World’s Largest Banks Pledged $906bn to Fossil Fuel Companies in ‘Unfathomable’ Increase in 2025, Report Finds
The world’s largest banks pledged $906 billion to fossil fuel companies in 2025, marking what reports describe as an “unfathomable” increase in financing for oil, gas, and coal. According to data cited by The Guardian, this surge in capital commitments contradicts global climate targets and highlights a significant shift in the lending behavior of major global financial institutions.
How Much Did Global Banks Invest in Fossil Fuels in 2025?
Financial institutions provided $906 billion in pledges to the fossil fuel sector during 2025, according to a report highlighted by The Guardian. This figure represents a sharp upward trajectory in capital allocation toward carbon-intensive energy sources. The report characterizes the scale of this increase as “unfathomable,” suggesting that the volume of funding far exceeds previous projections for the transition to green energy.
While many banks have publicly committed to “Net Zero” targets, the actual flow of capital tells a different story. The funding isn’t just maintaining existing infrastructure but is increasingly fueling the growth of the sector. This includes a surge in financing specifically for new fossil fuel sites, a trend tracked by Net Zero Investor, which indicates that banks are betting on the long-term viability of oil and gas expansion.
Key data points regarding the 2025 funding surge include:
- Total Pledges: $906 billion committed to fossil fuel entities.
- Expansion Capital: $508 billion specifically tied to fossil fuel expansion, according to reporting from thebanker.com.
- Sector Focus: Increased investments across oil, gas, and coal, as noted in rankings by Table.Briefings.
Which Banks and Regions Are Driving the Fossil Fuel Surge?
The increase in funding is not evenly distributed across the globe. According to the Financial Times, banks in the United States and Japan are the primary drivers of this boost in fossil fuel finance. These institutions have significantly increased their exposure to energy companies involved in the extraction and production of hydrocarbons.
In the U.S., the shift is attributed to a combination of domestic energy priorities and a changing political climate. The Financial Times notes that U.S. banks have leaned back into traditional energy lending, potentially anticipating a regulatory environment more favorable to fossil fuel production. Similarly, Japanese banks continue to provide substantial backing to coal and gas projects, often linked to regional energy security strategies in Asia.
This regional concentration suggests a divide in global banking. While some European institutions have faced stricter pressure to divest from coal and oil, the powerhouse banks in the U.S. and Japan are filling the gap, ensuring that fossil fuel companies have ample access to liquidity.
| Region/Driver | Primary Role in 2025 Surge | Source of Attribution |
|---|---|---|
| United States | Increased lending to oil and gas producers | Financial Times |
| Japan | Continued support for coal and gas infrastructure | Financial Times |
| Global Banks | $906bn total pledges to fossil fuel companies | The Guardian |
Why Is Financing for New Fossil Fuel Sites Increasing?
A critical detail in the 2025 data is the distinction between maintaining old assets and financing new ones. Net Zero Investor reports that financing for new fossil fuel sites has surged. This is a pivotal distinction because new projects—such as new oil fields or coal mines—create “carbon lock-in,” where infrastructure is built to last decades, effectively committing the planet to high emissions for the remainder of the project’s lifespan.
The drive toward new sites is fueled by several factors:
- Energy Price Volatility: High prices for oil and gas have made new extraction projects more profitable in the short term.
- Energy Security: Following geopolitical instabilities, nations are prioritizing domestic production over international imports.
- Investment Returns: Some banks view fossil fuels as a “safe haven” for returns compared to the longer payback periods of some renewable energy projects.
This trend suggests that the banking sector is not merely managing a “glide path” away from fossil fuels but is actively investing in the expansion of the industry.
The ‘Trump Factor’ and the $508 Billion Expansion
Political shifts in the United States are playing a documented role in these financial trends. According to thebanker.com, activists and analysts point to the “Trump factor” as a primary catalyst for a record $508 billion expansion in fossil fuel projects. This refers to the anticipation of—or the actual implementation of—policies under Donald Trump’s administration that prioritize “energy dominance.”
“The Trump factor is to blame for record $508bn fossil fuel expansion,” activists stated, according to thebanker.com.
This political influence manifests in several ways. First, the removal of regulatory hurdles for drilling and mining makes these projects less risky for banks to finance. Second, the explicit promotion of fossil fuels as a cornerstone of national security encourages financial institutions to allocate more capital to the sector without fear of political backlash at the federal level.
This $508 billion figure specifically refers to the expansion of capacity, which is a subset of the broader $906 billion in total pledges. This indicates that more than half of the total pledged capital is going toward increasing the world’s fossil fuel production capacity rather than simply sustaining existing operations.
Comparing Total Pledges vs. Expansion Capital
When analyzing the data from multiple sources, a clear picture emerges regarding how banks are allocating their money. There is a significant difference between the total amount pledged and the amount dedicated to growth. According to The Guardian, the total pledged amount is $906 billion. However, thebanker.com identifies $508 billion as being tied specifically to expansion.
This means that approximately 56% of the total funding is earmarked for growing the industry. The remaining balance likely covers operational loans, refinancing of existing debt, and general corporate credit lines for fossil fuel companies. For climate observers, the expansion figure is the more alarming metric, as it represents a direct increase in the potential for future carbon emissions.
This contrast highlights a gap in how “green” banking is reported. A bank may claim it is reducing its “carbon intensity” by improving the efficiency of its portfolio, while simultaneously pledging billions to expand the total amount of oil and gas extracted from the ground.
Global Rankings: Oil, Gas, and Coal Investments
The trend is not limited to a single type of fuel. Table.Briefings reports that banks worldwide are increasing investments across the board—oil, gas, and coal. While coal was previously the first target for divestment campaigns, the data suggests a resurgence or a failure to fully exit the coal market in certain jurisdictions.
The rankings of the world’s largest banks now show a redistribution of risk. Instead of a wholesale move toward renewables, many of the top-tier banks are diversifying their energy portfolios to include both green energy and expanded fossil fuel commitments. This “hedging” strategy allows banks to benefit from the transition to renewables while still capturing the high profits associated with fossil fuel spikes.
This strategy creates a paradox where the same institution may finance a massive wind farm in one region while pledging billions to a new gas pipeline in another. This dual-track approach is a primary reason why total fossil fuel pledges have reached the $906 billion mark despite a global increase in renewable energy investment.
Implications for Global Climate Goals
The scale of this financing poses a direct challenge to the goals set by the Paris Agreement. To limit global warming to 1.5°C, the International Energy Agency (IEA) has previously stated that no new investment in fossil fuel supply is necessary. The $906 billion in pledges and the $508 billion in expansion capital directly contradict this requirement.
The implications are twofold:
- Infrastructure Lock-in: New sites funded in 2025 will likely operate for 30 to 50 years, making it nearly impossible to hit mid-century net-zero targets.
- Market Signal: When the world’s largest banks pledge nearly a trillion dollars to fossil fuels, it signals to the market that the industry is still seen as a low-risk, high-reward bet, which may slow the transition to cleaner alternatives.
Furthermore, the role of U.S. and Japanese banks suggests that the financial “center of gravity” for the energy transition is shifting. If the largest capital providers in these economies continue to boost fossil fuel finance, the global transition will rely more heavily on government subsidies and smaller, specialized green banks rather than the systemic shift of the global banking core.
For those tracking these developments, a related explainer on carbon lock-in would provide further context on why new site financing is more damaging than operational funding.
Frequently Asked Questions
What is the difference between a “pledge” and an “investment” in this report?
A pledge, in the context of banking, often refers to a commitment of credit or a loan facility that a company can draw upon. It is not always an immediate cash payment but a guarantee that the funds are available. This means the $906 billion represents the total potential capital the banks have agreed to provide to fossil fuel companies.
Which countries’ banks are most responsible for the 2025 increase?
According to the Financial Times, banks from the United States and Japan have provided the most significant boost to fossil fuel finance during this period.
How much of the funding is going toward expanding fossil fuel production?
Reporting from thebanker.com indicates that $508 billion of the funding is specifically linked to the expansion of fossil fuel capacity, rather than the maintenance of existing sites.
Why is the “Trump factor” mentioned in relation to bank lending?
Activists and analysts suggest that the political environment under Donald Trump encourages fossil fuel expansion by reducing regulations and promoting energy production as a national priority, which in turn makes these projects more attractive to lenders.
Does this mean banks are stopping their investments in renewable energy?
Not necessarily. Many banks are pursuing a dual strategy, investing in renewables while simultaneously increasing their fossil fuel pledges to hedge their risks and capitalize on short-term energy profits.
The surge in fossil fuel financing reveals a deep tension between the public climate commitments of the global financial sector and the actual flow of capital. As U.S. and Japanese banks lead this trend, the gap between “Net Zero” rhetoric and the $906 billion reality continues to widen, leaving the global energy transition in a precarious position.
