A recent study has found that the world’s leading banks have provided significantly more financing for fossil fuels than for sustainable alternatives between 2021 and 2024. The study, conducted by Reclaim Finance and partners including WWF, Urgewald, and Rainforest Action Network, analyzed the financing activities of the 65 largest banks globally. The results show that these banks allocated $1,368 billion for sustainable power, such as solar and wind energy, while $3,285 billion was allocated to fossil fuels during the same period.
This disparity means that for every dollar allocated to fossil fuels, only 42 cents went to sustainable alternatives. The study highlights that US and Canadian banks provided four times more financing for fossil fuels than for sustainable alternatives, while institutions in Asia and Europe performed better but still fell short of the required levels for a successful energy transition.
The findings of the study are in line with the concerns expressed by UN Secretary General Antonio Guterres, who stated earlier this year that the energy transition is “not yet fast enough or fair enough.” The study notes that 93% of financing for sustainable alternatives is concentrated in companies and projects in OECD countries and China, despite the urgent need for financing in other parts of the world.
The study’s authors emphasize that the largest banks are not on track to finance the energy transition, which is crucial for reducing greenhouse gas emissions and mitigating climate change. The significant imbalance in financing between fossil fuels and sustainable alternatives underscores the need for banks to reorient their investment strategies and prioritize sustainable energy sources. As the world continues to grapple with the challenges of climate change, the role of banks in financing the energy transition will be closely watched in the coming years.
