Despite joining industry groups committed to reaching carbon neutrality the world's top banks are continuing to finance new oil and gas projects incompatible with that objective, environmental activist groups warned Tuesday.

The environmental groups took aim at the Glasgow Financial Alliance for Net Zero (GFANZ), which has emerged as the key climate alliance for finance industry firms committed to reaching carbon neutrality by 2050 and aligning with a 1.5 degrees Celsius increase in global temperatures this century.

But a study by Reclaim Finance, 350.org, BankTrack, Rainforest Action Network, Recommon, Urgewald, Les Amis de la Terre, Sierra Club and Stand Earth found that many lenders in GFANZ's Net Zero Banking Alliance sub-group are continuing to finance new oil projects, which experts believe to be incompatible with limiting global warming to 1.5 degrees Celsius.

"Between their date of joining and August 2022, the 56 top banks in the NZBA provided at least US$269 billion to 102 of the major fossil fuel expanders," said the groups.

At the top of the list were two US lenders: Citigroup, with $30.5 billion in financing to groups expanding oil and gas production, followed by Bank of America with $22.8 billion. In third place was Japan's MUFG at $22.7 billion.

The climate groups also pointed to asset managers continuing to hold stocks of oil and gas firms that are developing new projects.

They found the top 58 asset managers in alliance held $847 billion in shares and bonds of companies developing new fossil fuel projects.

"There is now broad agreement... that there is no room in a 1.5-degree carbon budget for the carbon that would be brought into the atmosphere from new fossil fuel supply," said Paddy McCully, author of the report and an analyst for Reclaim Finance.

Banks and asset managers are regularly scolded for financing the fossil fuel sector, but say they work to finance the energy transition.

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