‘Eco-friendly Trend’ Global Banks Earn $3 Billion Through Green Finance

More Than $300 Million in Revenue Last Year Compared to Fossil Fuel Trading
BNP Paribas Tops, EU Strong... US Faces Contrasting Mood Due to Sanctions
To Achieve 'Net Zero' Goals, Investment in Green Finance Must Quadruple

Global banks earned fee income amounting to $3 billion (approximately 3.9261 trillion KRW) last year from financing eco-friendly projects. This revenue exceeds that from fossil fuel transactions such as oil, gas, and coal by more than $300 million.

On the 3rd (local time), Bloomberg reported these findings after analyzing the 2023 earnings of major global banks.

According to Bloomberg's data, the bank that earned the most from green finance, including environmental-related loans and bond sales last year, was France's BNP Paribas. BNP Paribas generated revenue of $130 million (approximately 170.1 billion KRW) through green finance last year. Following were France's Cr?dit Agricole with $96 million (approximately 125.6 billion KRW) and the UK's HSBC with $94 million (approximately 123 billion KRW) in earnings.

In the list of banks earning revenue from fossil fuel-related loans and bond sales, U.S. banks showed strong performance. Wells Fargo earned the highest fee income of $107 million (approximately 140 billion KRW), followed by JP Morgan and Japan's Mitsubishi UFJ Financial Group, each earning $106 million (approximately 138.7 billion KRW).

These results reflect the regulatory impact of various governments. Countries belonging to the European Union (EU), which lead the green transition, impose penalties and enforce higher capital requirements on banks that do not actively address the climate crisis. Consequently, many European banks limit their involvement in loans and bond sales related to fossil fuels.

The United States presents a contrasting atmosphere compared to Europe. Many Republican-majority states are passive toward decarbonization energy policies. These states have imposed sanctions on banks suspected of withholding financing from fossil fuel companies such as oil and gas. Texas, for example, is considering penalizing banks that refuse to cooperate with fossil fuel companies under state law and has threatened that such banks will be unable to secure public contracts in Texas. In fact, it has investigated 10 banks, including Bank of America and JP Morgan, that are engaged in net-zero (achieving carbon neutrality by 2050) activities.

Last year, global banks increased green bonds and loans to $583 billion (approximately 763 trillion KRW). Debt related to fossil fuels reached $527 billion (approximately 690 trillion KRW). In 2022, $594 billion (approximately 777 trillion KRW) was invested in green finance, and $558 billion (approximately 730 trillion KRW) in fossil fuels.

Although the capital scale invested in green finance is larger than that in fossil fuels, it falls short of the level required to meet the goals of the Paris Climate Agreement. According to BloombergNEF analysis, to achieve net-zero targets, four times more capital must be invested in green industries compared to fossil fuels by 2030. However, as of the end of 2022, the ratio of capital?including bank debt and equity acquisitions?between green industries and fossil fuel-related industries was only 1 to 0.7. Trina White, a sustainable finance analyst at BloombergNEF, evaluated that "bank financing is far from the level needed for the net-zero transition."

Jason Schwartz, senior communications strategist at the nonprofit Sunrise Project, said, "Banks are still failing to keep pace with the transition speed necessary to prevent catastrophic climate change." Bloomberg stated, "In recent years, the world's largest banks have released reports allocating huge amounts for environmental protection, but in the absence of regulatory guidelines to help investors understand these claims, their assertions are being questioned."

This content was produced with the assistance of AI translation services.