Banks are coming under increasing pressure to stop financing new fossil fuel expansion as pressure groups say that the new targets that banks are setting on the emissions they finance are still not going far or fast enough.
Deutsche Bank and Societe Generale recently announced targets to reduce emissions from their highest-emitting sectors, but the portfolio targets only give a partial picture as they do not cover “facilitated emissions” from underwriting and other capital market activities.
Lloyds Banking Group went a step further by saying that it will no longer support direct financing of new oil and gas developments – either project financing or reserve-based lending – but this does not cover “general corporate purpose” financing that makes up the vast majority of its exposure
Pressure groups are frustrated with the slow progress and varying financed emissions targets, including the use of carbon intensity metrics that allow fossil fuel expansion. They are calling for banks to set absolute financed emissions targets with precise carbon targets and publish policies restricting corporate finance for new fossil fuels.
Banks are publishing financed emissions targets to meet their commitments under the Net Zero Banking Alliance, part of the Glasgow Financial Alliance for Net Zero, ahead of the UN’s COP27 climate meeting in Egypt in November.
NGOs are ramping up action as banks continue to fund fossil fuel clients. BNP Paribas is facing legal action from French NGOs demanding that the bank stop support for new oil and gas projects, a move that could result in the first climate litigation to hold a commercial bank to account if BNPP fails to comply.