The Oil and Gas Policy Tracker rates the oil and gas exclusion policies adopted by financial institutions on a consistent and transparent scoring grid built upon three main criteria.
Why the Oil and Gas Policy Tracker ?
According to the International Energy Agency, oil and gas production could keep increasing by 2% each year. This is incompatible with the drastic annual cuts in fossil fuel production by 2030 required to stay below 1.5°C: 11%, 4% and 3% in coal, oil and gas production each year until 2030, according to the 2021 UNEP Production Gap report.
In its 2021 net zero scenario and World Energy Outlook, the International Energy Agency also concludes that there is no room for new oil and gas fields, beyond those approved in 2021, in a 1.5°C scenario and calls on companies to focus on reducing their production. Yet, hundreds of billions are still flowing each year to the oil and gas industry: in 2021, the Banking on Climate Chaos report calculated that the top 60 banks had channeled more than USD 3.8 trillion to the fossil fuel industry since the Paris Climate Agreement. Nothing seems to slow down plans to develop new production projects across the planet.
Meanwhile, more and more financial institutions are making climate commitments, pledging to achieve net zero and align with the international 1.5°C climate goal. But are they implementing the policies required to achieve those goals?
A tool against greenwashing, for high-quality oil and gas policies
The number of investors, insurers and banks with policy guidelines restricting their support to the oil and gas industry sector is growing rapidly, particularly since the publication of the International Energy Agency’s Net-Zero scenario in 2021.
However, not all policies are equal, and we often find comparable loopholes. See here for more details on the recurring loopholes.
The Tracker is not just about counting and comparing policies. Its main goal is to encourage high-quality oil and gas exclusion policies. As banks, insurers and investors consider new policies or seek to revise existing policies, understanding the details of these policies is critical to ensure they deliver on the Paris Agreement goal to limit global warming to a maximum of 1.5°C above pre-industrial levels.
In a nutshell, the Oil and Gas Policy Tracker is a tool designed to answer a critical question: will this policy help us stay within the 1.5°C limit? Thanks to a detailed scoring and analysis, the Tracker detects gaps in each policy and points them in the right direction, listing the next steps each financial institution should focus on.
Which financial institutions?
The Oil&Gas Policy Tracker covers all the biggest banks, (re)insurers, asset owners and asset managers globally, in 32 countries, from Australia to the United States.
Are included in the tracker: (as of July 2022)
- The top 100 banks according to “The world’s 100 largest banks‘‘ ranking (Standard & Poor’s, 2021). The top 60 banks are also assessed in the Banking on Climate Chaos 2022 report.
- The top 30 insurers covered in the 2021 Scorecard on Insurance, Fossil Fuels & Climate Change (Insure Our Future, Oct. 2021).
- The top 100 asset managers according to the “The world’s largest 500 asset managers” ranking (Thinking Ahead Institute, Willis Tower Watson, Oct. 2021).
- The top 50 asset owners according to “The Asset Owner 100” ranking (Thinking Ahead Institute, Willis Tower Watson, Nov. 2021)
- 158 financial institutions which joined the Glasgow Financial Alliance for Net-Zero (GFANZ)
- 53 French financial institutions
Some financial institutions fall into more than one of the above categories.
Therefore, the Oil&Gas Policy Tracker assesses all the majors financial institutions that have signed the Net Zero Banking Alliance (NZBA), the Net Zero Asset Owner Alliance (NZAO), the Net Zero Asset Managers initiative (NZAM) and the Net-Zero Insurance Alliance (NZIA).
What does the OGPT assess exactly?
The Oil&Gas Policy Tracker looks at the exclusion policies of financial institutions. It does not define due diligence processes as “exclusion policies” unless there are explicit measures to exclude support.
The Oil&Gas Policy Tracker considers the entire oil and gas industry. First of all, it assesses both conventional and unconventional oil and gas, considering the following four unconventional sectors: Arctic oil and gas, fracking/shale oil and gas, tar sands, ultra-deep water activities.
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
Oil & Gas Value chain graphic: dieprojektoren.de (with graphics from thenounproject.com)
Expansion is the most urgent issue for financial institutions to address. In order to assess the commitment of a financial institution to explicitly exclude companies with oil and gas expansion plans, we calculate the percentage of global resources under development excluded. The calculation is based on the Global Oil&Gas Exit List. The expansion criteria also assesses midstream expansion, taking into account the exclusion of companies with pipelines and/or LNG terminals under development.
The Oil&Gas Policy Tracker is a work in progress. Its methodology will be updated regularly and expand over time. In the future, we aim to include a larger part of the downstream value chain and other sectors of the oil & gas industry.
What are the criteria
Oil and gas policies are rated according to three main criteria, applying to the complete oil and gas industry :
- The first criteria covers the immediate exclusion of financial services dedicated to oil and gas projects*.
- The second criteria addresses the exclusion of all financial services to companies with oil and gas expansion plans. Reclaim Finance will assess the impact of each policy on oil and gas expansion by looking at the % of oil and gas developers it rules out, based on the Global Oil & Gas Exit List from Urgewald.
- The third criteria rates the quality of oil and gas phase-out commitments (considering both long-term commitments and immediate exclusion criteria).
*By financial services dedicated to oil and gas projects, we refer to the following services: project finance, dedicated financing, advisory services dedicated to oil and gas projects, reserve-based lending and/or other dedicated financial services, insurance and direct investment.
In addition, the Oil & Gas Policy Tracker offers a “Zoom on unconventional oil and gas”. The tool rates exclusion policies focusing on four specific unconventional sectors: Arctic oil and gas, shale oil and gas, tar sands and ultra-deep water activities. This rating considers project-level exclusion, company-level exclusions and the phase-out strategy from a specific unconventional sector.
There are multiple definitions of the Arctic region. The OGPT considers the boundaries established by the Arctic Monitoring & Assessment Programme. The AMAP is the Arctic Council’s working group focused on monitoring pollution and climate change in the Arctic region.
Arctic oil and gas
The Arctic region is home to very fragile and interdependent ecosystems. The more oil and gas industry projects in the Arctic, the greater the pollution of the white ice sheets, undermining the vital role they play in cooling down the planet. In turn, that means accelerating global warming in the Arctic, thawing permafrost and releasing methane. It’s a vicious climate circle.
Tar sands are a mix of tar, clay, sand and bitumen. Bitumen is a very dense and viscous form of petroleum that cannot be pumped like conventional oil. This makes oil from tar sands hard to extract and difficult to process. Producing oil from tar sands is very carbon intensive and has immense impacts on local communities and the environment.
Fracking/Shale oil and gas
Fracking is an extraction method used to access gas and oil trapped in deep rock formations. Oil & gas producers drill wells and pump so-called fracking fluid into the ground to crack open the rock and release the trapped oil and gas resources.
Ultra deepwater wells are located at least 1,500 meters (5,000 feet) below sea level. The risk of accidents is the biggest threat related to ultra deepwater production, but even routine drilling activities can have severe impacts on fragile ecosystems at the bottom of the sea.
The scoring system?
For the three main criteria used to assess oil and gas policy, the scoring system is quite simple. The scores range from 0 to 10 and are based on the following color code: red, orange, yellow, green, to quickly identify the quality of the policies with regard to the assessed criteria.
For the focus on the four unconventional sectors, the rating is primarily qualitative. Project-level exclusion, company-level exclusions (relative and absolute thresholds, exclusion of companies with expansion plans) and the phase-out strategy from the unconventionals are taken into account. The rating system includes five grades, ranging from no policy to a robust exclusion policy.
Many policies allow exceptions, use inappropriate metrics or weaken the impact of the criteria by limiting their application to certain activities. In these cases, a penalty of one or two points is applied for each criteria to sanction these limitations and loopholes.
Policies only applying to SRI/ESG funds are not considered in this analysis, except if they are the only ones proposed by the financial player or if these funds represent at least 80% of the total assets under management.
For each financial institution, a quick paragraph summarizes the content of each policy per criteria, the source used (policy, press release, web page…), and a brief analysis by Reclaim Finance. Filters allow the user to limit the selection to either banks, insurers or investors so that you can better compare financial players to their peers. Finally, it is possible to identify the best policies at a glance with the “Best Practices” button (a “star logo” appears next to the name of the financial institution)
The complete analysis grid is available below the Oil & Gas Policy Tracker.
Which data sources?
Reclaim Finance assesses all types of public documents issued by financial institutions: these may include oil and gas policies, ESG frameworks, investment policies, disclosure reports, press releases, specific pages of a website, etc. Links to public documents are available in the Oil&Gas Policy Tracker, in the analysis dedicated to each financial institution.
As part of the development of this tracker, since October 2021, Reclaim Finance contacted all 369 financial institutions assessed in the tool to (1) get more information about their oil and gas commitments and (2) share the scores, analysis and the assessment methodology.
The Oil&Gas Policy Tracker will be continuously updated whenever new policies are adopted or existing policies are upgraded.
Despite our best efforts, errors or omissions may have appeared in our tool. Reclaim Finance welcomes feedback from financial institutions, especially if we missed an existing oil & gas policy.
Did you identify a mistake? Is a financial institution missing?
Feel free to contact us: email@example.com