Toxic Bonds

This report reveals that, since the Paris Agreement was signed in 2015, banks have underwritten $2.7tn in bonds for coal companies and those leading oil and gas expansion. It argues that underwriting fossil fuel bonds is a loophole in banks’ net-zero targets and merits greater scrutiny.

The authors explain that banks’ commitments under initiatives such as the Net Zero Banking Alliance either exclude underwriting or only apply to new clients. This allows support for fossil fuels to continue, in spite of banks’ stated climate goals.

The paper finds that the US banks JPMorgan Chase and Citigroup were most involved in fossil fuel bond transactions between 2016 and 2022, followed by the Industrial and Commercial Bank of China.

The report warns that underwriting fossil fuel bonds comes with an outsized reputational risk for banks and a considerable impact on the planet. It recommends that banks include underwriting all their climate policies and financed emissions reduction targets. It also recommends that they urgently cease underwriting bonds for coal, oil and gas expansion.

The Toxic Bonds Initiative and Bank on Our Future, which authored the report, describe themselves as networks of climate advocates and social movements. The Toxic Bonds Initiative is hosted by the global non-profit advocacy organisation SumOfUs, while Bank on Our Future is funded by the Sunrise Project, which also funds Green Central Banking.