In News:

In a stark contradiction to global climate goals, the world’s 65 largest banks increased their fossil fuel financing by $162 billion in 2024, reaching a total of $869 billion, up from $707 billion in 2023, according to the Fossil Fuel Finance Report 2025. This trend threatens to derail global commitments under the Paris Agreement and undermines the International Energy Agency’s (IEA) roadmap to achieving net-zero emissions by 2050.

India’s Position:

Among global lenders, the State Bank of India (SBI) was the only Indian bank featured in the top 65, rising from the 49th to 47th position. SBI’s fossil fuel financing increased modestly by $65 million, taking its 2024 total to $2.62 billion. Cumulatively, between 2021 and 2024, SBI extended $10.6 billion to fossil fuel projects. In contrast, JPMorgan Chase topped the global list with $53.5 billion in 2024 alone.

Despite this, SBI has also signalled intent to transition. It has pledged to become net zero by 2055, and aims to ensure that 7.5% of its domestic advances are green by 2030. As of March 2024, SBI had sanctioned ?20,558 crore in sustainable finance. However, this dual-track financing model raises questions about the coherence of India's green finance agenda.

Global Setbacks and Policy Rollbacks

2024 witnessed a rollback in climate-related financial commitments, particularly in the United States. The withdrawal of the US from the Paris Agreement, scheduled to take effect in 2026, was accompanied by policy shifts like exiting the Net Zero Banking Alliance and the Network for Greening the Financial System (NGFS). Major banks such as Wells Fargo abandoned their net-zero commitments, signaling a broader retreat from climate-aligned finance.

This global trend is no longer confined to North America. European banks, traditionally viewed as progressive, also weakened fossil fuel exclusion policies. The result: a global rise in fossil fuel merger and acquisition financing, which reached $82.9 billion in 2024, up by $19.2 billion from 2023. Although M&As do not directly add infrastructure, they consolidate fossil fuel power at a time when the world urgently needs to pivot to renewables.

Indian Banks and the Coal Dilemma

Indian financial institutions, barring a few exceptions like Federal Bank and RBL Bank, lack explicit coal exclusion policies. According to Climate Risk Horizons, this constitutes a major blind spot. The economics of energy is shifting — renewables and storage are now often cheaper than coal, making continued fossil fuel investments financially and environmentally risky.

Conclusion

The rise in fossil fuel financing reflects a disconnect between climate rhetoric and financial action, threatening the global transition to clean energy. For India, this highlights the need for a coherent climate finance strategy, integrating environmental, financial, and developmental priorities. As a signatory to the Paris Agreement and a G20 economy, India must not only align public finance with green goals but also push for global financial reforms that discourage fossil fuel dependencies and reward sustainable investments.