Global Banks Bolster Fossil Fuel Financing Amid Policy Shifts

The world's 65 largest banks escalated their financing for fossil fuel projects, committing $906 billion in 2025. This represents an 8% increase from the previous year, with a notable acceleration observed among U.S. and Japanese financial institutions, coinciding with a period of climate policy recalibration. This latest funding surge brings the cumulative total invested in oil, natural gas, and coal operations by these banks to $8.7 trillion since the Paris Agreement was signed in 2015. The increase in 2025 marks the second consecutive year of heightened fossil fuel financing, according to the annual Banking on Climate Chaos report compiled by a coalition of environmental groups. The uptick in financing reflects a complex interplay of factors, including energy security imperatives, ongoing demand for hydrocarbons, and varying regulatory environments across jurisdictions. While some regions continue to push for aggressive decarbonization, others appear to be re-evaluating the pace and cost of the energy transition, leading to a more permissive stance on traditional energy sources. From an economic perspective, sustained bank funding for fossil fuels indicates a belief in the sector's medium-term profitability and its continued role in global energy supply. This financial commitment underpins significant capital expenditure in extraction, processing, and distribution infrastructure, thereby influencing commodity markets, energy prices, and the operational viability of numerous energy companies globally. The report's findings highlight a divergence between stated climate ambitions and observed financial flows, particularly in the banking sector. The implications extend to national energy strategies, corporate investment decisions, and the long-term trajectory of global emissions, posing challenges for climate-related financial risk assessments and sustainable finance initiatives.