The largest global lenders collectively earned about $3 billion in fees in 2023 by facilitating debt for deals positioned as environmentally sustainable, as per Bloomberg’s data.
In contrast, the sector garnered less than $2.7 billion in combined earnings from transactions related to fossil fuels.
For the second consecutive year, global banks earned higher profits from underwriting bonds and offering loans for green initiatives than from financing activities related to oil, gas, and coal.
In leading the transition, European banks took the forefront, with BNP Paribas SA securing the top spot in Bloomberg’s green debt league table.
Meanwhile, Wall Street asserted dominance in fossil finance, with Wells Fargo & Co. and JPMorgan Chase & Co. emerging as top earners from oil and gas deals.
BNP, the largest bank in the European Union, garnered nearly $130 million from its green finance operations last year. Following closely were Credit Agricole AG with $96 million and HSBC Holdings Plc with $94 million.
In contrast within the energy sector, Wells Fargo accrued fees totaling $107 million from orchestrating bonds and loans for fossil fuels.
JPMorgan and Mitsubishi UFJ Financial Group Inc. closely followed, each earning $106 million.
It’s worth noting that MUFG was also the leading arranger of global green loans in the previous year.
This development aligns with more stringent regulations in Europe, where both the European Central Bank and the region’s principal banking authority have emphasized the urgency for the finance industry to accelerate its transition toward green initiatives.
European lenders now confront the risk of fines and heightened capital requirements in cases of mismanagement of climate exposures.
As a result, many banks are implementing explicit restrictions on fossil finance in response to these regulatory changes.
Overall, banks provided $583 billion in green bonds and loans in the previous year, surpassing the $527 billion allocated for fossil fuel debt.
In 2022, the figures were $594 billion for environmental projects and $558 billion for oil, gas, and coal, as per Bloomberg data.
For several years, major global banks have released reports detailing significant funds allocated towards creating a more environmentally friendly and equitable world.
However, some of these claims are now facing scrutiny due to a lack of regulatory guidance, making it challenging for stakeholders to assess their accuracy.