Deep Pockets, Dirty Profits: Banks and Investors are accelerating the climate crisis

When we think about responding to the climate crisis, transitioning our energy systems away from oil and gas has always been clear. But what about investment in petrochemicals?

Petrochemicals are fossil-fuel-derived substances – they’re used to produce a range of synthetic materials and substances, including plastics and fertilisers. Not only are they heavily reliant on fossil fuels, but they have the highest energy demand of all industrial sectors, and will likely override lorries, aviation and shipping for oil demand over the next two decades. 

The sector has been described as a “blind spot” of the energy system, becoming key to continued growth for the fossil fuel industry. At the centre of this are financial institutions who are actively funding the petrochemical industry whilst sitting comfortably behind the next phase of fossil-based infrastructure.

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Financing is concentrated across a small number of banks, including Citigroup, Bank of America, Mizuho Financial, JP Morgan Chase and HSBC – covering the US, Japan and the UK, and providing US$66.4 billion in finance. Asset managers also play a key role, including Vanguard, BlackRock, State Street, Capital Group and Geode Capital, with collective holdings of US$53.4 billion. 

Examining the petrochemical companies themselves, East Asia is dominant, including six companies located within this region, five in Europe, three in North America and one in West Asia. Specifically, Syngenta, INEOS and Dow account for just over half of all financing. 

It is communities who sadly bear the cost, including risks to workers and retirees’ pension funds, as major firms, including both Norway’s Government Pension Fund and Japan’s Government Pension Investment Fund, continue to invest in high-risk, carbon-intensive products, despite advancing climate-change-related losses and legal liability. 

There are of course solutions, including adopting transition plans and redirecting funds to strategic investments that reduce fossil-fuel reliance. Without such, communities will continue to be exposed to climate-induced financial, social and environmental consequences.   

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For more information contact: info@scarabtrust.org.uk

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