How green is Wall Street? Ranking of banks by financing of oil, coal and renewable energies – fr

How green is Wall Street? Ranking of banks by financing of oil, coal and renewable energies – fr

After investing trillions in oil, gas and coal since the Paris agreement, banks are on track in 2021 to commit more funding to climate-friendly projects.

By Tim Quinson and Mathieu Benhamou

In more than five years since the world agreed to limit warming, banks have invested more than $ 3.6 trillion in fossil fuels – nearly three times the total of bonds and loans backing green projects, according to Bloomberg data. Now this persistent disparity in favor of oil, gas and coal producers may finally end.
Green bonds and global banking loans have surpassed the value of fossil finance so far this year, an unprecedented reversal since the signing of the Paris Agreement at the very end of 2015. Bloomberg data spanning nearly 140 financial services institutions around the world are showing at least $ 203 billion in bonds and loans to revolving projects and other climate-friendly businesses through May 14, compared to $ 189 billion to companies focused on climate-friendly businesses. hydrocarbons.

Focus on fossil fuels

Green debt issuance has lagged oil, gas and coal financing by a factor of three since 2016

Source: Bloomberg League Tables

“We may be at a powerful tipping point,” said Tim Buckley, a clean energy investor who spent nearly two decades at Citigroup Inc. “Finance will only lead when the numbers make sense.”
The long wait for funding to eliminate the main sources of pollution due to global warming has left the sector open to criticism. By taking fees for the subscription of fossil fuels, banks seemed to prioritize short-term profits over climate goals. Banks have pocketed around $ 16.6 billion arranging bonds and loans for energy companies since the Paris announcement, more than double the $ 7.4 billion generated by green bonds and loans.
US banks dominate this dirty corner of the debt markets. JPMorgan Chase ranks as the largest financier of energy companies, having helped to issue more than $ 256 billion in bonds and loans since the start of 2016 in exchange for fees of around $ 900 million. Citigroup, Bank of America, and Wells Fargo are the next largest corporate issuers advisers, based on fees earned.

Fossil fuels pay off

Banks collected $ 16.6 billion in fees related to energy sector loans and bonds from Paris compared to $ 7.4 billion for green debt

Source: Bloomberg League Tables

To measure the involvement of each bank, Bloomberg Green looked at bonds and syndicated loans taken out for companies that produce or extract oil, natural gas and coal. These figures are assessed in relation to the debt by each bank arranged on behalf of private and public issuers for climate or environmental projects. These climate-friendly projects were to be deemed eligible for green bonds by lenders and investors.
There are weaknesses in the dataset. For example, it is possible that part of a loan to an oil company was used for a clean energy project. Bloomberg only started tracking the fees banks earn by making loans in 2018, so the fees for 2016 and 2017 might be underestimated.
But the big picture from the data is clear: Banks have focused overwhelmingly on fossil fuels in recent years, and that balance is starting to shift as well. Both America’s largest bank and the primary fossil fuel financier, JPMorgan is an indicator of climate-driven change underway. The Wall Street giant has contributed more green bond underwriting and loans so far in 2021 than the funding it has arranged for fossil fuel companies. This reversal over less than half a year could also reflect a temporary drop in the financing needs of the energy industry.

Greening big banks

Financing Oil, Gas and Coal Versus Green Debt

Source: Bloomberg League Tables

The largest Western oil companies – Exxon Mobil, Chevron, BP, Royal Dutch Shell, Total, Eni and Equinor – issued $ 13 billion in debt in 2021, up from $ 60 billion in the same period last year. The early stages of the pandemic saw these companies selling bonds to increase their liquidity as oil prices fell below $ 20 a barrel, said Paul Vickars, senior credit analyst at Bloomberg Intelligence. “I don’t expect to see any net new issuance for the rest of 2021,” he said.
But what is happening in financial markets adds to the signs that politicians and business leaders are finally taking climate change seriously. China, Japan and South Korea, Asia’s three largest economies, recently pledged net zero, and the election of US President Joe Biden has allowed more focus than expected on climate issues. Banks are working to echo these global commitments: JPMorgan, Citigroup and Bank of America lead a group of U.S. banks that have pledged to facilitate at least $ 4 trillion in sustainable, climate-friendly deals over the course of the next decade.
From a profit and loss perspective, industry executives now have proof that they can make money by participating in the transition away from fossil fuels. Banks receive fees of around 0.6% for underwriting green bonds and loans, according to Bloomberg data, six basis points more than similar deals for energy companies.
The sums required to finance the transition to a low-carbon future are substantial. S&P Global analysts cite estimates of $ 3 trillion in annual investment if the world hopes to limit warming to 2 degrees Celsius by 2050, as outlined in the Paris Agreement. This means that total investment in clean technology and energy efficiency is expected to increase fivefold by mid-century, compared to 2015 levels.
None of this will happen without the financial markets. Investment bankers will need to give unbalanced support for green projects, just as they have long done for the old fossil fuel economy.

Fossil vs Green Finance in the top 30 banks

All figures since 2016, after the signing of the Paris Agreement. Click on the column headings to sort 👆

Source: Bloomberg League Tables

—With assistance from Chris Cannon


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