The Oil&Gas Policy Tracker looks at the main criteria to ensure financial institutions gradually align their portfolio with 1.5°C imperatives. Ending investments in expansion (new oil and gas fields) is a critical first step: according to the International Energy Agency, staying below 1.5°C means no further investments in new oil and gas fields are required beyond those approved in 2021.

There is often confusion between exploration and expansion. Exploration includes activities by the company to search for undiscovered oil and gas reserves. Expansion on the other hand includes all plans by a company to develop new oil and gas fields. There are two metrics to define expansion: the total reserves owned by a company and the reserves that are likely to enter production in the short term (defined by the Global OIl and Gas Exit List as currently under development or at the field evaluation stage). The second metric is of particular importance for financial institutions looking to align with 1.5°C given that short term expansion plans alone are incompatible with the 1.5°C carbon budget.

Unconventional hydrocarbons such as shale oil & gas extracted by fracking, tar sands oil, ultra deep offshore drilling and Arctic oil & gas are particularly harmful for the environment and are often more carbon- and methane-intensive than conventional oil & gas.

That being said, according to the IEA Net Zero scenario, there is no room in a 1.5°C world for oil and gas projects, whether unconventional or conventional.

Project financing includes any direct support to oil and gas projects. Corporate financing includes any transactions supporting the company involved with these oil and gas projects. The Tracker focuses in particular on whether policies enable or restrict corporate financing to companies developing new oil and gas projects (expansionists or developers).

IPCC has warned of the potent methane emissions released by gas production with a global warming potential 84 times higher than CO2 emissions in the short term. The IEA net zero scenario clearly outlines that there are no new oil and no new gas fields in a 1.5°C pathway. Gas expansion needs to end and gas production needs to decline. FInancial institutions must equally address oil and gas.

To make an oil and gas policy more robust, it’s critical to address the oil and gas expansion issue. This means committing to no longer providing direct support to new projects as well as corporate-level support to companies developing these new projects.

Reducing exposure to oil and gas is, of course, a step in the right direction but it tells the story of the past, not the future. It won’t be enough to ensure money stops fuelling oil and gas expansion. In fact, a bank could reduce its global exposure but keep channeling new support for a subset of oil and gas companies with the most climate-threatening projects. This is why it’s critical that financial institutions focus on restricting or ending future financial transactions with companies developing new oil and gas projects. 

The IEA is very clear that there is no room for any new oil and gas projects in a 1.5°C world. However, financial institutions tend to start by restricting support for unconventional oil and gas first. What matters most is that the policy is effective: it’s critical to restrict support to both new projects and the companies developing new projects.

The assessment of exclusion policies takes into account a large part of the oil and gas value chain:

• Upstream activities: exploration, development, production
• Midstream activities: pipelines, LNG terminals, other transport infrastructure (including transportation vessels) and storage infrastructure

Downstream activities (refining infrastructure, oil and gas-fired power plants) are not assessed directly, but a bonus can be granted if some downstream activities are covered by the oil and gas policy.

For financial institutions, keeping investments in carbon-intensive sectors is a way to maintain a dialogue and influence companies directly responsible for climate change, and thus encourage them to align their climate strategies with a science-based 1.5°C trajectory. 

This is why, in addition to exclusion policies, investors shall adopt engagement and voting policies specifically toward oil & gas companies. The credibility of the engagement policy relies on formulating public, precise and impactful demands and on the robustness of its implementation strategy. The more precise, phased and diversified the strategy, the more likely the initial dialogue will be successful. Engagement must include two main demands towards oil and gas companies: 1/ the end of oil and gas expansion 2/ the reduction of oil & gas production.In our Tracker only investors are assessed on engagement policies, but every financial institution

In our tracker, only investors are assessed on their engagement policies, but every financial institution is able to encourage their clients to decarbonize their business, through dialogue.

For financial institutions, keeping investments in carbon-intensive sectors is a way to maintain a dialogue and influence companies directly responsible for climate change, and thus encourage them to align their climate strategies with a science-based 1.5°C trajectory. 

This is why, in addition to exclusion policies, investors shall adopt engagement and voting policies specifically toward oil & gas companies. The credibility of the engagement policy relies on formulating public, precise and impactful demands and on the robustness of its implementation strategy. The more precise, phased and diversified the strategy, the more likely the initial dialogue will be successful. Engagement must include two main demands towards oil and gas companies: 1/ the end of oil and gas expansion 2/ the reduction of oil & gas production.In our Tracker only investors are assessed on engagement policies, but every financial institution

In our tracker, only investors are assessed on their engagement policies, but every financial institution is able to encourage their clients to decarbonize their business, through dialogue.

The Tracker uses the most recent policies and statements officially released by financial institutions. We do not rely on non-public sources of information. The sources used are listed under each policy assessment. Please check the methodology section of the website for more information.

At of June 2023, it focuses on 394 financial institutions in the world: the 100 biggest banks, the 30 major insurers, 20 Lloyd’s of London managing agents, the 200 largest investors and some other French financial institutions. You can use the search button to check out whether the financial institution you’re looking for is included in the tracker. The Tracker will gradually assess a larger number of financial institutions. Watch out!