German financial institutions partly responsible for record global warming
According to the EU's climate service Copernicus, the average global temperature exceeded 1.5 degrees Celsius compared to the pre-industrial era for the first time over a span of twelve months. This means that the mark agreed in the 2015 Paris Climate Agreement has been exceeded.
Back then, the international community had agreed to limit global warming to 1.5 degrees Celsius if possible. Experts speak of a “warning to humankind”. In addition, according to the International Energy Agency (IEA), global demand for coal in 2024 will be higher than ever before, rising to 8.77 billion tons. Upstream investments for the exploration, extraction and production of oil and gas are also expected to reach their highest level since 2015 in 2024, amounting to around USD 528 billion, according to the IEA.
This development has evidently been ignored by German banks and insurance companies since the Paris Climate Agreement and despite scientific evidence, as the second edition of the 100-page study ‘Highway to Climate Hell’ by the Berlin-based NGO Facing Finance shows. The independent analysis examines whether and how 20 selected German financial service providers are helping to shape the transition to a sustainable future and how they are meeting the goals and commitments of the Paris Climate Agreement, which stipulates a redirection of financial flows in favor of renewable energies.
More than 85% of the analyzed energy financings (USD 152 billion) from the 20 financial institutions active in Germany examined in this study went to the global fossil energy sector between 2016 and 2023. The companies analyzed are those developing coal-fired power plant, coal mining and/or coal infrastructure projects - in the power generation, mining and services sectors, as well as oil and gas companies operating in the upstream, midstream or gas and oil energy sectors, or global energy companies classified as renewable energy (geothermal, wind and solar).
While in 2016, still 90.8% of the analyzed energy financing went to fossil fuels, this figure fell to 81.4% in 2023. At the same time, the share of financing in the global renewable energy sector doubled from 9.2% to 18.6%. However, both of these figures together are far below the requirements for achieving the climate targets by 2030 and illustrate the co-responsibility of financial service providers for anthropogenic climate change.
“German banks and financial service providers bear responsibility for record global warming and the ever-increasing use of fossil fuels, as their financing and investment behavior is still in stark contradiction to the goals and commitments of the Paris Climate Agreement,” complains Thomas Küchenmeister, Managing Director at Facing Finance and author of the study.
During the 2016 - 2023 evaluation period, Deutsche Bank alone granted the most extensive loans to companies in the fossil energy sector. Following the conclusion of the Paris Climate Agreement, it provided almost USD 70 billion in financing in the global fossil energy sector between 2016 and 2023. However, the ING Group, Commerzbank, UniCredit, BayernLB, DZ Bank and LBBW also financed the fossil fuel sector extensively.
The study is based on a methodology developed by the Dutch institute Profundo, which researched transparent, objective data on financial relationships. Facing Finance supplemented the research with a thorough analysis of the climate-related voluntary commitments of financial service providers.
The study also comes to the conclusion that the climate-related guidelines of the banks examined are largely insufficient to achieve the climate targets required. There is often a lack of measurable, short-term targets (up to 2030) regarding the reduction of financing and investments in the fossil energy sector. The same applies to financing and investment in the renewable energy sector.
The “Highway to Climate Hell” study aims to help consumers and other stakeholders make more informed decisions by transparently disclosing which financial service providers are promoting the transformation process, and which are leading the way in supporting climate-friendly financial practices and which are not.
Details on the methodology and data collection can be found in the following documents:
The study “Highway to Climate Hell” is available for download here.
Media contact
Thomas Küchenmeister
Managing Director at Facing Finance e.V.
+49 (0)175 4964 082
kuechenmeister@facing-finance.org
