Since the Paris Agreement was signed five years ago, several trillions of dollars have been financed into fossil fuel businesses by major banks around the world.
A new study titled Banking on Climate Chaos 2021, released Wednesday by a group of climate organisations, found that 60 of the world's biggest commercial and investment banks invested USD 3.8 trillion in fossil fuels from 2016 to 2020, reports CNBC.
"This report serves as a reality check for banks that think that vague 'net-zero' goals are enough to stop the climate crisis," said Lorne Stockman, a Senior Research Analyst at Oil Change International, one of the organisations authoring the report, in a statement released with the report. "Our future goes where the money flows, and in 2020 these banks have ploughed billions into locking us into further climate chaos."
In 2020, gross fossil fuel funding fell by 9 per cent on an annual basis. However, the study attributes this to demand constraints caused by Covid-19.
The study also discovered that "fossil fuel financing... from the world's 60 largest commercial and investment banks was higher in 2020 than it was in 2016," the first full year of the Paris climate agreement. Then in 2017, Former President Donald Trump pulled out of the multinational deal. Then in 2021, on his first day in office, President Joe Biden re-entered the Paris Agreement.
According to the study, the three banks that did the most fossil fuel finance in 2020 were JPMorgan Chase (USD 51.3 billion), Citi (USD 48.4 billion), and Bank of America (USD 42.1 billion).
A representative of JPMorgan Chase told CNBC Make It that the bank was unable to comment on a third party report. However, the bank guided CNBC Make It to its initiatives for climate change as "adopting a financing commitment that is aligned to the goals of the Paris Agreement" and facilitating USD 200 billion in clean, sustainable financing by 2025.
Citi pointed CNBC Make It to Val Smith, the bank's Chief Sustainability Officer, in a blog post released on Tuesday. Citi said in a blog post that it would collaborate with its fossil fuel banking customers to move to public monitoring of greenhouse gas emissions first, and then phase-out of funding for businesses that do not meet carbon mitigation requirements.
"As the world's most global bank, we acknowledge that we are connected with many carbon-intensive sectors that have driven global economic development for decades," Smith wrote. "Our work to achieve net zero emissions by 2050 therefore makes it imperative that we work with our clients, including our fossil fuel clients, to help them and the energy systems that we all rely on to transition to a net-zero economy."
Bank of America did not immediately respond to CNBC Make It's request for comment.
The Banking on Climate Chaos 2021 report comes as indicators show global economies are not currently on track to meet the emissions reductions established as part of The Paris Agreement in 2015.
The 2020 report is the 12th annual, though the scope of the report has expanded in that time. The report was a collaboration by seven non-profits: Rainforest Action Network, Bank Track, Indigenous Environmental Network, Oil Change International, Reclaim Finance, and Sierra Club.
The report authors aggregate bank lending and underwriting data using Bloomberg's league credit methodology, meaning credit is divided between banks playing a leading role in a given transaction, and uses data from Bloomberg Finance LP and the Global Coal Exit List.
Also, banks are given the opportunity to weigh in on the findings. "Draft report findings are shared with banks in advance, and they are given an opportunity to comment on financing and policy assessments," the report says.