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World’s largest lenders provided only slightly less financing last year than in 2020, analysis shows

Global banks provided $742bn in financing to coal, oil and gas companies last year, despite the fanfare of climate pledges by lenders that signed up to former Bank of England governor Mark Carney’s industry alliance, according to the latest comprehensive analysis by an activist group.

Fossil fuel financing remained dominated by the same four US banks, led by JPMorgan Chase, and followed by Wells Fargo, Citi and Bank of America, according to the annual report produced by a coalition of campaign groups organised by the Rainforest Action Network.

All four banks are members of the so-called Net-Zero Banking Alliance that is part of Carney’s Glasgow Financial Alliance for Net Zero umbrella group. The group made the claim at the UN climate summit in Glasgow in November that $130tn of private sector assets was committed to achieving net zero greenhouse gas emissions.

Overall, the world’s 60 largest lenders provided only slightly less financing for fossil fuels in 2021 than the $750bn recorded in 2020, the RAN report found. The banks have provided a total of $4.6tn since the Paris Agreement was signed in 2016, peaking in 2019 at $830bn, it said.

The energy crisis that has been exacerbated by Russia’s invasion of Ukraine has driven expectations that the demand for fuel will support coal, oil and gas production in the short term.

Although the total amount provided by the banks in 2021 for fossil fuel expansion fell to $185.5bn from $319.7bn in 2020, that decline “may be cancelled out in the year ahead by pressures in energy markets”, said James Vaccaro, executive director of the Climate Safe Lending Network, a group of banks, NGOs and investors.

“There is very little to feel positive about,” he said. The findings were in “stark contrast” with banks’ climate pledges, and showed that “there are still considerable flows of finance to fossil fuel companies at similar rates to that in previous years”.

JPMorgan was the biggest western financier of the Russian state energy company Gazprom over the past six years, according to the RAN analysis.

In total, JPMorgan funding of fossil fuels companies in 2021 stood at $61.7bn, up about $10bn after falling by a similar amount the previous year. The bank said it was “taking pragmatic steps” to meets its emission reduction targets “while helping the world meet its energy needs securely and affordably”.

Wells Fargo similarly recorded a bounce back by about $20bn to $46.2bn in 2021, after the biggest backer of US fracking put the fall the previous year down to the slump in oil prices.

Citi moved behind Wells Fargo in 2021, providing $41bn of financing, down from $49bn the year before. The bank said its strategy was based on “responsibly driving the transition to a net zero economy and . . . focused on working with our fossil fuel clients to help them decarbonise their businesses”.

Similarly, the Bank of America lowered its fossil fuel financing activities to about $32bn in 2021, from $42bn the year before. The French banks also pared back their activities in 2021, after a surge the previous year.

Although many banks had climate policies in place, they were often worded in such a way as to be ineffective, the RAN report said. For example, exclusions related to project-specific finance, or only limited lending and not underwriting.

Of the 44 banks covered by the report that had committed to net zero emissions goals by 2050, it found 27 did not have a “meaningful no-expansion policy for any part of the fossil fuel industry”.

That enabled fossil fuel financing to continue without breaching policies, the report said. Soon after the launch of the Net-Zero Banking Alliance, founding signatories including Citi, BNP Paribas and Barclays took part in multibillion-dollar financing deals with companies including Saudi Aramco and the Abu Dhabi National Oil Company, the state-owned oil companies, and the US oil major ExxonMobil, the report noted.

Banks’ financing exclusion policies often focus on coal, the most polluting fossil fuel that has become a focal point for policymakers.

Yet only about 4 per cent of the $4.6tn in fossil fuel lending and underwriting recorded since 2016 went towards coal mining companies, and the bulk of coal financing came from Chinese state-backed banks, the report said. Roughly a quarter of the total financing went to utilities, including coal power generators, and about two-thirds went to oil and gas.

The analysis also noted the “alarming” increase in the financing of tar sands oil projects, which jumped 50 per cent between 2020 and 2021 to $23.3bn.

Fewer employers tested applicants for marijuana last year than in 2020 as companies grappled with nationwide labor shortages

The percentage of working Americans testing positive for drugs hit a two-decade high last year, driven by an increase in positive marijuana tests, as businesses might have loosened screening policies amid nationwide labor shortages.

Of the more than six million general workforce urine tests that Quest Diagnostics Inc., one of the country’s largest drug-testing laboratories, screened for marijuana last year, 3.9% came back positive, an increase of more than 8% from 2020, according to Quest’s annual drug-testing index.

That figure is up 50% since 2017. Since then, the number of states that legalized marijuana for recreational use grew to 18 from eight, plus the District of Columbia.

Despite the increase in positivity last year, fewer companies tested their employees for THC, the substance in marijuana primarily responsible for its effects, than in recent years, said Barry Sample, Quest’s senior science consultant.

The shifting legal backdrop and changing cultural attitudes have prompted some employers to stop testing for marijuana while companies in some states are barred from factoring the test results into hiring decisions, according to Dr. Sample. And those trends accelerated last year amid the recent shortage of workers, especially in states where recreational marijuana is legal, Dr. Sample added.

“We’ve been seeing year-over-year declines in those recreational-use states, but by far the largest drop we’ve ever seen was in 2021,” he said about the number of drug tests that screened for THC.

The percentage of specimens tested for THC declined 6.7% nationwide in 2021 from 2020, while that figure fell by 10.3% in states where recreational marijuana is legal, according to Quest’s data.

“We certainly heard from some of our employer customers that they were having difficulty finding qualified workers to pass the drug test,” Dr. Sample said of pre-employment tests for THC, especially in states where use of the drug is legal.

Overall, the proportion of U.S. workers who tested positive for the various drugs Quest screened for in 2021 rose to 4.6%, the highest level since 2001, according to Quest, which analyzed nearly nine million overall urine tests last year on behalf of employers.

That percentage is more than 31% higher than the low of 3.5% a decade ago, in the early days of a resurgent heroin epidemic in the U.S.

In Michigan, where recreational marijuana was legalized in 2018, many employers didn’t loosen their requirements on pre-employment drug tests for a few years, according to Tammy Turner, co-owner of Kapstone Employment Services, a Detroit-based staffing agency.

But during the pandemic and the related labor shortages, Kapstone, which works mostly with manufacturers that supply the Big Three car makers, encouraged regional employers to loosen their THC-screening policies for many positions.

“So many of our clients were adamant, in pre-Covid, that they would not accept anyone that could not pass a drug test, even if it was THC,” Ms. Turner said. “We had to encourage some of them to reassess their policy, and they did, and we were able to fill many of those jobs as a result.”

For certain positions, such as those that involve heavy machinery, Kapstone still screens applicants for THC and other drugs, as required by the federal government, said Kerry Buffington, co-owner of the company.

Ms. Buffington and Ms. Turner said they don’t see any of the companies they work with reverting back to their pre-pandemic hiring standards even if the labor shortage eases.

Marijuana use has become so casual among some young workers that Ms. Turner said some potential workers have shown up to her office smelling like the drug, and one worker who was placed by Kapstone got fired after using a vape pen in the workplace. The firm has had to counsel some workers on what is appropriate at work, Ms. Turner added.

Michelle Bearden, chief risk and operating officer for Houston-based staffing and recruiting firm Link Staffing Services Inc., said she has yet to see a strong reason why Link Staffing should move to loosen pre-employment marijuana screenings before the federal government does. She acknowledged the job market has been tight during the pandemic, but said she doesn’t think nixing THC screenings is a good solution.

“[Marijuana] is still on the federal list of prohibited substances, and that is what our policies are driven by at this point,” she said. “If I see that there is an overwhelming reason or cause for us to change ahead of that, we will.”

In Texas, Link Staffing, which mostly hires for the manufacturing and distribution sectors in the Dallas and Houston areas, has made some concessions to fill open roles amid the labor shortage, including by easing background-check requirements, Ms. Bearden said.

And while it can still be tough to fill open roles, Link Staffing and the employers it works with still view marijuana use as a deal breaker.

“We employ people in safety-sensitive jobs, and I think your employers that operate workplaces with high safety concerns—it may still be part of what they view as a hazard in the workplace, for people to be under the influence of anything,” Ms. Bearden said.

Chinese property giant also agrees to $575 million project disposal

A quartet of outside law firms and accountants will help probe how banks ended up taking control of more than $2 billion at a key China Evergrande Group subsidiary.

Last week, the highly indebted Chinese real-estate developer and its Evergrande Property Services Group Ltd. unit said lenders had enforced their rights over 13.4 billion yuan, or about $2.1 billion, of bank deposits pledged by the subsidiary to guarantee third-party borrowing.

The professional advisers will work with non-executive directors at Evergrande EGRNF 9.11% and its property-services unit, after both companies set up board committees to investigate the incident.

“Preliminary investigation has revealed that the pledge of the relevant deposits and the enforcement took place in 2021,” Evergrande said late Tuesday in a filing to the Hong Kong stock exchange.

China Evergrande said it will hire Reed Smith Richards Butler LLP, while the subsidiary will appoint DLA Piper, Jincheng Tongda & Neal and Grant Thornton China. Both companies said the investigation committees had begun collecting information and will strive to complete their probes as soon as possible.

Shares in the two Hong Kong-listed companies and another major Evergrande subsidiary, China Evergrande New Energy Vehicle Group Ltd. , had been halted since March 21.

On Wednesday, shares in the car-making unit, which is also known as Evergrande Auto, resumed trading and fell as much as 14% in morning trade. Evergrande Auto said it was seeking more information on the deposit seizure. “The board considers that this primarily concerns a sister company,” it added.

Evergrande Auto said its shares would be halted again from Friday, as it won’t meet Hong Kong’s March 31 deadline to publish audited annual results. It said it expects to release the audited results in about three months.

Evergrande and Evergrande Property Services, whose shares are still suspended, have both said they won’t meet the deadline for audited results either.

In another filing, Evergrande said it had agreed to offload a stake in Crystal City, a project in the eastern Chinese city of Hangzhou, for 3.66 billion yuan, or about $575 million.

The two state-owned buyers will pay Evergrande within 20 months after the sale is completed, it said. About a quarter of the proceeds will be used to repay construction fees owed to one of the buyers, Evergrande added.

Evergrande is China’s most-indebted property developer, with the equivalent of more than $300 billion in liabilities as of June 2021. It defaulted on its offshore debts in December.

Last week, Evergrande told offshore creditors it was on track to deliver a global restructuring plan by July, but warned that there may be additional pledges and guarantees made from the company’s offshore subsidiaries to onshore entities.