The commitment of banks and financiers to measures to slow down global warming is not reflected in oil and gas companies’ loan prices, S&P’s report says.
Oil- and gas companies still get loans on the same terms as less polluting companies, even though the UN and international organizations have encouraged banks and big investors to reduce funding for the global warming fossil energy industry.
The information comes from the American financial information company S&P Global Ratings from the reportcomparing borrowing costs for American and European oil and gas companies, Financial Times (FT) tells.
Loan prices have risen only in periods of drastic price reductions.
by S&P Global Ratings manager Michael Altbergwho is also one of the authors of the report, told the FT that the report shows that lenders do not actually give an advantage to ESG aspects (environmental, social, governance), i.e. those who invest in the environment, social justice and good governance.
In 2021, major banks and financial institutions founded the global Glasgow Financial Alliance for Net Zero, whose members committed to accelerating the reduction of carbon dioxide in the economy.
According to the report, the coalition’s actions are not reflected at least in the financing costs of the oil and gas industry.
in Finland banking groups have reported that various financing arrangements based on the environment, social responsibility and good governance have grown rapidly in corporate financing.
For example, the OP group announced in the summer the surveyaccording to which already a quarter of large Finnish companies are primarily looking for “green” financing to finance their business.
In OP, the number of loans meeting ESG criteria increased by more than 70 percent last year, and in the summer of 2023 there were already over 5.5 billion euros.
of S&P according to the report, more than 40 percent of banks and financial and insurance companies have committed to reducing carbon dioxide emissions both in their direct operations and in their indirect energy purchases needed to run their operations.
But only a fifth of banks have committed to reducing all indirect emissions.
Taking these emissions into account would cover the effects of investment and financing activities as a whole, i.e. also the environmental effects of the end use of products and services produced with financing and investments.
According to FT’s information, the UN-supported Net Zero bank association is considering adding end-use emissions to its carbon dioxide emission targets. The members of the alliance will vote on these reform proposals in April 2024.
Energy high prices have increased the profits of oil and gas companies and they have become more solvent and the need for borrowing has decreased, S&P estimates.
The International Energy Agency (IEA), founded by the OECD, an organization of industrialized countries, recently predicted that global demand for oil, gas and coal will peak before 2030.
After that, demand decreases as renewable energy and electric cars take over the market.
S&P estimates that the tightening financing restrictions that take into account environmental impacts can further strengthen large and solvent oil and gas companies, whose profitability is often better than small companies, in the energy transition.
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