60% of bank directors linked to fossil fuels

New research finds extensive links and revolving doors between banking and most polluting sectors.

Campaigners are calling for banks, shareholders and regulators to ensure directors work towards the end of financing for fossil fuels.

A new report has found that over half of Europe’s bank directors have affiliations with highly carbon dependent companies and organisations.

The analysis, released by investigative research organisation DeSmog UK, found that over 80% of directors for Lloyds, HSBC and Barclays held potentially compromising ties.

“The findings raise concerns over a systemic conflict of interest at a time when the international financial sector is under increasing pressure to stop funding fossil fuels,” according to authors of the report.

The world’s 60 biggest banks have provided fossil fuel funding worth $3.8 trillion in the five years since the Paris Agreement.

Compromised directors

DeSmog’s analysis of 15 major European banks found that 61% of directors had held positions with polluting companies and organisations, with over a third of those currently holding the role. 17% of directors were found to have held positions with polluting energy companies, including fossil fuel giants Shell, BP and Exxon.

At least 20% of directors at five of the banks had links to companies identified by Climate Actions 100+ as some of the world’s worst polluters. One director was found to sit on the board of seven banks and have ties to companies involved in the extraction of coal, the most polluting fossil fuel.

Banks and their links to fossil fuels
Bank % of board directors with climate-conflicting ties Fossil fuel funding since Paris Agreement
Lloyds 91% $12 billion
HSBC 87% $111 billion
Barclays 83% $145 billion
Santander 81% $34 billion

The report, which also looked at Canada, China, Australia, South Africa and the USA, found that there were also significant ties to think tanks and lobbying groups with a history of campaigning against climate action.

“The fossil fuel industry has a well-established track record of ingratiating itself with society’s opinion leaders and decision makers, ... because of the revolving doors between the corporate leaderships of incumbent industries,” Geoffrey Supran, Research Associate in the Department of the History of Science at Harvard University, said.

“Having its fingers in all the pies allows the fossil fuel industry to quietly put its thumb on the scales of institutional decision making, helping delay action and protect the status quo.”

Deutsche Bank and Citibank were also named in the report for their compromising links.

Barclays' board

Barclays remains the worst fossil fuel financier in Europe, providing over $27.5 billion in 2020 alone. Its boardroom is also dominated by those with fossil fuel ties, including directors Brian Gilvary and Tushar Morzaria. 

Brian Gilvary joined the Barclays board in 2020. He worked for BP for 34 years, including as chief financial officer in the aftermath of the company’s Deepwater Horizon oil spill in 2010. Tushar Morzaria joined the Barclay board in 2013. He also currently sits on the board for BP, responsible for over 34 billion tonnes of greenhouse gas emissions between 1965-2017. Barclays has provided $2,460 million in financing to BP since the Paris Agreement. 

Last year, Brian Gilvary was also appointed chair of INEOS Energy, a new company formed by the chemicals giant to accelerate the group’s technologies under the energy transition. The chemicals company describes itself as “the biggest player in the UK shale gas industry”, and holds licences to explore for shale gas in the UK covering more than one million acres. In 2017, it took out a wide-reaching injunction that would prevent “persons unknown” protesting against future shale gas sites. Gilvery’s appointment at the company coincided with Ineos’ $5 billion deal to buy BP’s petrochemical business.

Gilvary is also a fellow at the Energy Institute, an association of energy industry professionals, which organises “International Petroleum Week”, an annual conference for oil and gas professions.

Fossil finance 

According to the Banking on Climate Chaos 2021 report, the UK’s ‘big five’ banks have increased fossil fuel finance since the Paris Agreement in 2016. The report compared 60 banks globally and found that Barclays was the 7th biggest global fossil fuel financier, followed by HSBC at 13th.

Not only are these banks responsible for propping up existing fossil fuel extraction, in the face of climate breakdown, they are financing its expansion.

The report found, “even amidst a pandemic-induced recession that resulted in an across-the-board reduction of fossil fuel financing of roughly 9%, the world’s 60 largest banks still increased their financing in 2020 to the 100 companies most responsible for fossil fuel expansion by over 10%.”

This included companies behind highly controversial projects including the Line 3 tar sand oil pipeline and the expansion of fracking on the land of Indigenous Mapuche communities in Argentina’s Patagonia region, both of which have serious human rights implications and face fierce opposition.

“Financial institutions are critical to driving the transition to clean energy, so it’s terrifying that their directors’ views are being shaped by the fossil fuel industry,” Adam McGibbon from campaign group Market Forces stated.

“How can banks reasonably claim to support the Paris Agreement when their directors are linked to an industry with a vested interest in the Paris Agreement failing?”

What needs to be done?

Beau O’Sullivan, campaign coordinator Bank on our Future which is campaigning on DeSmog’s research, says, “banks need to make sure they have a board that is reflective of the 21st century, that includes being competent in the risks that coal, oil, and gas pose to the planet and economy.” 

The campaign is calling for shareholders to vote off climate-conflicted directors, and for board chairs and to hold directors to account at AGMs for failure to properly manage risks. It also states that directors’ conflicting interests show that regulators like the Bank of England need to do more: “they can step in to set rules that force banks out of fossil fuels,” Beau says. 

“Ultimately, we need all banks to end financing of all fossil fuels, starting with coal.”

Take Action

To avoid contributing to climate change through your finances, switch banks now.

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