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Green Daily
Green lending is on top
By Tim Quinson
Green lending tops fossil fuel for
first time
For the first time, more money was raised in the
debt markets for climate-friendly projects than for fossil-fuel
companies.
Roughly $580 billion was arranged in 2022 for renewable energy and
other environmentally responsible ventures, while the oil, gas and
coal industries turned to lenders and underwriters for closer to $530
billion, according to data compiled by Bloomberg.
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But it’s not that green financing is finally
winning out over fossil fuel lending. Rather, Big Oil looks to be
getting more money from elsewhere. High oil prices over the past year
have likely freed energy companies from their dependence on capital
markets, said April Merleaux, research manager at the environmental
nonprofit Rainforest Action Network.
“We’re also seeing fossil-fuel companies turn to less traditional
sources of capital, such as private equity, which is much harder for
us to track,” Merleaux said. Given this backdrop, “it’s difficult to
say with confidence that there’s a new trend in the lending markets
that will extend into 2023.”
The big question for oil, gas and coal companies is how they plan to
use their balance sheets to make the transition to clean energy,
Merleaux said. Currently, many are saying they plan to expand
fossil-fuel production now and decarbonize later, she said.
“This is false logic, and it isn’t what the International Energy
Agency (IEA) recommends,” she said. As for the banks, “they know what
needs to be done, but we don’t yet see evidence that they’re really
ready to follow through on their emissions-reduction objectives.”
![](images/images_01_04_2023/pic3.jpg)
Jamie Dimon, chairman and chief executive officer of
JPMorgan Chase & Co. The bank’s recent climate commitments have done
“nothing to change” its support for the fossil-fuel industry, said
environmental nonprofit Reclaim Finance. Photographer: Al Drago/Bloomberg
Bankers are generating considerably more revenue these days
from selling green bonds and loans. In 2022, they pocketed an
estimated $3.3 billion of fees from these deals, exceeding the $2.5
billion earned from lining up bonds and loans for the
highest-polluting energy sectors, Bloomberg data show.
Credit Agricole SA, BNP Paribas SA and Bank of America Corp. ranked as
the top arrangers of green bonds and loans last year, according to
Bloomberg data, while RBC Capital Markets, Wells Fargo & Co. and
JPMorgan Chase & Co. were the leading providers to the fossil-fuel
industry.
However, if one looks at the bigger picture, Wall Street and its
brethren clearly remain dedicated to funding the companies most
responsible for global warming. Since the Paris climate agreement was
announced in 2015, banks have raised almost $4.6 trillion for oil, gas
and coal companies—double the $2.3 trillion gathered from green loans
and bond sales.
But those Big Oil banks—including JPMorgan—say they have climate
ambitions, and they’re expanding. Last month, the New York-based bank
announced new emissions-reduction targets for airlines, cement
manufacturers and iron ore and steel companies. That adds to
JPMorgan’s first set of goals, which focused on the oil and gas,
electric power and auto manufacturing sectors.
JPMorgan said the six sectors now covered by its reduction goals
account for the majority of global emissions. The new targets are
intended to align with the IEA’s net zero by 2050 scenario, according
to the bank.
Climate activists have had a mixed reaction to JPMorgan’s claims.
While the adoption of additional sectoral goals is “great to see,”
JPMorgan’s oil and gas commitments have so far done “nothing to change
its unwavering support” for the fossil-fuel industry, said Lucie
Pinson, director of environmental nonprofit Reclaim Finance. “The jury
is still out on the material impact of these new targets for cement
and steel.”
Merleaux and others also have questioned JPMorgan’s decision to focus
on reducing the carbon intensity of its financing portfolio rather
than pledging to reduce absolute emissions. That jibes with a United
Nations-appointed panel of experts that said companies and financial
institutions should focus on cutting absolute emissions when setting
net-zero goals.
JPMorgan has responded by saying that intensity-based metrics are the
most “decision-useful way to evaluate clients progress against climate
scenarios.”
Sustainable finance in brief
More than a dozen Republican state attorneys general have been
blasting ESG financial practices, while Republicans in Congress said
they plan to increase their scrutiny of what they call “woke
capitalism.” Now, presidential contenders like former Vice President
Mike Pence are getting into the game.
![](images/images_01_04_2023/pic4.jpg)
Former Vice President Mike Pence
Photographer: Scott Eisen/Getty Images
North America
One of their main complaints is that environmental, social and
governance investing is part of a broader Democratic effort to
prioritize fighting climate change to the detriment of the fossil-fuel
industry. But the GOP is increasingly facing blowback over its
strategy—and its claims—from pension officials, banking associations,
and within
the party itself.
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In Europe, the
war against greenwashing continues. Banque Pictet & Cie, one of the
world’s biggest managers of top-ranked ESG funds, is stripping that classification
from some $14 billion of client savings.
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But over at
BNP Paribas SA, they say using a different interpretation of
“sustainable investment” means you can keep the EU’s
top ESG tag.
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With the new
year come new updates to the key climate change indicators. These
are the
numbers to watch.
Bloomberg
Green publishes Good Business every week, providing unique insights on
ESG and climate-conscious investing.
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