To what extent are big banks involved in greenhouse gas emissions?

To what extent are big banks involved in greenhouse gas emissions? Credit Suisse and UBS are heavily involved in business with fossil fuel companies, according to Greenpeace Switzerland. As Greenpeace Switzerland already revealed in 2018, from 2015 to 2017 the two big banks provided a total of $12.3 billion to 47 companies that harness particularly dirty, so-called extreme fossil fuels [1]. These include coal, oil from tar sands, the Arctic and deep sea, and liquefied natural gas (LNG) [2].

Credit Suisse prevails

Greenpeace Switzerland had the emissions resulting from this financing calculated by ISS-Ethix from Zurich and evaluated by the data provider "right. based on science" from Frankfurt. The report shows that the two big banks financed a total of 182.9 million tons of greenhouse gas emissions with the 12.3 billion US dollars in 2015, 2016 and 2017. Credit Suisse was responsible for more than two-thirds of this.

Credit Suisse tripled its financed issuance between 2015 and 2017 - mainly through increased support for coal. UBS saw a steady decline in financed issuance.

Versus climate agreement

In the period under review, 2017 was particularly damaging for the climate: Two years after the adoption of the Paris Climate Agreement, the two major banks financed 93.9 million tons of greenhouse gas emissions via the 47 companies studied. That is about twice as many emissions as Switzerland produces domestically in one year [3]. Credit Suisse contributed by far the most to the climate-damaging business with 82.6 million tons.

It should be noted that the environmental footprint of the two banks from 2015 to 2017 will have been considerably higher than reported in this report. This is because the report only takes into account the climate impact of the financing of 47 companies in the extreme fossil energy sector. A high number of unreported financed emissions must therefore be expected.

Eleven of the analyzed companies financed by Credit Suisse and UBS are known to be actively engaged in climate-skeptic lobbying, aimed at preventing or watering down climate legislation. These include Duke Energy, BP, American Electric Power and RWE.

Risks for companies

Banks are not only harming climate stability with their financing, they are also exposing themselves to high risks. For the report, the extent to which these companies are exposed to climate-relevant physical risks - for example, extreme weather events such as heavy precipitation, storms and heat waves - and the time horizon in which these risks come to bear were analyzed for 34 of 47 companies.

One of the things that becomes apparent is that Credit Suisse provides significantly more funding for companies that are exposed to high climate-related risks in the short term (a period of three years) compared to UBS. "If the climate-relevant physical - and also regulatory - risks materialize, there is a risk that the banks will have to write off significant parts of the financing.

That's why more and more investors and banks are looking at climate change as a financial risk, not just a reputational one," says Katya Nikitenko, a financial expert at Greenpeace Switzerland.

Commenting further, Nikitenko said, "With this report, we can once again show that Credit Suisse and UBS are fueling climate change. They could instead play an active and leading role in the transition to a low-carbon economy."

Greenpeace is calling on the two major banks to make a binding public statement this year on how they intend to bring their financial flows into line with the Paris climate agreement. In addition, there must be an immediate withdrawal from the financing of companies that do business with coal and tar sands.

More information:

- Download the report "An Analysis of Fossil Fuel Emissions Financed by Credit Suisse and UBS."

- The factsheet "Swiss banks and the issues they finance" on the report.

Notes

[1] "Swiss Banks at the End of the Fossil Fuel Age." The report is based on the "Banking on Climate Change: Fossil Fuel Finance Report Card 2018" by Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change International, Sierra Club and Honor The Earth - supported by over 50 organizations around the world, including Greenpeace USA.

[2] Extreme fossil fuels refer to non-conventional hydrocarbons, such as extreme oil (tar sands, Arctic and deep sea oil), liquefied natural gas (LNG), coal mining and coal-fired power plants. These fossil fuel choices are based on reports from the Carbon Tracker Initiative, which identified oil and gas projects with the highest financial risk if we are to succeed in keeping global warming well below 2 degrees. The entire coal sector is also included because of its incompatibility with climate stability and serious environmental, health, and human rights impacts.

[3] According to Switzerland's greenhouse gas inventory, 48.3 million tons of greenhouse gases were emitted in 2016.