks, climate finance director at Stand.earth, said in a statement.

Still, U.S. banks dominate the funding landscape, accounting for more than a quarter of all fossil fuel financing in 2022. That’s despite JPMorgan Chase falling from its six-year streak in the top spot to second, handing out nearly $40 billion last year.  

But since the Paris Agreement came into effect in 2016, JPMorgan Chase has been the largest single financier of fossil fuels, at a total of $434 billion. Fellow U.S. banks Citi, Wells Fargo, and Bank of America round out the top five since 2016. In the years after nearly 200 nations pledged to limit global heating, the world’s biggest banks have spent $5.5 trillion on fossil fuels. 

JPMorgan Chase did not immediately respond to a request for comment.

According to the analysis, while fossil fuel companies reported record profits of $4 trillion in 2022, the top 60 banks still shelled out more than half a trillion dollars to the sector. Overall fossil fuel financing was lower than the previous year, but the report finds this was due to “unusual geopolitical and economic conditions, not shifts in bank policy.”

Global energy market turmoil stemming from the Russian invasion of Ukraine, skyrocketing oil and gas prices, and record fossil fuel profiteering meant that some companies had little need for bank financing. “Several big players in the oil and gas sector did not borrow in 2022,” the report explains, including Shell, ExxonMobil, Suncor, and Occidental Petroleum. 

“Those record profits really disrupted the normal pattern of lending to fossil fuels,” April Merleaux, research manager at Rainforest Action Network’s climate and energy program, and lead author of the report, told DeSmog. But she doesn’t expect this anomaly to last. “It seems quite clear…that 2023 and 2024 are anticipated to be really significant years of growth for fossil fuel expansion, and we expect that will be matched by increases in growth of fossil fuel financing from banks,” she said.

Banking on Fossil Fuel Expansion

In 2022, banks provided $150 billion to the top 100 companies actively expanding fossil fuels, which include TC Energy, TotalEnergies, Saudi Aramco, and ConocoPhillips, the report finds. 

“The amount of money going into fossil fuels and fossil fuel expansion is still dwarfing the amount going into renewables and other [low-carbon] technologies,” Merleaux said. She noted that roughly 80 percent of the bank financing that went towards expansion last year came from banks with net-zero commitments.

“It’s hard to take seriously a net-zero commitment from a bank that continues financing in the billions [fossil fuel] companies that are actively expanding,” Merleaux said.

Climate and energy experts have warned that growing the world’s supply of fossil fuels is inconsistent with limiting warming under the Paris Agreement and net-zero emissions objectives. A 2021 International Energy Agency report said that reaching the net zero by 2050 goal requires no further investment in new fossil fuel supply. And last month’s report from the Intergovernmental Panel on Climate Change said emissions from existing fossil fuel pipelines, power plants, and other infrastructure are expected to “exceed the remaining carbon budget for 1.5°C.”

Despite these clear statements, the world’s largest banks have not cut off the flow of money to fossil fuels. “This is one of the most insane misallocations of capital in human history,” climate author and activist Bill McKibben told DeSmog. “Climate scientists have literally said: no more fossil fuel infrastructure if we want to have any chance of meeting our climate targets. Banks know this, but they can’t help themselves.”

One of the companies at the forefront of fossil fuel expansion is ConocoPhillips, the developer behind the recently approved Willow oil and gas megaproject in the Alaskan Arctic. While some banks now have exclusion policies restricting financing for oil and gas projects in the Arctic, for example, companies like ConocoPhillips can still secure funds under requests made for general corporate purposes. Project-specific finance, the report notes, only accounts for about 4 percent of banks’ fossil fuel financing. “It’s typical for [fossil fuel companies] to not seek project finance but to get finance for general corporate purposes,” Merleaux explained. “It ends up being a huge loophole.”

ConocoPhillips also holds a 30 percent stake in a proposed liquefied natural gas (LNG) export project in Port Arthur, Texas. The LNG sector, undergoing significant expansion, is another area where many banks’ fossil fuel restriction policies fall short. According to the report, very few banks have exclusion policies that apply to LNG expansion or to midstream operations in oil and gas such as export infrastructure. Financing for the top 30 LNG companies increased almost 50 percent to $22.7 billion in 2022, coming from major funders Mizuho, Morgan Stanley, JPMorgan Chase, ING, and Citi, the report reveals. 

This financing is backing a surge in proposed LNG export projects as gas companies used the war in Ukraine and Europe’s energy crisis to justify expansion. But since projects can take years to become operational, the buildout does little to alleviate the immediate supply gap. “New LNG facilities are a false solution to Europe’s short term energy needs,” the report says.

RBC Tops This Year’s List

The leading financier of fossil fuels in 2022, per the new analysis, was Royal Bank of Canada, which increased its funding nearly 9 percent over the previous year. The Canadian bank was a major funder of tar sands companies, and poured the most — $7.4 billion — into fracking. Since the Paris Agreement, RBC has provided approximately $254 billion to the fossil fuel sector.

“The authors of this report do not validate their figures or findings with us and we can’t confirm their conclusions. Further, this report does not measure progress in meeting our climate goals,” an RBC spokesperson said in a statement. “We are confident in our ongoing engagement with our clients and our climate strategy. This includes setting initial interim emissions reduction targets for lending in three key sectors which inform our lending decisions, adding climate considerations to executive compensation and establishing the RBC Climate Action Institute, focused on advancing climate policy research and action.”

Among the fossil fuel expansion projects RBC is funding is the Coastal GasLink fracked gas pipeline, which is being built across the heart of unceded Wet’suwet’en territory in modern-day British Columbia. The project has been embroiled in conflict for years, largely over the question of Indigenous sovereignty, with opposition from Wet’suwet’en hereditary chiefs but signed agreements from most of the First Nation’s elected band councils. At its Annual General Meeting on April 5, RBC reportedly shut out an Indigenous delegation, which included Wet’suwet’en hereditary leadership, from the main meeting room and even threatened Indigenous leaders with arrest.

“It is clear that we can no longer simply trust bankers to do the right thing on climate change or Indigenous rights,” Keith Stewart, senior energy strategist with Greenpeace Canada, which was not involved with the report, told DeSmog. “Asking politely will only lead to us continuing to be played for suckers by the big banks. Canada is currently legislating a requirement for auto manufacturers to phase out gasoline-powered cars in favor of electric vehicles, and now our federal banking regulators must similarly require banks to phase out fossil fuel finance while ramping up support for clean energy.”

Courts could be another avenue to compel big banks to change course. A Greenpeace Canada report released last month highlights the growing legal risk facing banks globally for failing to act on their climate promise, warning that Canadian banks may be on notice or subject to future litigation as they continue to heavily finance fossil fuels. The mismatch between Canadian banks’ words committing to climate action and their behavior ramping up fossil fuel financing raises greenwashing concerns, the report says. BNP Paribas — the top fossil fuel financer in Europe — is already the target of the world’s first climate lawsuit against a commercial bank.

Growing Calls for Banks to End Fossil Fuel Financing

Banks are facing heightened scrutiny and mounting pressure over their ongoing financial support for a sector that is destabilizing the climate and considered to be in long-term decline. UN Secretary General António Guterres has referred to fossil fuels as a “dead end” and explicitly called upon financial actors to help facilitate the energy transition. In a video message to a sustainability conference in late March, Guterres called for all financial institutions “to publicly present credible and detailed plans to transition their funding from fossil fuels to clean energy with clear targets for 2025 and 2030.” That entails an immediate end to any coal financing and plans to phase out oil and gas finance, he said.   

Just this week, more than 1,300 scientists signed onto a letter urging JPMorgan Chase shareholders to vote for a resolution at the bank’s upcoming Annual General Meeting requesting the board adopt a policy to ramp down financing of fossil fuel expansion.

Several progressive Democrats in Congress are making similar asks of major financial institutions. Sen. Ed Markey (D-MA) and Reps. Ayana Pressley (D-MA) and Rashida Tlaib (D-MI) recently reintroduced legislation, the Fossil Free Finance Act, that directs the Federal Reserve to mandate that big banks halve their financed emissions by 2030 and end them by 2050. And last month, thousands of people led by Americans over age 60 rallied in 30 states and the capital to “stop dirty banks” in a movement organized by the climate campaign group Third Act. “It’s no accident that the March 21 protests were the biggest day in the streets for the climate movement in a while,” said McKibben, the founder of Third Act, which organizes older Americans to take climate action and protect democracy. “People are understanding that we have to pull the lever marked ‘politics,’ but also the one marked ‘finance.’ They’re the only two levers big enough to really matter.”