Study Claims Banks "Greenlaunder" Trillions of Dollars of Fossil Fuels Funding
By Tsvetana Paraskova of OilPrice.com
Trillions of U.S. dollars are being “greenwashed” by banks extending loans and credit lines to subsidiaries of fossil fuel companies in secrecy jurisdictions, thus helping hide the true scale of banking support for oil, gas, and coal, a new study by NGO Tax Justice Network showed on Wednesday.
The report, produced in collaboration with the organization Banking on Climate Chaos, found that funds are being strategically channeled through “secrecy jurisdictions”, tax havens, which allow companies to obscure their activities and ownership structures from the public, the authors say.
“Fossil fuel company subsidiaries appear to be deliberately established in secrecy jurisdictions to take advantage of weak transparency regulations and favourable tax regimes,” they added.
The analysis of the fossil fuel financing of the world’s largest 60 banks revealed that 68% of the fossil fuel financing provided by these banks is being granted to subsidiaries in secrecy jurisdictions.
“It is widespread practice among fossil fuel companies to establish financing subsidiaries in secrecy jurisdictions, from which they move funds to expand fossil fuel activities in other locations,” Tax Justice Network’s report said.
“The authors of the report liken banks’ financing through secrecy jurisdictions to granting a loan through a “hall of mirrors” that makes it impossible for regulators, campaigners, and the public to know for certain where money is going and whether banks and fossil fuel companies are abiding by hard-won rules, restrictions, and commitments on sustainable finance,” the NGO said in a statement.
Franziska Mager, senior researcher and advocacy lead at the Tax Justice Network and one of the report authors, commented,
“We’re raising the alarm on banks and fossil fuel companies greenlaundering their finances to hide how much money they’re truly putting into fossil fuels. The situation is much worse than we’ve been led to believe, and the guardrails put in place on fossil fuel financing are being easily jumped over.”
Regional banks in North America have been striking more deals to lend money to the oil, natural gas, and coal industry in recent years, while many European lenders have either shrunk financing for fossil fuels or pledged to lower their exposure to the sector, according to available transparent data compiled by Bloomberg.