In a recent episode of The Big Question, Wim Mijs, CEO of the European Banking Federation, addressed the complexities surrounding the transition away from fossil fuel investments in light of the EU Green Deal’s ambitious climate goals. As Europe strives for climate neutrality by 2050, the issue of phasing out fossil fuels while maintaining energy security remains contentious.
The EU Green Deal aims to establish a clean energy and sustainable industry landscape across Europe. However, the transition has been gradual, with significant financial support still flowing into the fossil fuel sector. Research indicates that global banks have invested approximately €6.5 trillion in fossil fuels since the Paris Climate Agreement was signed in 2016.
The Banking on Climate Chaos report highlights Barclays as Europe’s top contributor to fossil fuel financing, ranking 8th globally. Despite this, Barclays has committed to providing $1 trillion (€923.9 billion) in Sustainable and Transition Financing between 2023 and 2030. The bank has also pledged to cease direct financing of new oil and gas projects and to limit funding for companies focused solely on fossil-fuel exploration and extraction.
In a discussion with Angela Barnes on The Big Question, Mijs emphasized that a sudden halt in fossil fuel investments could have severe repercussions. “Cutting off investments from one day to the next might seem like a straightforward way to go green quickly,” Mijs said. “However, this approach would undermine the bank’s role in society, potentially causing mass unemployment and social unrest.”
Mijs stressed that banks must play a crucial role in financing the green transition and supporting energy companies as they shift to alternative energy sources. He argued that while immediate divestment is impractical, banks should set clear goals and expectations for the companies they fund. “It is our duty to ensure these companies have a viable plan for moving towards a fossil-free future, but an abrupt cessation of investments would be entirely irresponsible,” he added.
Despite these challenges, Mijs underscored the importance of sustainable development goals. “The sustainable development goals are essential for our future and the future of our children,” he concluded, reaffirming the need for a balanced and strategic approach to divesting from fossil fuels while supporting the transition to a greener economy.