Only 1 in 10 of banks’ energy financing deals went to renewables

Bank financing going towards green energy and net zero emissions changed little in the past six years, according to a report released by Sierra Club, Fair Finance International, BankTrack, and Rainforest Action Network.

Total amount of clear energy financing totalled $34.5b in 2021, climbing from $23.2b in 2016, barely doubling in five years. Bank loans and bond underwriting for renewables went from 7% of the overall financing of the energy companies examined in 2016, to 10% in 2021.

Overall, of the $2.5t in loans and bond underwriting provided by 60 banks to energy companies between January 2016 and July 2022. Of that amount, $2.3t were for the production of fossil fuel energy and just $178b were for clean energy activities such as wind and solar.

The data shows that funding stagnated over the five years, rather than showing any positive trend, the report said.

“Many banks claim that they continue to provide financing for fossil fuel clients in order to help those clients in their climate transition. This data calls into question that claim, and gives proof that banks must get serious about financing the clean energy transition,” said Adele Shraiman, campaign representative with the Sierra Club’s FossilFree Finance Campaign.

Based on the data, no bank is set to reach the minimum requirement needed to reach climate goals, as set in the Glasgow Financial Alliance for Net Zero (GFANZ). The GFANZ research stated that low carbon energy investments need to account for at least 80% of energy investments compared to fossil fuels (4:1) by 2030 to reach climate goals.

Citi and JP Morgan Chase pumped $181b into energy companies examined between 2016 and 2022 by Sierra Club’s research, but just 2% went to renewables.

Similarly, only 2% of Barclays’ financing of the energy companies examined went to renewable energy sources.

Royal Bank of Canada is at just 1% of its energy financing; Mizuho, 4%; BNP Paribas, 7%; and HSBC, 5%.

The research said that banks that are members of GFANZ actually provide less financing for renewable energy, on average, than their counterparts that are not members of the alliance.

THE CHARTIST: DEMAND FOR BUY NOW, PAY LATER RISE AS INFLATION HIT CONSUMERS’ INCOMES

Buy now pay later is expected to account for 41.% of the share of APAC e-commerce payments value in 2026, according to a report by data and analytics company GlobalData.

BNPL has gradually gained traction in APAC markets due to a recent surge in inflation that adversely affected consumers’ disposable income. Inflation has also given rise to demand for shortterm financial solutions, a hole that BNPL currently fills.

Furthermore, BNPL has emerged as a viable payment option for consumers, who do not have access to traditional credit options such as a credit card, allowing them to pay for purchases conveniently at later dates in installments.

Amongst countries in the region, Australia and New Zealand were noted for having well-developed BNPL markets far ahead of their peers. In Australia, BNPL now make up an estimated 20% of all e-commerce payments; the statistic is 12.5% in New Zealand.

Afterpay, a BNPL brand in Australia, serves over 20 million customers in the country alone.

Countries such as India, Singapore, and Japan are also now seeing high adoption of BNPL services. India has reportedly seen the fastest jump in BNPL share in the region, which increased from 0.1% of e-commerce sales in 2019 to 3.2% in 2021. BNPL is expected to account for more than 5% of all e-commerce sales transactions in 2022.

Source: GlobalData