What, Why, How ?

Financial institutions are currently being very selective on what their policies should cover or not: some unconventional activities, project-level support but not corporate-level support, upstream operations but not midstream ones, bits and pieces of the Arctic. See below concrete examples of the loopholes commonly detected by the Oil and Gas Policy Tracker (statistics updated in July 2022).

Questions about oil and gas expansion

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.

Questions about oil and gas policies

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.

Questions about the Tracker methodology

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

The tracker does not assess emissions reduction targets. It is designed to assess whether the financial institutions have implemented the tools required to achieve these climate goals:  concrete and robust exclusion policies to phase down and out support for fossil fuels.

The tracker only looks at oil and gas exclusion policies. That is not to say that engagement policies are a bad thing. However, alone, they will not achieve the desired effect. Engagement strategies must always go hand in hand with exclusion policies.

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 the time of its release, it focuses on 369 financial institutions in the world: the 100 biggest banks, the 30 major insurers, and 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!