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Time of India
30-06-2025
- Business
- Time of India
What role does your money play in the climate crisis?
Personal finance is a climate blind spot for many — lagging behind decisions on things like diet, travel or shopping when it comes to individual action. Yet when it comes to lowering a personal carbon footprint, moving to a sustainable pension provider can be 20 times more effective than the combined impact of giving up flying, going vegetarian or switching energy provider, according to analysis from UK campaign group Make My Money Matter. What role do banks have in funding fossil fuels? by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Wrap Foil Around Your Doorknob When Alone, Here's Why Life Hacks 101 The world's 60 biggest banks are estimated to have committed $705 billion (€619 billion) to the fossil fuel industry in 2023, and $6.9 trillion since the Paris Agreement was reached in 2015. Much of this is funding expansion plans that fly in the face of science's unequivocal climate warnings. Live Events "We all have pots of money that are contributing to this in various ways without our knowledge a lot of the time," said Adam McGibbon , campaign strategist at US-based research and advocacy organization Oil Change International, adding that it could be in the form of current accounts, pensions or insurance policies that are reinvested into the fossil fuel industry. Yet experts note the difficulty in precisely quantifying personal finance's contribution to fossil fuel funding due to complex financial systems and individual circumstances. This is largely because it is through the corporate rather than retail side of a bank's operations — where individual customers' money is held — that they usually lend money or underwrite bonds for companies developing fossil fuel projects, explained Quentin Aubineau, policy analyst at BankTrack, an international NGO documenting the financial activities of commercial banks. However, McGibbon added that banks are still using our money to grow their business, create more revenue and attract investors. He said our savings might at the very least be "used to inflate the balance sheet of a bank, which will then allow them to service corporate clients" with links to fossil fuels. Is there a link between our cash and rising global temperatures? When it comes to investments, some personal finances go directly into the fossil fuel industry via stocks or bonds, said Carmen Nuzzo , executive director of the Transition Pathway Initiative Centre in the UK, which researches progress made by the financial and corporate world to low-carbon economy. "This includes investment in oil and gas companies, which have been very attractive and profitable in recent years as well as investment in other companies that rely heavily on fossil fuel for their production or service provision, such as steel or aviation," said Nuzzo. Many people will also be funding fossil fuels through savings going into pension funds that invest in "brown" companies — those within the highest greenhouse gas and carbon-emitting industries. Pensions are usually held and controlled by either the state, employers or private companies. "You pay into a pension pot, that money is invested on your behalf and some of that may end up being invested in companies that make sure that your retirement will be one where you live in an unstable, difficult world," said McGibbon. Recent studies have estimated that in a world of 4 degrees Celsius (7.2 degrees Fahrenheit) warming, an average person will be 40% poorer and that pension fund returns in the US and Canada could fall up to 50% by 2040, due to the exposure of assets to extreme climate events. Pension funds are among the world's largest investors in fossil fuels, with an estimated $46 trillion plowed into the industry and holding 30% of its shares, according to Climate Safe Pensions, a divestment campaign based in the US and Canada. They were also found to be among the leading funders of fossil fuel expansion across Africa. In 2023, the German investigative platform Correctiv revealed that 10 out of 16 German federal states invested pension funds in fossil fuel activities. What are green finance alternatives? While green banks don't always have the most favourable conditions, among climate-conscious people there is a growing appetite for sustainable financial alternatives, said Katrin Ganswindt , a finance researcher at the German NGO Urgewald. Among the growing pool of green banks are those that pledge to stop lending to fossil fuel companies and invest in climate-friendly activities. Online tools such as bank. green have also emerged to help consumers compare the environmental credentials of different banks. But overcoming a lack of financial knowledge is still one of the key challenges, explained Nuzzo. "In the countries where most people have a pension, individuals do not keep track of where their pension assets are being invested .... or they might not review their options regularly." Things such as pensions that invest in the long-term are effective places to make a change, said Ganswindt. "Pension funds have a big effect because they invest large sums." Make My Money Matter estimated that the UK's pension industry could invest €1.2 trillion into renewable energy and climate solutions by 2035. The green pension landscape is, however, evolving. In the Netherlands, pension funds for civil servants and teachers as well as health care workers have divested from fossil fuel companies, and in the UK, large pension schemes are also now required to report their climate risks. What is 'green' and 'sustainable,' and what is 'greenlaundering'? Yet despite growing awareness and green finance options, there is still a lack of standards and regulation in this space, said Franziska Mager , senior researcher at Tax Justice Network, a UK advocacy group working against tax avoidance. "Even if you're banking with a 'green' bank, you might be surprised to find out where your money is invested — if you're able to find out, that is. Let alone what the big players define as sustainable," she said. A recent paper she co-authored on "greenlaundering" in the banking industry said the existence of opaque financial practices — including the use of secrecy jurisdictions, a type of tax haven — obscure the true scale of fossil fuel financing. When it comes to ETFs — a type of investment fund traded on the stock market — you have been able to say it is "green" and it can mean nothing," said Ganswindt. There has, however, been recent progress when it comes to transparency, she added, pointing to new EU guidelines that will regulate which companies are allowed into funds that are labeled green or sustainable. Ultimately, personal finances likely make up a small fraction of the enormous sums of funding fossil fuels — but that is not the point of actions like switching your bank to a greener provider, explained Ganswindt. It's about sending a message. "Certainly, there's some power as customers, but we have way more power as citizens," said McGibbon. "So great to move to a greener bank, great to move to a greener pension scheme. But ultimately, we could have much more power as citizens, changing the way we vote, demanding the politicians regulate the financial sector."
National Observer
24-06-2025
- Business
- National Observer
Bank unveils green loans plan to unlock trillions for climate finance
This story was originally published by The Guardian and appears here as part of the Climate Desk collaboration An innovative plan to use public money to back renewable energy loans in the developing world could liberate cash from the private sector for urgently needed climate finance. Avinash Persaud, a special adviser on climate change to the president of the Inter-American Development Bank (IADB), who developed the proposals, believes the plan could drive tens of billions of new investment in the fledgling green economy in poorer countries within a few years, and could provide the bulk of the $1.3tn in annual climate finance promised to the developing world by 2035. 'This could be an engine for green growth, and produce the trillions needed for climate finance in the future,' he told the Guardian. 'It could be a transformation.' His ideas will be set out in detail at a UN meeting in Germany this week, kicking off negotiations for the Cop30 climate summit that will take place in Brazil this November against a worrying global background for the discussions. Having missed a deadline in February, the world's largest economies still need to submit plans for their greenhouse gas emissions before the Brazil summit, but so far only a few have done do so. But research seen by the Guardian, carried out by the campaign group Oil Change International, shows that many developed countries are still planning to expand their extraction of oil and gas, despite promising at Cop28 in 2023 to 'transition away from fossil fuels'. The analysis found that the US, Canada, Norway and Australia were responsible for 70% of projected new oil and gas expansion in 2025-35. Romain Ioualalen, the global policy lead at Oil Change International, said: 'It is sickening that countries with the highest incomes and outsized historical responsibility for causing the climate crisis are planning massive oil and gas expansion with no regard for the lives and livelihoods at stake.' At the two-week meeting in Bonn, which ends on 26 June, the vital issue of finance for developing countries – which they need in order to cut their emissions and cope with the impacts of extreme weather – will also come to the fore. The proposals by Persaud and others to buy up loans to renewable energy projects in the developing world could allow billions of dollars of private sector cash to flood the sector, in a big boost to global climate finance. The plan, which is being pioneered by the IADB, would involve getting taxpayer-funded development banks to buy existing loans to green projects in poor countries, which would free up investment from private sector lenders. Such loans are relatively low risk because they are already performing – but because they are in developing countries, with credit ratings lower than those of rich states – mainstream private sector investors such as pension funds are often forbidden from touching them because of their strict rules on credit worthiness. But if those loans are backed instead by development banks, which can provide guarantees against default, and which themselves have impeccable credit ratings, the 'repackaged' loan finance can meet private sector criteria. 'The lightbulb moment was realising there was $50bn in performing green loans in Latin America,' said Persaud, a former adviser to Barbados's prime minister, Mia Mottley, who has championed climate finance. 'Why not buy that to enable new projects to be created?' Key to the concept is that when the loans are bought up by the development banks, which pay a small premium to the current private sector creditors that own the loans, the originators of the renewable energy projects must agree to use the finance they gain access to in new projects. This creates a 'virtuous circle,' by which when the loans are bought up, developers – who already have expertise in setting up successful renewable energy schemes – seek new opportunities, which leads to further investment. IADB is working on launching the programme now, and is expected to send a request for proposals within the next few months, before COP30. The initial portfolio of loans is likely to be about $500m to £1bn. Several private and public sector experts said Persaud's ideas could have a big impact. Mattia Romani, a senior partner at Systemiq, a consultancy that is working with Cop30 on climate finance, said: 'It is a very powerful initiative, both pragmatic and innovative. Given the constraints we will inevitably face in the coming years, securitisation is one of the few realistic tools to reach [the sums needed]. 'This initiative is designed to unlock institutional capital by leveraging the balance sheets of domestic commercial banks – securitising their loans so that they can meet the fiduciary needs of institutional investors, and turning them into engines for transition finance. What's new is the direct engagement with local banks – we are starting with a pilot in Latin America.'
The Guardian
16-06-2025
- Business
- The Guardian
Bank unveils plan tp unlock trillions for climate finance
An innovative plan to use public money to back renewable energy loans in the developing world could liberate cash from the private sector for urgently needed climate finance. Avinash Persaud, a special adviser on climate change to the president of the Inter-American Development Bank, who developed the proposals, believes the plan could drive tens of billions of new investment in the fledgling green economy in poor countries within a few years, and could provide the bulk of the $1.3tn in annual climate finance promised to the developing world by 2035. 'This could be an engine for green growth, and produce the trillions needed for climate finance in the future,' he told the Guardian. 'It could be a transformation.' His ideas will be set out in detail at a UN meeting in Germany this week, kicking off negotiations for the Cop30 climate summit that will take place in Brazil this November against a worrying global background for the discussions. Having missed a deadline in February, the world's largest economies still need to submit plans for their greenhouse gas emissionsbefore the Brazil summit, but so far only a few have done do so. But research seen by the Guardian, carried out by the campaign group Oil Change International, shows that many developed countries are still planning to expand their extraction of oil and gas, despite promising at Cop28 in 2023 to 'transition away from fossil fuels'. The analysis found that the US, Canada, Norway and Australia were responsible for 70% of projected new oil and gas expansion in 2025-35. Romain Ioualalen, the global policy lead at Oil Change International, said: 'It is sickening that countries with the highest incomes and outsized historical responsibility for causing the climate crisis are planning massive oil and gas expansion with no regard for the lives and livelihoods at stake.' At the two-week meeting in Bonn, which ends on 26 June, the vital issue of finance for developing countries – which they need in order to cut their emissions and cope with the impacts of extreme weather – will also come to the fore. The proposals by Persaud and others to buy up loans to renewable energy projects in the developing world could allow billions of dollars of private sector cash to flood the sector, in a big boost to global climate finance. The plan, which is being pioneered by the IADB, would involve getting taxpayer-funded development banks to buy existing loans to green projects in poor countries, which would free up investment from private sector lenders. Such loans are relatively low risk because they are already performing – but because they are in developing countries, with credit ratings lower than those of rich states, mainstream private sector investors such as pension funds are often forbidden from touching them because of their strict rules on credit-worthiness. But if those loans are backed instead by development banks, which can provide guarantees against default, and which themselves have impeccable credit ratings, the 'repackaged' loan finance can meet private sector criteria. 'The lightbulb moment was realising there was $50bn in performing green loans in Latin America,' said Persaud, a former adviser to Barbados's prime minister, Mia Mottley, who has championed climate finance. 'Why not buy that to enable new projects to be created?' Key to the concept is that when the loans are bought up by the development banks, which pay a small premium to the current private sector creditors that own the loans, the originators of the renewable energy projects must agree to use the finance they gain access to in new projects. This creates a 'virtuous circle', by which when the loans are bought up, developers – who already have expertise in setting up successful renewable energy schemes – seek new opportunities, which leads to further investment. IADB is working on launching the programme now, and is expected to send a request for proposals within the next few months, before Cop30. The initial portfolio of loans is likely to be about $500m to £1bn. Several private and public sector experts said Persaud's ideas could have a big impact. Mattia Romani, a senior partner at Systemiq, a consultancy that is working with Cop30 on climate finance, said: 'It is a very powerful initiative, both pragmatic and innovative. Given the constraints we will inevitably face in the coming years, securitisation is one of the few realistic tools to reach [the sums needed]. 'This initiative is designed to unlock institutional capital by leveraging the balance sheets of domestic commercial banks –securitising their loans so that they can meet the fiduciary needs of institutional investors, and turning them into engines for transition finance. What's new is the direct engagement with local banks – – we are starting with a pilot in Latin America.'
The Independent
06-06-2025
- Business
- The Independent
Death, violence and endless delay: Inside Africa's most troubled energy project
Campaigners have demanded the UK government pull its funding for a natural gas mega project in Mozambique – alleging that it breaches Britain's human rights and environmental obligations. The project in question is a $20 billion (£15bn) liquified natural gas (LNG) development located in the Cabo Delgado region of Mozambique. The project, called Mozambique LNG, has been halted since 2021 after violence from an Isis-backed group led to 183 contractors being trapped in a hotel for two days, with 10 people killed when apparently trying to escape, including British national Philip Mawer. In all, the ongoing insurgency in the area has resulted in an estimated 6,000 deaths since the conflict began in 2017, with some 600,000 people displaced. In a letter seen by The Independent, campaign group Oil Change International (OCI) argues that the violence and other issues over the protection of the project makes a potential $1.15bn investment by UK Export Finance, a department of the UK government untenable. Continuing to finance the project is also not compatible with environmental commitments made in 2021 to no longer finance fossil fuels abroad, OCI argues. A tale of violence, delay and legal action was never meant to be the story of Mozambique's foray into natural gas, after some 180 trillion cubic feet of gas was discovered off the country's coast in 2010. In 2016, the International Monetary Fund (IMF) projected 34 per cent GDP growth for Mozambique by 2021. However, actual economic growth was around 2.5 per cent. TotalEnergies, the French energy firm, is currently in the process of trying to re-start the project by the middle of this year. 'The security situation has improved," CEO Patrick Pouyanne told Reuters on the sidelines of the World Gas conference earlier this month. Pouyanne's ambitions received a big boost in March when the US Export-Import Bank re-approved financial support worth $4.7bn for the project, boosting TotalEnergies' hopes of restarting the project. But the future of Mozambique LNG remains up in the air, with the British export credit agency still considering whether to recommit to its $1.15bn pledge – having joining with 33 countries, including the US, to sign a pledge to end public finance for fossil fuel projects abroad while hosting the COP26 climate summit in Glasgow in 2021. According to OCI campaigner Adam McGibbon, if the UK pulls out of the deal then the entire financial arrangement is expected to collapse. 'We know of at least one major bank involved in the deal that has said they will also pull out if the UK does,' he says. The legal letter sent by OCI argues that the funding of the LNG project in Mozambique goes against the UK's obligations under international law to promote human rights in business both domestically and abroad. The letter highlights the UN's Guiding Principles on Business and Human Rights, which state that companies and nations must ensure that human rights are respected in relation to business operations. A UK Export Finance spokesperson said: 'UK Export Finance is currently in talks with project sponsors and other lenders regarding the latest status of the LNG production project in Mozambique. 'We take reports of alleged human rights infringement extremely seriously and are looking further into the matters.' 'The Qatar of Africa' Observers at the time the gas was discovered off the coast of Mozambique suggested that the country – one of the world's poorest – could transform into the 'Qatar of Africa'. A number of massive projects aiming to ship the gas around the world in the form of LNG were soon proposed. TotalEnergies' Mozambique LNG project stands out for its sheer size, with the $20bn in financing a figure roughly the same size as Mozambique's entire GDP. The 65 trillion cubic feet of gas it was expected to deliver is the equivalent of six years of current EU gas demand. But in March 2021, the 'force majeure' declaration was made, which enables parties to renege on an agreement due to unforeseen external circumstances. It came after Islamist insurgents captured swathes of territory in the Cabo Delgado region, and at least 1,400 people were left killed or missing presumed dead. Earlier this year French authorities began investigating TotalEnergies over potential corporate manslaughter, after survivors and relatives of victims of the event accused the energy giant of failing to protect its workers. In a statement shared with The Independent, a spokesperson for TotalEnergies said that they will ' cooperate with this investigation', but that 'the company categorically rejects' the accusations. 'Mozambique LNG's teams provided emergency assistance and mobilised their resources to evacuate more than 2,500 people (civilians, employees, contractors, and subcontractors) from the site where the Mozambique LNG project is located at the time of the attacks,' the spokesperson said. But some say the need to resettle people so that the land can used for the project has aided recruitment for the insurgents. 'The local population is being deprived of jobs, in a scenario where pressure on land is increasing, where people are losing access to land, losing access to natural resources,' wrote local analyst Joao Feijo earlier this year. 'The discontent that is created here is very great and this kind of discontent is capitalised on by these violent groups. Many individuals joined this group because they had no other alternative,' he added. Signs of discontent can be found in villagers claiming that they have not been sufficiently compensated for giving up land that most rely on for subsistence farming, according to evidence collected by local NGO Justica Ambiental, after Mozambique LNG was given rights to 6,625 hectares of land to build its liquefaction terminal. 'We agreed that the company would take our areas, but when they took our areas – the forests and fields – and they didn't want to pay us, they denied it,' said Neto Agostino Paulo resident of Macala Village, in footage captured by Justica Ambiental in summer 2024. Fellow Macala villager Adija Momade Sumail Nkabwi said: 'The company came here to lie to us that they were going to compensate us for our property that they had occupied, leaving us with false expectations'. The spokesperson for TotalEnergies told The Independent that prior to the force majeure announcement, 89 per cent of compensation payments had been paid within six months of the signing of compensation agreements, and 66 per cent were paid within 90 days. 'The Force Majeure situation has prevented the full implementation of the relocation and compensation process and has slowed down the exercise,' they said. 'Drill baby, drill' For OCI's Adam McGibbon, the violence and displacement witnessed in Cabo Delgado is a 'classic example of the resource curse': The phenomenon where resource-rich countries with abundant natural resources ironically end up with a multitude of problems. Nigeria and Angola – both oil-rich countries plagued by corruption and inequality – are oft-cited examples of countries to have suffered this fate in Africa. At the same time, it has also been said that given the low living standards of countries like Mozambique, any opportunity to bring in billions of dollars of foreign investment is a good thing. Some, like former Irish President Mary Robinson, have argued that African nations should be allowed to extract natural gas to develop. But there are growing concerns that the economic benefits originally conceived in Mozambique LNG might not ever materialise, even if the project goes ahead as planned. For all the talk of ' Drill baby, drill ' coming from Donald Trump in the White House right now, the prospects of a major new LNG production terminal are much weaker than in 2020. Since Russia invaded Ukraine in 2022, and subsequently shut off pipeline gas flows to Europe, planned new LNG facilities in the US and Qatar have driven up projections of global LNG capacity. An increase of nearly 50 per cent is currently on the horizon, according to the International Energy Agency (IEA). This ' LNG glut ', as the IEA describes it, is exacerbated by renewables continually beating targets in Europe and Asia, as well as a global push for 'energy security' that did not exist in 2020, and which is making governments less inclined to rely on expensive liquefied gas imports for energy. 'If and when TotalEnergies' Mozambique LNG project gets off the ground, it will be adding further supply into a market characterised by oversupply and lacklustre demand,' says Simon Nicholas, from IEEFA, a think tank. 'This can hardly be a surprise: There is a long history in Sub-Saharan Africa of fossil fuel projects doing nothing to boost development in the host country.' If global gas markets are oversupplied, there is a risk that Mozambique LNG will become a 'stranded asset', which will plummet in value – or even become a liability for Mozambique. Even a 'moderate-paced transition' away from fossil fuels globally would lead to Mozambique seeing gas revenues of just 20 per cent of what they would be in a slow-paced transition, a report from the think tank Carbon Tracker has found. The authors described countries looking to exploit oil and gas assets for the first time as making a 'significant gamble'. 'Huge economic costs' TotalEnergies has also structured its LNG deals in a way that activists have warned is disadvantageous to Mozambique, with revenues Mozambique set to come in the mid-2030s and 2040s, think tank IISD has said. This means that if the project does not see out its lifespan, TotalEnergies and other partners will have seen an outsize share of profits so far, with Mozambique losing out. Mozambique also faces 'substantial economic risks' related to investor-state dispute settlements (ISDS), a separate report from Columbia University found last year. ISDS are lawsuits where foreign investors sue countries where they have invested if they believe the government has violated the terms of the agreement. Mozambique's international investment agreements allow foreign investors to bypass the national judicial system in such disputes, the report found, while 'stabilisation clauses' protect investments from unexpected regulatory changes or new fiscal rules, potentially preventing Mozambique enacting new legislation to transition away from fossil fuels. 'What they have basically done is said Mozambique cannot invest in climate action without paying huge economic costs,' says Daniel Ribeiro, a Mozambican activist with Justica Ambiental. Such an arrangement is likely to 'only amplify social tensions in Cabo Delgado,' if little money is seen to reach local people while a Western company makes large profits, warns Ribeiro. Given the insurgency, delays, and economic concerns, it might seem the simplest thing for Mozambique to do would be to try and pull out of the deal. However, the country has racked up government debts since gas was discovered, using expected future gas revenues as collateral for borrowing. But expectations have not matched reality. The year 2016 also saw a corruption scandal rock the country after it was found that members of the Mozambican Government had secretly taken out loans for themselves from London-based banks, using assurances of future LNG gas revenues to do so. A 2023 report from Debt Justice found that the Mozambican government has been paying back some of those loans. Mozambique's external national debt more than doubled between 2010 and 2018, according to CEICC data, while Friends of the Earth has warned that potential corruption arising from the 'mere promises of LNG development' may have already cost the country more than any actual profit the project could generate for the country over its lifetime. For Ribeiro, who lives in the Mozambican capital of Maputo, the priority for the country should be investing in renewables and climate change adaptation. 'My main message is that the cost of climate change is going to be far greater than any profits from Mozambique LNG, and that should be the priority,' he says. The country is considered one of the most climate-vulnerable on the continent, exposed to extreme weather concerns including cyclones, droughts and floods. Cyclone Kenneth, which hit Cabo Delgado in 2019, caused damage estimated at $300m. But the Trump administration has a different idea about what is good for the country. Weeks before confirming its $4.7bn loan for Mozambique LNG, the US government shut down the USAID-backed Power Africa programme's operations in the country – with an emphasis on renewable energy – which has been leading efforts to boost energy access, in a country where only 40 per cent of the country's population has access to electricity. 'Cycle of death' The push to resume the Mozambique LNG project also comes despite the fact that the Islamist insurgency very much remains a threat. While insurgents no longer control full towns and villages, they have become more agile, and have stepped up the number of road blocks in recent weeks, according to local media. 'There are still believed to be several insurgency units of hundred or so people, and they still have the ability to make attacks and destabilise the area,' says Ribeiro. 'And every time they suffer losses, they continue to be able to recruit. Why? Because we are still not dealing with the economic and social drivers of the problem,' he adds. The EU is currently funding Rwandan troops to help protect the region - but this arrangement is also under threat due to accusations Rwanda has been supporting rebels in the Democratic Republic of Congo, as well as allegations that the Mozambican government is using units trained by the EU for protest suppression. For Marisa Lourenço, an independent risk analyst in Southern Africa, the threat of violence is 'definitely still there' in Cabo Delgado. She believes that while TotalEnergies will be able to securely lock down its site on the coast, it remains unclear if doing so is worth the money. 'TotalEnergies can secure the site. But is the infrastructure cost worth it? Will it recoup its sunken costs? Probably not. TotalEnergies rushed into taking on this project, and I think it regrets it,' she believe. For Mozambique, meanwhile, it remains clear for Ribeiro that the best option is for the country to pull out of the project. 'Pulling out will cause a whole host of problems in the short term, but it will help us emerge from this cycle of death,' he says. So long as the project continues, the Western world can turn a blind eye to what is happening in Mozambique, by imagining that it is financially supporting the country, believes Ribeiro. But if the project fails, then the country can focus on other development pathways that actually benefit the people. 'It's like a chronic condition that keeps flaring up, for which there is no cure' he says. 'Sometimes you just need to take the bullet.'
Times of Oman
27-05-2025
- Business
- Times of Oman
What role does your money play in the climate crisis?
Paris: Personal finance is a climate blind spot for many — lagging behind decisions on things like diet, travel or shopping when it comes to individual action. Yet when it comes to lowering a personal carbon footprint, moving to a sustainable pension provider can be 20 times more effective than the combined impact of giving up flying, going vegetarian or switching energy provider, according to analysis from UK campaign group Make My Money Matter. What role do banks have in funding fossil fuels? The world's 60 biggest banks are estimated to have committed $705 billion (€619 billion) to the fossil fuel industry in 2023, and $6.9 trillion since the Paris Agreement was reached in 2015. Much of this is funding expansion plans that fly in the face of science's unequivocal climate warnings. "We all have pots of money that are contributing to this in various ways without our knowledge a lot of the time," said Adam McGibbon, campaign strategist at US-based research and advocacy organisation Oil Change International, adding that it could be in the form of current accounts, pensions or insurance policies that are reinvested into the fossil fuel industry. Yet experts note the difficulty in precisely quantifying personal finance's contribution to fossil fuel funding due to complex financial systems and individual circumstances. This is largely because it is through the corporate rather than retail side of a bank's operations — where individual customers' money is held — that they usually lend money or underwrite bonds for companies developing fossil fuel projects, explained Quentin Aubineau, policy analyst at BankTrack, an international NGO documenting the financial activities of commercial banks. However, McGibbon added that banks are still using our money to grow their business, create more revenue and attract investors. He said our savings might at the very least be "used to inflate the balance sheet of a bank, which will then allow them to service corporate clients" with links to fossil fuels. Is there a link between our cash and rising global temperatures? When it comes to investments, some personal finances go directly into the fossil fuel industry via stocks or bonds, said Carmen Nuzzo, executive director of the Transition Pathway Initiative Centre in the UK, which researches progress made by the financial and corporate world to low-carbon economy. "This includes investment in oil and gas companies, which have been very attractive and profitable in recent years ... as well as investment in other companies that rely heavily on fossil fuel for their production or service provision, such as steel or aviation," said Nuzzo. Many people will also be funding fossil fuels through savings going into pension funds that invest in "brown" companies — those within the highest greenhouse gas and carbon-emitting industries. Pensions are usually held and controlled by either the state, employers or private companies. "You pay into a pension pot, that money is invested on your behalf and some of that may end up being invested in companies that make sure that your retirement will be one where you live in an unstable, difficult world," said McGibbon. Recent studies have estimated that in a world of 4 degrees Celsius (7.2 degrees Fahrenheit) warming, an average person will be 40% poorer and that pension fund returns in the US and Canada could fall up to 50% by 2040, due to the exposure of assets to extreme climate events. Pension funds are among the world's largest investors in fossil fuels, with an estimated $46 trillion plowed into the industry and holding 30% of its shares, according to Climate Safe Pensions, a divestment campaign based in the US and Canada. They were also found to be among the leading funders of fossil fuel expansion across Africa. In 2023, the German investigative platform Correctiv revealed that 10 out of 16 German federal states invested pension funds in fossil fuel activities. What are green finance alternatives? While green banks don't always have the most favorable conditions, among climate-conscious people there is a growing appetite for sustainable financial alternatives, said Katrin Ganswindt, a finance researcher at the German NGO Urgewald. Among the growing pool of green banks are those that pledge to stop lending to fossil fuel companies and invest in climate-friendly activities. Online tools such as have also emerged to help consumers compare the environmental credentials of different banks. But overcoming a lack of financial knowledge is still one of the key challenges, explained Nuzzo. "In the countries where most people have a pension, individuals do not keep track of where their pension assets are being invested .... or they might not review their options regularly." Things such as pensions that invest in the long-term are effective places to make a change, said Ganswindt. "Pension funds have a big effect because they invest large sums." Make My Money Matter estimated that the UK's pension industry could invest €1.2 trillion into renewable energy and climate solutions by 2035. The green pension landscape is, however, evolving. In the Netherlands, pension funds for civil servants and teachers as well as health care workers have divested from fossil fuel companies, and in the UK, large pension schemes are also now required to report their climate risks. What is 'green' and 'sustainable,' and what is 'greenlaundering'? Yet despite growing awareness and green finance options, there is still a lack of standards and regulation in this space, said Franziska Mager, senior researcher at Tax Justice Network, a UK advocacy group working against tax avoidance. "Even if you're banking with a 'green' bank, you might be surprised to find out where your money is invested — if you're able to find out, that is. Let alone what the big players define as sustainable," she said. A recent paper she co-authored on "greenlaundering" in the banking industry said the existence of opaque financial practices — including the use of secrecy jurisdictions, a type of tax haven — obscure the true scale of fossil fuel financing. When it comes to ETFs — a type of investment fund traded on the stock market — you have been able to say it is "green" and it can mean nothing," said Ganswindt. There has, however, been recent progress when it comes to transparency, she added, pointing to new EU guidelines that will regulate which companies are allowed into funds that are labeled green or sustainable. Ultimately, personal finances likely make up a small fraction of the enormous sums of funding fossil fuels — but that is not the point of actions like switching your bank to a greener provider, explained Ganswindt. It's about sending a message. "Certainly, there's some power as customers, but we have way more power as citizens," said McGibbon. "So great to move to a greener bank, great to move to a greener pension scheme. But ultimately, we could have much more power as citizens, changing the way we vote, demanding the politicians regulate the financial sector."
