At Atmos Financial, we’re dedicated to driving a positive impact in the financial world, especially when it comes to climate change. A big part of that is helping individuals, businesses, and lenders alike understand the importance of climate-positive financial solutions. To support this mission, we turn to invaluable resources like the Banking on Climate Chaos report, produced annually by Rainforest Action Network.

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This week, April Merleaux from the Rainforest Action Network (RAN) sat down with Atmos Financial’s River Mizell, to discuss the 2023 Banking on Climate Chaos report. April, the Research Manager on the Climate and Energy team at RAN, has been instrumental in overseeing the production of this comprehensive analysis. 

In this conversation, April sheds light on the report's findings, the evolving role of financial institutions in climate action, and how individuals and organizations can push for meaningful change.
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Hi April, thanks for joining us today. Can you tell us a little more about how the “Banking on Climate Chaos” report came to be? What motivated RAN to create the report, and how has it evolved over the years?

Hi, River, thanks so much for having me! The report started about 15 years ago actually as a smaller-scale project – essentially a coal report card for banking policies. But over time, it expanded to cover broader topics including bank financing and more sectors. 

People are increasingly focused on fossil fuel expansion now, which has become a key part of the report since 2021. Our current report now evaluates the 60 largest global banks and examines their financial ties to thousands of fossil fuel companies. The goal is to hold financial institutions accountable for their role in enabling fossil fuel companies to continue their operations.

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You mentioned this year’s report was more robust. Were there any particularly startling findings? 

Yeah, there were a few alarming points. One major concern is that half of the financing provided by the banks in our report in 2023 went to companies actively expanding fossil fuels. This includes building new pipelines and refineries. According to the International Energy Agency’s 2021 net-zero report, any expansion in fossil fuels beyond 2021 jeopardizes our climate goals. Even though overall financing trends are downwards and expansion financing has decreased over the past two years, it's troubling that nearly half of the financing still supports expansion plans.

When we look at all banks as an aggregate, the overall trend is downwards, which is good news. I'd like to be optimistic about this and hope it continues across all banks. However, I have reasons to be cautiously optimistic. 

This caution extends to expansion financing as well. Expansion financing has also decreased year on year for the last two years, which begins to look like a positive trend.

What's surprising to me is how much of the overall financing for fossil fuels is going to companies with expansion plans. Often, banks claim they need to support their fossil fuel clients as they transition away from oil, gas, and coal, and be partners in their transition journeys. But that's not what we're seeing. 

Instead, we're seeing them lend money and underwrite bonds for companies that are actually expanding their fossil fuel activities, not transitioning away from them. This is quite alarming.

The overall trend in the numbers is down, but almost half of the banks in our report actually increased financing to fossil fuel companies between 2022 and 2023. This increase in financing is significantly higher than the previous two years. What seems to be driving this is an actual increase in financing for liquefied natural gas (LNG) companies. 

We saw a boom in LNG financing following the Russian invasion of Ukraine in 2022, driven by concerns about energy security and heating and cooling costs. Many projects that had been shelved because they didn't seem economical were revived in 2022 and 2023. This increase in financing includes contributions from European banks, which have generally been more progressive than North American banks, and was notably led by Japanese banks. However, nearly all North American banks are now heavily exposed to LNG expansion.

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You’ve shared that some banks are staying away from projects due to the actions taken by people on the ground. What was the general response from the banks? 

Yeah, we have a robust bank engagement process for this report. We make an attempt to contact every bank within the scope of the report, and this year we received feedback from about half of them. Some of that feedback was quite extensive. We incorporate feedback that aligns with our methodology, but we don’t make major changes based on what banks dislike—banks have made it clear in various ways that they don’t like our report. For instance, when a bank issued a press release in response to our report, I might link it below. They take issue with some aspects of our methodology, which I think is fair, as I also take issue with some aspects of theirs.
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Globally, are there any good actors in the sector? You can only hope that banks are trying to improve and make a difference.

There is one standout example—La Banque Postale in France. They made a policy decision a few years ago to stop financing oil, gas, and coal. Their financing for these sectors is now almost zero. This shows that banks can make significant changes when they are committed. Such actions can ripple out and influence regulatory environments, encouraging other institutions to follow suit.
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We’ve talked a lot about banks. How do you see the role of fintechs fitting into this transition off of fossil fuels?

I’d be curious to hear your thoughts on that actually! I've seen a lot of headlines recently about AI data centers, and the energy requirements for those as an excuse to continue fossil fuels. So I think it's important to acknowledge that the desire for AI and data-intensive services at our fingertips could actually make it harder to transition away from fossil fuels.

I also think Fintech has a real opportunity to say no, actually, we can innovate and move forward with a just transition to clean energy in the foreground. There's an opportunity to replace the old energy systems. 

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I think you highlighted Atmos's mission perfectly. Our whole ethos is about doing better collectively, and move bank deposits away from fossil fuels. We agree the old system isn't working, so we’re thinking about how can we improve it instead of just operating within it.

It's tricky to determine what will drive change. As UN Secretary General António Guterres said, 'To address the climate crisis, we need everything everywhere all at once.' This applies to how we approach finance and fossil fuels as well.
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What can individuals and organizations do to help drive change?

Pressuring major financial institutions to collaborate with international standards and take concrete actions is crucial. While it may seem incremental, collective pressure can lead to significant impacts. For high-net-worth individuals, talking directly to their bankers can also be influential.

Additionally, coming together with others—whether in your workplace, union, or community—can amplify your efforts. Every institution we interact with uses financial services, and since we entrust these institutions with our money and future, we have a right to expect responsible stewardship. If they fail to meet these expectations, we should explore other options.

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And If someone reads your report and wants to take action, what’s the best way for them to get involved?

For those ready to act, we recommend starting with petitions and protests. There are various ways to amplify pressure, such as organizing actions or advocating for specific policies. It's about making informed decisions and encouraging others to do the same. Collective action can drive significant change, so every effort counts.
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Absolutely. We obviously recommend moving your money out of institutions that fund fossil fuels as well. Without money, they can't finance these projects. We also direct people to resources like Bank for Good and Bank.Green, which provide insights into what major institutions are doing with their funds, often informed by research like yours. This helps individuals make informed decisions.

After taking initial steps like signing letters or attending protests, many are ready to take significant action, such as switching banks. This shift often leads to powerful letters and statements about their decision. April, what message would you like to leave our readers with?

Our most crucial demand is to stop financing the expansion of fossil fuels. We cannot achieve our climate goals while banks continue to support companies that are expanding fossil fuel infrastructure. Financial institutions need to draw a clear line and refuse to fund any expansion. It’s essential for effective climate action.
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To dive deeper, read the Banking on Climate Chaos report by Rainforest Action Network for in-depth insights into bank financing for fossil fuels. Or learn about ways to take action, here!

At Atmos Financial, we empower customers’ money to make a positive impact in the world. Deposits exclusively support clean energy and we show the carbon impact of every dollar so that you know what your money is doing, and what it’s not. If you haven’t already, consider opening an account today. It takes less than 2 minutes.

And if you’re moved by today’s discussion, consider donating to Rainforest Action Network to support their vital work. Atmos account holders can do so in their accounts to boost savings rates while driving impact toward a sustainable, fossil-fuel-free future.

‍Thank you to April Merleaux, Zanne Garland, and the entire Rainforest Action Network team for joining us to discuss the crucial work behind the 2023 Banking on Climate Chaos report.