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Is the global financial system finally going green?

For the first time since the world agreed to take steps to curb global warming green bonds and loans from the global banking sector topped the value of fossil fuel financing, according to a Bloomberg report.

Sign from one of the Global Climate Strike protests on 9/20/2019. Image Credit: Flickr/Martin Spiske

Financial institutions poured more than $203 billion into bonds and loans for renewable projects and climate friendly ventures through May 14, compared to $189 billion in businesses focused on hydrocarbons, according to the Bloomberg data.

That funding is significant, but it’s a drop in the bucket compared to the $3.6 trillion the banks have spent providing money to fossil fuel companies over the last five years. That figure dwarfs the roughly $1 trillion spent on green projects over the same period.

Banks have reaped major benefits from their backing of fossil fuel companies — to the tune of about $16.6 billion in windfall from those kinds of energy deals. By contrast, the world’s largest financial institutions have raked in $7.4 billion from green bonds and loans since the Paris Agreement was signed on December 12, 2015.

As for which banks have profited the most in the last few years from oil and gas deals — it’s no surprise that U.S. banks lead the list.

JPMorgan Chase funneled roughly $256 billion in bonds and loans to oil and gas companies and utilities since 2016. While Citigroup, Bank of America and Wells Fargo also lead in lending to polluting energy companies.

Bloomberg based its data on the bonds and syndicated loans these banks underwrote fro companies that produce or extract, oil, natural gas, and coal, the publication wrote. That data was then compared against debt each bank arranged for corporate or government issuers for climate or environmental projects.

Although, as Bloomberg notes, the data can be muddy, the overall picture it paints is that banks have profited heavily from lending to companies exacerbating the climate crisis.

However, the Bloomberg data also shows that the times are changing.

“We may well be at a powerful tipping point,” Tim Buckley, a clean-energy investor who spent nearly two decades at Citigroup Inc. told Bloomberg. “Finance will only lead when the numbers make sense.”


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