Global Banks Increased Fossil Fuel Funding to $906 Billion
Financial institutions have shifted capital toward energy expanders, forcing businesses to evaluate their banking partners' lending criteria.
Updated on Sept. 30, 2026 in Financial Services
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Should major banks be required to stop financing coal and other fossil fuel projects?
Global bank financing for fossil fuel companies climbed to $906 billion in 2025, marking an 8 percent increase over 2024 levels. Financing for firms actively expanding fossil fuel operations rose 27 percent to $508 billion, even as over a third of major banks reduced their fossil fuel spending.
Why it matters
The divergence in lending strategies complicates corporate access to capital and sustainability compliance, as bank portfolios face intensifying scrutiny. Businesses must navigate these shifting funding patterns to align their procurement and expansion plans with the changing risk appetites of global lenders.
Global fossil fuel financing reached $906 billion in 2025, while coal value chain financing remained steady at roughly $117 billion annually. Chinese institutions currently account for 62 percent of total global coal financing, while U.S. banks expanded their coal lending by 23 percent to $16.7 billion.
The players
Barclays
A major British universal bank that increased its annual coal financing by 34 percent to $1.6 billion in 2025.
HSBC
A multinational financial services firm that doubled its annual coal financing from $200 million to $414 million in 2025.
The details
Banks continue to deploy capital through direct lending and underwriting services for companies operating across the fossil fuel and coal supply chains. While European institutions notably reduced coal financing by 46 percent between 2022 and 2025, other major global players significantly increased their exposure. This operational divergence requires businesses to reconsider the long-term viability of their existing banking relationships as lenders recalibrate their exposure to carbon-intensive sectors.
Timeline
2016: The Paris Agreement was signed.
2022: COP26 conference was held in Glasgow.
2022-2025: Period analyzed for EU bank coal financing trends.
2024: Baseline established for comparative fossil fuel financing data.
2025: Full year of banking data recorded for fossil fuel and coal sector financing.
Market Landscape
Rising fossil fuel investment marks a significant departure from the decarbonization milestones originally envisioned by the Paris Agreement. This shift highlights a widening divide between European financial institutions, which are actively reducing carbon-intensive portfolios, and lenders in other regions expanding their exposure to energy sector growth.
Operators should review their banking agreements to assess whether their lenders are signaling shifts in sector-specific credit access. Businesses dependent on long-term lending should diversify their funding sources as major banks increasingly differentiate their portfolios based on carbon intensity.
The takeaway
The divergence between global banks suggests that capital costs for fossil fuel-dependent operations may vary significantly by geography. Maintain a detailed audit of your primary lender's sector-wide financing disclosures to anticipate future changes in your company's credit availability.
Further reading
For broader trends in global capital allocation, see the Financial Services section.
Live Poll
Should major banks be required to stop financing coal and other fossil fuel projects?
