Report: Minnesota’s leading banks increased their lending to fossil fuel companies last year

Minnesota’s biggest banks publicly pledged to help fight climate change after a United Nations summit four years ago. But last year their financing of fossil fuel companies increased, a new report found.

Wells Fargo, the state’s second largest bank by deposits, ranked fifth highest in the world for bankrolling fossil fuel companies, lending them $39 billion last year, $9 billion more than in 2023, according to a report by a coalition of environmental nonprofits.

The state’s largest bank, U.S. Bank, ranked 25th. It lent $13 billion last year, almost $1 billion more than in 2023.

In all, the world’s 65 wealthiest banks lent nearly $870 billion to oil, gas and coal companies in 2024, the report released Tuesday showed.

It’s the first time since 2021 that fossil fuel lending has increased, the report said, noting that bank financing for oil, gas and coal companies dropped 30% between 2021 and 2023.

Authors of the report warned that those findings signal the world’s governments and financial institutions remain woefully behind in their efforts to rein in rising carbon emissions. The International Energy Agency has said that achieving the climate goals set in the 2015 Paris Agreement meant governments and businesses would need to invest $4 trillion in clean energy every year through 2030, more than three times what was being spent in 2021. It also meant that the world must quickly wean off of fossil fuels, the agency said.

“It’s really disheartening to see that we are moving in the wrong direction,” said Allison Fajans-Turner, who leads Rainforest Action Network’s bank policy work and co-authored the report. “This report should be a wake up call to national governments and to regulators at all levels of society.”

The Minnesota Star Tribune shared the report’s findings with each bank. Both declined to comment.

The report comes as major banks around the world walk back their pledges to reduce company greenhouse gas emissions and use their financial influence to accelerate the transition to cleaner energy sources like solar and wind. Despite a steady decline in fossil fuel financing between 2021 and 2023, many banks have reversed course since President Donald Trump was elected.

In December, the six biggest U.S. banks — JP Morgan, Citigroup, Bank of America, Wells Fargo, Morgan Stanley and Goldman Sachs — all pulled out of a global coalition dedicated to drastically realigning their lending and investments as a way to curb rising carbon emissions.

In February, Wells Fargo rescinded its two most ambitious climate goals: to reduce greenhouse gas emissions related to its financing in certain sectors by 2030 and ultimately reach net-zero emissions across its entire financial portfolio by 2050.

“Wells Fargo is now the Wall Street bank with the weakest climate policies on its books,” Fajans-Turner said. “We have seen banks in multiple geographies roll back their climate policies.”

U.S. Bank did not rescind its climate goals. Minnesota’s top bank pledged in 2021 to power 100% of its operations with renewable energy by the end of 2025. It also set a goal of financing at least $50 billion for clean energy and other environmental projects by 2030. The company has met at least $14.9 billion of that $50 billion goal, according to its own December report, and 99% of its operations are currently powered by renewable sources.

Tim Smith, a professor at the University of Minnesota’s College of Science and Engineering who focuses on corporate sustainability issues, said that banks likely backed away from their climate pledges in response to the changing political climate.

In 2022, President Joe Biden signed the Inflation Reduction Act (IRA) into law. That legislation dedicated hundreds of billions of dollars to clean energy and climate initiatives. But since taking office in January, President Donald Trump has taken unprecedented steps to deregulate the nation’s environmental protections, including by attempting to rescind the federal money established under the IRA.

That 180-degree turn in U.S. policy has rattled the expectations of financial institutions, which are now struggling to anticipate what the future regulatory landscape will look like.

“The business world likes certainty. Uncertainty is risk,” Smith said. “In the absence of certain and sustained government policy, I am afraid that we will continue to see this type of fluidity in the commitments and actions of banks.”

Tuesday’s report, which analyzed the lending commitments listed in financial databases maintained by firms such as Bloomberg and IJGlobal, showed that banks had generally decreased their lending to fossil fuel companies between 2021 and 2023. During that time, fossil fuel financing dropped from $922 billion to $707 billion.

Smith and Fajans-Turner said it’s unclear how much, if any, of that decrease is because of the shifting political climate.

What is clear, Fajans-Turner said, is that several factors likely contributed to that decline: The global COVID-19 pandemic disrupted global trade and drastically reduced travel; the Russian invasion of Ukraine prompted trade sanctions that roiled the global energy market; and between 2021 and 2023, fossil fuel companies raked in record profits, relying less on banks for their financing.

Smith believes that financial institutions will continue to base their decisions on whatever makes financial sense and not their voluntary pledges, which he said were “weak instruments” for changing corporate behavior.

“Many of these banks were likely pursuing these [fossil fuel] deals with their pledges intact, in 2023 and 2024,” he said. “The current political climate simply made it easier to back away from commitments.”

Tee McClenty, executive director of the climate advocacy nonprofit MN350, said whatever the reasoning may be, what matters is that banks continue to fund fossil fuels, the key driver of global warming.

“These decisions are not abstract. They harm real people,” McClenty said. “We cannot wait for these institutions to do the right thing on their own.”