Tuesday, 24 May 2022

The oil and gas policy tracker: A tool to detect greenwashing practices in the finance sector

5 min read

 

Reclaim Finance and more than 15 NGOs launch the “Oil and Gas Policy Tracker” (OGPT). The tool is the first of its kind: it assesses in great detail the oil and gas exclusion policies (or lack thereof) of the 150 biggest financial institutions worldwide. The Oil and Gas Policy Tracker reveals that despite many of the banks, insurers and investors pledging to tackle climate change by restricting support for the oil and gas industry, their policies are too flawed to align their business with their net zero 1.5°C targets. Reclaim Finance and partners call on financial institutions that do not want to be exposed as greenwashers to adopt robust oil and gas policies with clear red lines against oil and gas expansion.

The OGPT scores the oil and gas exclusion policies of top global financial institutions (60 banks, 30 insurers and 60 investors), looking at three key indicators: restrictions on new oil and gas projects, restrictions on companies developing new oil and gas projects, and strategies to phase out oil and gas.

Currently, less than half of the 150 institutions have implemented oil and gas exclusion policies. The OGPT points to a significant number of the heavyweights in the Glasgow Financial Alliance for Net Zero (GFANZ) which still haven’t implemented an exclusion policy on oil and gas, despite their pledge to align their portfolios with 1.5°C.

The Tracker also points to major flaws in existing policies, hindering efforts to tackle oil and gas expansion, in line with what climate science requires in order to stay below 1.5°C.

Only nine financial institutions totally exclude support for all new upstream oil and gas projects, although the IEA’s 1.5°C pathway does not include new oil and gas fields. Policies tend to focus on excluding support only for some unconventional oil & gas such as tar sands, Arctic, fracking and/or ultra deep waters.

Only five financial institutions (partially or totally) restrict support for companies developing new oil and gas projects, despite the critical role played by corporate financing in new oil and gas projects. Most policies focus on restricting direct project support but still enable support at the company level.

More worryingly, close scrutiny reveals that a growing number of financial institutions are making room for major exceptions in the fine print of their policies. For instance:

Only 14 financial institutions have policies on both conventional and unconventional fossil fuels, while 66 have restrictions limited to one or more unconventional sectors.
More and more policies create exceptions for companies with “credible transition plans” or “aligned with 1.5°C by 2050”.

They hardly ever include clear redlines against oil and gas expansion and 1.5°C carbon budget overshoot.
Nearly all oil and gas policies include restrictions on the Arctic (54 out of 66).

However, the OGPT reveals that these policies are often deeply flawed. For instance, no more than eight financial institutions have adopted the Arctic AMAP definition as their exclusion scope.

 

Re-disseminated by The Wealth and Society



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