Surge in Fossil Fuel Financing by Global Banks Undermines Net Zero Goals

The 2025 Fossil Fuel Finance Report reveals that the world’s 65 largest banks collectively committed $869 billion to fossil fuel companies in 2024, up from $707 billion in 2023.

2025 Fossil Fuel Finance Report

2025 Fossil Fuel Finance Report Latest News

  • The 2025 Fossil Fuel Finance Report by the Banking on Climate Chaos Coalition reveals that the world’s 65 largest banks collectively committed $869 billion to fossil fuel companies in 2024, up from $707 billion in 2023. 
  • This growth, including the involvement of India’s SBI, has sparked global concerns over climate goals, especially amid policy rollbacks and increasing global temperatures.

Key Highlights of the Report

  • Rising fossil fuel financing:
    • Global financing surge: In 2024, global fossil fuel financing increased by 22.8% over 2023.
    • Top contributor: JPMorgan Chase topped the list, contributing $53.5 billion, a $15 billion increase from 2023.
  • SBI’s climate commitments vs actions:
    • Commitments:
      • State Bank of India (SBI) aims for net zero by 2055.
      • Target of 7.5% green advances by 2030 of domestic gross advances.
      • As of March 2025, SBI had extended ₹20,558 crore in sustainable finance.
    • Actions: The report highlights that SBI’s position rose to 47th rank, with a total fossil fuel financing of $2.62 billion, marking a $65 million increase from 2023.

Contradictions and Policy Backtracking

  • Policy rollbacks in global banks:
    • American lender Wells Fargo scrapped plans to become net zero by 2050.
    • European banks, earlier seen as climate-progressive, also showed weakening sector policies.
    • Six largest US banks exited the UN Net-Zero Banking Alliance.
  • US policy shift under Trump administration:
    • Withdrawal from Paris Agreement (effective early 2026).
    • Exit from the Network for Greening the Financial System.
    • Proposed legislation to cut clean energy tax incentives.
    • This rollback comes despite 2024 being the hottest year ever recorded.

India’s Coal Financing Blind Spot

  • As per Climate Risk Horizons, Indian banks largely lack coal exclusion policies.
  • Only Federal Bank and RBL Bank among BSE’s top 1000 banks have such policies.
  • Despite renewables now being cheaper than coal, banks continue fossil fuel investments.

Long-Term Concerns

  • Lock-in effect of infrastructure:
    • As per IEA 2024, achieving net zero by 2050 demands halving fossil fuel investment by 2030.
    • New investments risk locking economies into decades of fossil fuel dependency.
  • Mergers and acquisitions (M&A) financing:
    • Acquisition-related fossil fuel financing rose to $82.9 billion.
    • Although not directly creating new infrastructure, such financing strengthens fossil fuel companies’ market dominance, delaying the global phase-out essential for climate mitigation.
  • From 2016–2025, the 65 banks have contributed $7.9 trillion in fossil fuel financing.
  • Since 2021, $3.3 trillion has been lent to fossil fuel businesses — a persistent trend despite global climate urgencies.

Conclusion

  • The rise in fossil fuel financing by global and Indian banks in 2024 signals a critical policy regression against the backdrop of an escalating climate crisis. 
  • While financial institutions proclaim net-zero targets, the widening gap between climate pledges and actual financing behavior underscores the urgent need for enforceable climate-aligned banking regulations.
  • This is especially important as time runs out to meet global sustainability commitments.

Source: IE

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2025 Fossil Fuel Finance Report FAQs

Q1. What is the significance of the 2025 Fossil Fuel Finance Report in the context of global climate commitments? +

Q2. How has the State Bank of India (SBI) contributed to fossil fuel financing in 2024, and what are its green finance targets?+

Q3. What trends have been observed regarding fossil fuel financing policies among Western banks, especially in the US and Europe?+

Q4. Why is coal financing considered a blind spot for Indian banks?+

Q5. What is the potential impact of mergers and acquisitions financing in the fossil fuel sector? +

Tags: 2025 fossil fuel finance report mains articles upsc current affairs upsc mains current affairs

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