While many banks have comprehensive sustainability policies in place since the Paris Climate Agreement and have committed to phasing out fossil fuel investments, the reality unfortunately looks different. When oil, gas and coal companies need new capital, there are plenty of banks and law firms willing to support them. Companies that want to expand their fossil activities, for example by developing new oil fields, are still being facilitated by the financial sector.

A recent investigation by Investico, Follow the Money and ten international media, including Le Monde, Handelsblatt and The Guardian revealed which banks and law firms play a crucial role in raising money for oil and gas companies that are still expanding their fossil fuel business. The total of 1,600 bonds issued by expanding fossil fuel companies since the Paris Climate Agreement represent a value of more than a trillion euros.

About a third of the financing of oil, gas and coal companies comes from bonds. In order to issue bonds, companies need a bank that looks for investors to buy them. These banks then turn to large investors who need to invest money and receive a commission for this. For banks, this is a very lucrative business and unlike direct loans to fossil fuel companies, these supporting activities are not visible on their balance sheets.

In this way, banks can continue to make money from the fossil sector – despite their promises to no longer actively finance it. Although most of the banks that raise billions to finance fossil companies are located in the US, large European banks still play a very important role here. Many of the top facilitators of fossil fuel bonds will also be recognisable as the retail banks that many of us use for our own personal savings and investments.

Despite the fact that international big banks are broadly advertising their renewable energy portfolios, in reality only 7 percent of energy financing by banks went to renewable energy between 2016 and 2022. The rest was invested in fossil projects. In order to be CO2 neutral by 2050, we must completely stop the development and production of new oil and gas fields as soon as possible. This is not only the opinion of many NGOs, it was also the conclusion of the International Energy Agency (IEA) in 2021: every new oil, gas or coal project pushes the Paris objectives even further out of sight. However, the fossil sector continues to consistently oppose sustainability and even increases the problem by expanding production.

It is time for an end to investment in fossil fuel and exploration, even if fossil fuel might seem to be the answer to the energy crisis. If the financial sector is really serious about their green promises, they should massively support the Fossil Fuel Non-Proliferation Treaty as proposed by a group of Pacific countries and supported by the World Health Organisation and the European Parliament. The COP28 climate summit in Dubai is a moment to make this clear.

The treaty requires a stop to new fossil projects and a rapid phase-out of fossil energy in a fair and inclusive manner. Given the important role that banks still play in financing fossil projects, it is high time that they exert their influence and stop facilitating fossil financing. Only if they set meaningful targets and live up to the promise to become net-zero, they will be actively contributing to the transition to a sustainable world.