Big 4 US banks abandon standards to protect environment & communities

March 5, 2024

Four of the biggest banks in the world have left the Equator Principles, which set minimum standards on risks to the environment and local communities in countries where they finance oil, gas, coal, infrastructure and mining projects. 

Citi, Bank of America, JPMorgan Chase and Wells Fargo are listed as having left the group of banks which has signed the principles, which still includes global banks such as Barclays, HSBC, Deutsche Bank and Royal Bank of Canada. Citi has boasted in previous reports that it is a “founding signatory” to the Equator Principles and that it has applied them to various projects it has funded to assess and monitor the risk involved. This includes a massive LNG project in Texas, Cheniere’s $8 billion Corpus Christi expansion project, which is opposed by local communities over its health and environmental impacts.

The move is part of a concerning trend among banks headquartered in the US to backpedal on commitments on climate and to vulnerable communities affected by their financing deals. 

Bank of America has removed explicit bans on financing coal and Arctic drilling projects. JPMorgan Chase has introduced an “energy mix” for calculating its financed emissions, which will include renewable energy and make it harder to assess and recently left the voluntary CA100+ initiative. Citi’s chief executive, Jane Fraser, has also signalled a shift in priority.

Ironically, US banks sent large delegations to the recent climate talks at COP 28 in Dubai: Citi sent 26 staff and Bank of America sent 18, including chief executive Brian Moynihan. 

The four US banks are the biggest funders of oil, gas and coal in the world, pumping in $1.4 trillion between 2016-2022. 

Other global banks have continued to make policy changes to address climate and community risks. Barclays last month announced an end to funding for new oil and gas projects; HSBC in 2022 said it was ending funding for new fossil fuel projects. Most recently Danske Bank announced they would severely limit investments in fossil fuels via their asset management division after last year saying it would stop financing oil and gas projects and companies.

Richard Brooks, Climate Finance Director, Stand.earth:

“It is a very troubling move by some of the biggest fossil fuel financing banks in the world to abandon a bare minimum set of standards that banks themselves have set. It is both ethically shocking and financially irresponsible. It is becoming increasingly apparent these banks do not care about anything other than the bottom line.”

Johan Frijns, director, BankTrack:

“The sudden, quiet and coordinated departure of four major US banks from the Equator Principles is an alarming signal that they are not even prepared to adhere to these inadequate global minimum standards. The Equator Principles need fundamental reform, but quitting them in fear of political backlash will further undermine the rights and interests of communities whose rights and environment are so often damaged by the projects banks finance. We demand that such minimum safeguards continue to be respected by the banks now walking away from the initiative.”

Mary Mijares, Fossil Finance Campaigner, Amazon Watch:

“The exit of the largest US banks from the Equator Principles will only further reinforce their disregard for rights and the climate at large. The principles, which serve as a foundational commitment to safeguarding rights and the climate, are crucial. At a time when more commitments are needed from financial institutions, banks must not backslide for the sake of our collective future.”

Adele Shraiman, Fossil-Free Finance campaign senior strategist, Sierra Club:

“This is yet another display of cowardice that shows how Wall Street is bending to pressure from climate denier extremists rather than upholding some of their most basic climate and human rights commitments. While the fossil fuel industry and their political henchmen are pushing financial institutions to not even do the bare minimum, banks should know that they cannot continue to ignore the very real climate risks that their customers, shareholders, and regulators are increasingly alarmed about.”

Aditi Sen, Climate and Energy Director, Rainforest Action Network:

“The equator principles set out the absolute minimum set of standards and safeguards for financial institutions to address environmental and social risks in the projects they finance. The silent retreat from major US banks which are among the biggest financiers of fossil fuels globally from this initiative is deeply concerning. It further undermines the rights of frontline and fenceline communities across the world who bear the brunt of impacts from toxic projects.”