The financial sector in fossil fuels: social organizations point to COP26 as “the great summit of greenwashing”.


The financial sector and its role in fossil fuel investments, pointed out by social organizations. The Paris Climate Agreement states that financial flows must be “consistent with a path towards low greenhouse gas emissions and climate resilient development”. And although this issue is being addressed for the first time by the international community at COP26, the agenda and proposals on financial flows have been designed by the private financial sector, according to the Corporate Europe Observatory (CEO) and the Transnational Institute (TNI) in an analysis published on Tuesday, the third day of COP26.

The two organizations’ research shows that “the COP26 private finance proposal is not designed to engage governments in an ambitious reform process to prevent financial firms from investing in fossil fuels”.

On the contrary, the 31-page proposal, drafted for COP26 by Mark Carney, special advisor to UK Prime Minister Boris Johnson and UN Secretary General António Guterres, builds on ideas developed by major financial market players, many of whom are at the epicentre of the current climate crisis through massive investments in fossil fuels.

Self-regulation is at the heart of the proposals, which have been developed by major players such as JP Morgan Chase, BlackRock, BNP Paribas and other financial firms responsible for large carbon footprints.

Moreover, many of these companies will also be involved in the implementation of what was decided at COP26: the only requirement for financial firms to be part of the group that will lead the COP26 follow-up is to commit to carbon neutrality within three decades (zero emissions in 2050).

These are some of the main actors identified in the work of Corporate Europe Observatory and Transnational Institute:

Net Zero Banking Alliance. The largest of the net zero alliances forged before COP26, to ensure the participation of financial firms. It includes the biggest offenders in the Banking on Climate Chaos report by environmental groups Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change International, Reclaim Finance and Sierra Club. Featured members are JP Morgan Chase, Citi Group, Bank of America, Wells Fargo, RBC, The Mitsubishi UFJ Financial Group, Barclays, Australia and New Zealand Banking Group, BNP Paribas.

Working Group for Climate-Related Financial Disclosures. A group dominated by financial firms that has developed standards for communicating climate-related information about companies’ activities. “With COP26, it will grow in status and form the backbone of a private management effort to address climate change,” the report says: “Some of the core members include JP Morgan Chase, BlackRock, Citigroup, BNP Paribas, Industrial and Commercial Bank of China, BHP.”

The Investment Association. This association’s job is to provide “consumer understandable metrics” to express how investments align with “climate change values” after COP26. The IA represents investment managers in the UK. They include 14 of the top 20 coal investors worldwide.

The Glasgow Financial Alliance. This alliance for Net Zero will become the cornerstone of the follow-up to COP26.

It aims to provide “a basis for future collaboration and leadership on zero in the financial sector”. Members of the core coordinating group, the so-called “CEO Group”, include representatives from Citigroup, Bank of America, BlackRock, HSBC.

Kenneth Haar, researcher at Corporate Europe Observatory, explains: “What we see happening here is basically a privatization of crucial parts of international climate policy. Even if a financial company continues to invest massively in fossil fuels, which will be the case without strict regulation, it can still be included in the UN agenda on private finance and climate change. Sadly, it looks like COP26 will become the biggest financial greenwashing event in history”.

Transnational Institute (TNI) researcher Brid Brennan said: “COP 26 has become a landmine for the corporate finance sector and polluters, squandering a historic opportunity for serious CO2 emissions reductions and fossil fuel divestment. While global citizens are urging governments to take action on the brink of climate change disaster, the corporate financial sectors have pursued a strategy of privatizing the UN system and are now in a position to derail any substantial divestment from fossil fuels while applying a big corporate greenwash.”

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