The world’s 60 biggest banks financed fossil fuels by 6.9 trillion dollars (£5.5 trillion) since the Paris Agreement, according to an analysis.
The banks, which include UK giants like Barclays and HSBC, committed 705 billion dollars (£562 billion) in financing to fossil fuels in 2023, according to the 15th annual Banking On Climate Chaos (BOCC) report published on Monday.
It comes seven years after the legally binding international treaty to try to limit warming to 1.5C above pre-industrial levels came into force in 2016.
The UN says banks will play an important role in the transition by aligning their portfolios with the Paris Agreement.
The International Energy Agency has said that no new fossil fuel projects should be developed beyond existing fields to remain within the temperature limit.
The BOCC coalition of campaign and research groups analysed the banks’ lending and underwriting to more than 4,2000 fossil fuel companies reported in Bloomberg LP and London Stock Exchange Group (LSEG).
They found that 347 billion dollars (£277 billion), more than half of the biggest banks’ financing for fossil fuels in 2023, went to expansion alone.
Meanwhile, a total of 3.3 trillion dollars (£2.6 trillion) was found to have gone towards fossil fuel expansion since 2016.
US bank JP Morgan Chase was identified as the biggest fossil fuel financier globally in 2023, committing 41 billion dollars (£33 billion) to fossil fuel companies.
Citibank provided the most financing to fossil fuel expansion at 204 billion dollars (£163 billion) since 2016, the analysis suggests.
The UK biggest bank, Barclays, came eighth in the world for its financing of fossil fuels since 2016 at 235 billion dollars (£188 billion).
It also came ninth out of the top 12 for the amount of finance committed to fossil fuels in 2023 at 24 billion dollars (£19 billion).
HSBC came 12th in the world for its financing of fossil fuels since 2016 at 192 billion dollars (£153 billion).
April Merleaux, report co-author and research manager at Rainforest Action Network, said the report lifts the lid on the banks’ greenwashing.
“In a year with record climate impacts, I am shocked to see financing for any category of fossil fuels increase,” she said.
Lucie Pinson, director at Reclaim Finance, who also co-authored the report, said: “European banks like to claim to be showing leadership when it comes to action on climate change, but they are continuing to channel money into fossil fuel expansion, despite the clear warnings from climate science.”
The paper, which was endorsed by almost 600 organisations in 69 countries, was written by researchers at BankTrack, Centre for Energy, Ecology and Development, Indigenous Environmental Network, Oil Change International, Sierra Club, and Urgewald.
The authors said every bank was contacted and given an opportunity to review the deals attributed to them.
Coinciding with the release of the report, Barclays was accused of calling billions of dollars in financing for fossil fuel companies “sustainable”.
The bank has pledged to invest one trillion dollars (£0.8 trillion) in sustainable and transition finance by 2030, including green loans and bonds.
But it helped to raise 41 billion dollars (£33 billion) in sustainability-linked finance for fossil fuel companies last year, according to an analysis of LSEG data by the Bureau of Investigative Journalism (TBIJ).
This includes three billion dollars (£2.3 billion) in sustainability-linked finance for Enbridge, which is expanding oil and gas infrastructure, and Harbour Energy, the UK’s largest oil and gas producer.
Both of the firms have committed to reducing emissions from their operations but not those generated from burning fossil fuels, known as scope three emissions.
Epworth’s Andrew Harper, an investor in Barclays, said: “We think it’s totally dishonest. If they are calling the financing of any fossil fuel companies sustainable finance, that to me is greenwash.”
Katharina Lindmeier at Nest, which also invests in Barclays, said TBIJ’s findings were “very concerning”, adding that “any loans which help companies expand oil and gas infrastructure should not be classed as sustainable”.
Barclays itself counts only the funding it is directly responsible for, which it said was 10.9 billion dollars (£8.7 billion) across all sectors last year.
A spokesman for Barclays said the bank does not agree with the TBIJ claims and accused the organisation of “inflating financing figures attributed to Barclays”.
They added that the bank reports transparently on its green, transition, sustainable and sustainability-linked finance and that less than 5% of the reported 67.8 billion dollars (£54.1 billion) of green finance in 2023 was finance to the energy sector.
“The labelling of transactions as sustainability-linked is consistent with guidance from industry bodies,” it added.
“We believe in financing the real economy, helping our clients to reduce their emissions and the emissions we finance.
“We sought to engage the Rainforest Action Network about their methodology prior to the report publication. We do not recognise the classification or attribution of some transactions.”
A Citi spokesperson said the bank “is committed to the global transition to a low-carbon economy”.
“We are supporting our clients as they work to decarbonise their businesses, while also continuing to meet global needs for energy security, affordability and reliability.
“Since 2020, Citi has reached 441.2 billion dollars toward our one trillion dollar sustainable finance goal, and we disclose our progress toward net zero each year in our annual climate report.”
A JP Morgan Chase spokesperson said: “As one of the world’s largest financiers to both traditional and clean energy companies, we help power today’s global economy.
“We believe our data reflects our activities more comprehensively and accurately than estimates by third parties. Reflecting our strategy of supporting the build-out of zero-carbon power, we set a net-zero aligned Energy Mix target and will disclose a clean energy supply financing ratio.”
PA has contacted HSBC for comment.