No major bank has yet committed to stop funding new oil and gas fields or coal capacity, research has found.
Most banks that have recently updated their climate policies have weakened them, according to the research by the TPI Global Climate Transition Centre (TPI) at the London School of Economics and Political Science (LSE).
The centre analysed 36 of the largest banks by market capitalisation and total assets, and found “banks are still at an early stage of their transition with decarbonisation targets that cover a limited set of sectors and business activities.”
The researchers evaluated banks’ climate policies using 77 sub-indicators grouped into 10 areas, called the net zero banking assessment framework (NZBAF).
They found 95% of the scores remained unchanged year on year, and those banks that had shifted had weakened their policies. On average, banks score on only 18% of the 77 sub-indicators and the best-performing bank scores on about one-third of the sub-indicators.
The report said banks have “weakened their disclosures in areas such as net zero commitments, financing conditions for high-emission sectors and fossil fuel policies”. Some banks either fully withdrew or weakened their net zero commitments, substituting firm language such as “commitment” or “target” with less precise wording such as “ambition” or “aspiration”.
Algirdas Brochard, banking project lead at TPI, said: “Given banks’ central role in the economy and their far-reaching influence on climate, their slow progress on the climate transition coupled with the recent dissolution of the Net Zero Banking Alliance suggest that the objectives of the Paris agreement are slipping further out of reach.”
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As well as failing to stop funding fossil fuel projects, many banks are also not funding climate solutions and the green transition. Of the 36 banks TPI assessed, 17 have financing targets for climate solutions, but the activities eligible for this financing vary from bank to bank.
Another recent study found the world’s big banks have handed nearly $7tn (£5.6tn) in funding to the fossil fuel industry since the Paris agreement to limit carbon emissions.
This year, the Net Zero Banking Alliance shut down completely after leading banks quit it following the election of the US president, Donald Trump. It had encouraged members to cut the carbon footprint of their investments and help drive the transition to net zero emissions by 2050.
