The world’s biggest banks reduced their lending to fossil fuel firms by 9% in 2020 because of the pandemic, although funding has still risen over the past five years, a new report shows.
The 60 largest banks lent more than $750 billion U.S. to 2,300 fossil fuel companies in 2020, down from $824 billion U.S. in 2019, according to a report by Reclaim Finance, Oil Change International and a consortium of other non-governmental organizations (NGOs).
The report said the funding decline last year was driven by record low levels of industry investment in the second half of 2020 as the pandemic hammered fuel demand. However, bank lending to fossil fuel companies increased at an annual rate between 4.4% and 5.5% between 2016 and 2019.
Bank lending to companies with heavy greenhouse gas emissions is increasingly under the spotlight as investors push for more details about plans to manage climate-related risks and opportunities in their portfolios.
HSBC recently became the latest lender to announce that it is phasing out support for the coal industry and commit to short- and medium-term targets to align with the Paris Climate Agreement.
