The carbon dioxide financed by British banks and asset managers is almost double the UK’s yearly annual emissions, a new report reveals.
The study by Greenpeace and WWF shows the City provided loans and investments for projects and companies that emitted 805 million tonnes of CO2 in 2019. In the same year, the entire UK’s net emissions were 455 million tonnes. It means the City would be the world’s ninth biggest polluter, outranking Germany, if it were its own country.
Greenpeace and WWF are urging the government to introduce new regulations that would bring the sector in line with Paris Agreement targets, which aim to limit global temperature increases to 1.5C above pre-industrial levels.
Greenpeace UK’s executive director, John Sauven, said the UK could not turn a blind eye to the City’s contribution to the climate crisis, particularly before this year’s crucial Cop26 climate change conference in Glasgow, set for November.
“Finance is the UK’s dirty little secret,” he said. “Banks and investors are responsible for more emissions than most nations, and the UK government is giving them a free pass. How can we say we’re ‘leading the world on climate action’ while allowing financial institutions to plough billions into fossil fuel production every year? The claim is almost laughable.”
A spokesperson for UK Finance, which represents 300 banking and finance firms, said lenders took their responsibility to wider society “very seriously”, pointing to a recent commitment by the country’s six largest banking groups to bring emissions from their portfolios to net-zero by 2050.
However, campaigners say many such pledges have been exposed as greenwash, and are calling on the government to regulate the financial sector in the same way as other high carbon industries.
The new analysis, carried out by climate solutions firm South Pole, measured the lending and investment activities of the UK’s financial sector, based on a sample of 15 banks and 10 asset managers.
In order to keep global temperatures at no more than 1.5C above pre-industrial levels and avoid devastating damage from climate change, we must reduce carbon dioxide emissions by about 45 per cent from 2010 levels by 2030, according to the Intergovernmental Panel on Climate Change (IPCC).
But since countries including the UK signed up to the 1.5C goal in the Paris Agreement in 2015, the world’s 60 largest banks have provided £2.7 trillion to the fossil fuel industry, according to Rainforest Action Network.
The Top 10 CO2 emitters and where the City would fit in:
Annual CO2 emissions by gigatonne (Gt) or megatonne (Mt):
1 China: 11.71Gt
2 United States: 5.79Gt
3 India: 3.35Gt
4 Russia: 1.99Gt
5 Indonesia: 1.70Gt
6 Brazil: 1.42Gt
7 Japan: 1.15Gt
8 Iran: 828.34Mt
9 UK finance industry: 805Mt*
10 Germany: 776.61Mt
*Equivalent CO2 emissions related to UK banks’ and asset managers’ financing of projects and companies in 2019, as calculated by South Pole. Country calculations are based on the most recent data, which is from 2018.