Bankrolling the Burn: Why Climate Scientists are Taking on Fossil Fuel Financiers

Timed to coincide with the United Nations General Assembly (UNGA), last week's Climate Week in New York City s spotlighted the urgent need for ambitious worldwide climate action. The death toll and devastation of Hurricane Helene has underscored that urgency. UNGA and the upcoming international climate negotiations in Baku, Azerbaijan (known as COP29), are crucial because governments bear primary responsibility for adopting and implementing policies that will sharply reduce global warming emissions, increasing international climate finance, and defending people and policy-making processes against fossil fuel industry misconduct. Climate Week events highlighted commitments and actions needed from the financial sector and other corporations to support and spur government ambition. As usual, it was a mixed bag. While at least one event provided a platform for oil and gas industry greenwashing, others centered people directly affected by fossil fuel-driven climate change who are holding bad actors accountable.

I had the honor of moderating one of the latter events, Scientists & Activists vs. Fossil Fuel Finance. It featured a stellar panel of scientists, organizers, and frontline leaders reporting out from the Summer of Heat on Wall Street campaign and sharing their insights on why banks must stop financing fossil fuel expansion:

• Rose Z. Abramoff, PhD, Wintergreen Earth Science; Board President, Climate Emergency Fund
• Michael Johnson, New York Communities for Change
• Sandra Steingraber, PhD, Senior Scientist, Science and Environmental Health Network; Co-founder, Concerned Health Professionals of New York
• Jenny Xie, Organizing Manager, Stop the Money Pipeline

You can watch the recording of the event here.

Summer of Heat on Wall Street

According to the 2024 Banking on Climate Chaosreport, Citi is the second-largest financier of fossil fuels and the largest financier of fossil fuel expansion since the Paris climate agreement, having poured $396 billion into the industry since 2016. That's why activists with the Summer of Heat on Wall Street organized a campaign of sustained nonviolent direct action targeting Citi and other major players in the financial sector for their role in fueling the climate crisis.

In June, more than 750 scientists sent an open letter organized by UCS to Citi, calling on the bank to stop financing fossil fuel expansion, respect human rights, and redirect finance to renewable energy. Citi's Chief Sustainability Officer, Val Smith, responded to the scientists' letter in July, outlining the bank's support for the transition to a low-carbon economy and sharing its 2023 Climate Report. Unfortunately, Citi's response confirmed that the bank's actions are not fully aligned with what science shows is necessary to limit the worst impacts of climate change and protect people, ecosystems, and economies from worsening climate disasters.

And Citi's response to the scientists' letter came in the context of an escalating crackdown, as Citi and the New York Police Department attempted to suppress nonviolent protests and inhibit freedom of speech and free assembly at the bank's headquarters.

Here are some key points emerging from last week's event and UCS's analysis, demonstrating why we must keep up the pressure on Citi and other Big Banks to do better when it comes to climate change and environmental justice:

Citi continues to finance more fossil fuels than low-carbon energy projects and companies

In 2021, Dr. Fatih Birol, head of the International Energy Agency, stated, "If governments are serious about the climate crisis, there can be no new investments in oil, gas and coal, from now-from this year." The science is clear that a rapid and fair phaseout of fossil fuels is necessary to limit the worst climate impacts and secure a livable future. Citi's place as the biggest financier of fossil fuel expansion is taking us in the wrong direction.

While Citi touts its $1 trillion Sustainable Finance by 2030 Goal, that figure includes the bank's full range of environmental, social, and governance investments. A 2023 report by BloombergNEF suggests the finance industry's ratio for low-carbon to fossil-fuel supply investment needs to be at least 4:1 by 2030 to remain aligned with scenarios under which the average global temperature rises by no more than 1.5°C above pre-industrial levels. BloombergNEF calculated Citi's 2022 Energy Supply Banking Ratio (that is, financing for low-carbon projects and companies compared to financing for fossil fuel activities) at 0.6:1.

This year, in response to pressure from shareholders, Citi committed to regularly disclose its ratio of clean energy supply financing to fossil fuel extraction financing. These disclosures should allow shareholders and advocates to monitor the bank's future progress on this metric.

Citi's energy sector clients are not leading the low-carbon transition

No major oil and gas corporation has a business plan that would put it on track to meet the goals of the Paris climate agreement. A 2022 peer-reviewed study found that BP, Chevron, ExxonMobil and Shell continue to depend almost entirely on fossil fuels, with insignificant and opaque spending on clean energy-and that accusations of greenwashing appear well-founded. Indeed, a multiyear bicameral US congressional investigation found that the fossil fuel industry's long-running campaign of climate deception and delay continues to this day.

Citi's 2023 Climate Report reveals that, under Citi's own criteria, 42% of its clients in the energy sector don't have a substantive plan to reach net-zero, and an additional 29% don't have a clear strategy to execute their high-level plans. Only 28% of energy clients have what Citi termed a medium-strong or strong transition plan.

Citi parrots fossil fuel industry talking points about energy needs in developing countries

The truth is low-income countries-which have done the least to cause climate change-are being hit the first and hardest by devastating climate impacts. Small Island Developing States and other Global South nations have been at the forefront of pushing for greater climate ambition and climate accountability.

The solution to meeting the world's energy needs isnot to further expand polluting, ecosystem-destroying, and climate-warming fossil fuel operations. Instead, low-income, climate-vulnerable countries urgently need and deserve rapidly scaled-up and steady funding from the wealthy nations that have caused the climate crisis, to help cut heat-trapping emissions, invest in clean energy and climate resilience, and address climate losses and damage (the negative impacts of climate change that are not being avoided or cannot be avoided through mitigation and adaptation).

Citi ignores negative health and human rights impacts on local communities from fossil fuel extraction

Fossil fuel pollution disproportionately harms BIPOC and low-income communities in the US. We urge Citi leadership to read this new report on environmental racism and health harms linked to Citi's financing of LNG and petrochemical projects in the Gulf South, and to respond to ongoing requests from community leaders in Louisiana and Texas for a meeting to discuss these issues.

The impacts of Citi's financing are global-Citi is also a top financier of oil and gas extraction in the Amazon. While Citi recently responded to years of pressure from Amazonian Indigenous organizations and environmental groups by saying it will no longer provide project-related financing of oil and gas expansion in the Amazon, its new policy leaves significant loopholes and fails to fully meet the demands of local Indigenous communities. While the new policy is a step forward, project-related deals are estimated to be only 18% of Citibank's overall direct financing for Amazon oil and gas.

Citi lobbies against meaningful climate-related public policies

Citi is a member and funder of the US Chamber of Commerce, which continues to oppose climate-related legislation and regulation in its lobbying efforts. For example, the Chamber recently sued the Securities and Exchange Commission (SEC), aiming to stop the SEC from implementing a rule that would compel companies to disclose more details about how they manage climate-related risks.

As noted by Alec Connon, director of the Stop the Money Pipeline coalition, Citi's CEO, Jane Fraser, is Vice Chair of the Financial Services Forum and a board member of the Bank Policy Institute, both of which receive negative rankings from LobbyMap for their lobbying on sustainable finance policy, including corporate climate disclosure and climate-related risk management.

Science-and scientists-call on Citi to stop fueling the climate crisis

As part of the Summer of Heat on Wall Street campaign, scientists have engaged in civil disobedience and been arrested outside of Citi's doors on multiple occasions, alongside elders, youth, frontline leaders, and other activists. It was a "summer of heat" in multiple senses, with an unprecedented number of heat records being broken across the globe and dangerous extreme weather causing economic damage and death.

Scientists are joining this powerful and growing movement to hold Big Banks accountable on climate because we know that the science is clear. The world will face increasingly catastrophic climate impacts if we do not swiftly phase out fossil fuels, cut heat-trapping emissions, and make a just transition to a clean energy economy, and every sector must play its part.

That's why Citi and other major financial institutions must stop prolonging the fossil fuel era-and the fossil fuel industry's exorbitant profits-at the expense of people and ecosystems around the world. You can help increase the pressure on Citi by sharing the event recording and the new report Citi: Funding Fossil-Fueled Environmental Racism in the Gulf South on social media. To stay tuned with what's coming next for the Summer of Heat campaign, sign up for updates here.

Thanks to Campaign Organizer Hannah Poor for her assistance with this blogpost and for her leadership in organizing UCS's Climate Week events.

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