Understanding the Energy Supply Financing Ratio (ESFR) and Decyphering Banks’ Publications

The Energy Supply Financing Ratio (ESFR) compares a bank's financing of fossil fuels against its financing of sustainable alternatives, with a target ratio of 6:1 by 2030 based on IEA scenarios. Reclaim Finance warns that varying methodologies allow banks to present misleading ratios, often by excluding capital market activities or including fossil-fuel-related technologies like CCUS in 'low-carbon' scopes. While some North American and French banks have begun publishing these ratios, significant gaps in transparency and scope persist.

• The Energy Supply Financing Ratio (ESFR) is derived from the International Energy Agency's (IEA) 'Net Zero Emissions by 2050' scenario, which requires a 6:1 ratio by 2030, meaning six dollars must be invested in clean energy supply for every dollar invested in fossil fuels.
• Research by Reclaim Finance indicates that the world's 65 largest banks are far from the necessary transition trajectory, allocating an average of only 42 cents to sustainable electricity for every dollar allocated to fossil fuels between 2021 and 2024.
• Bank disclosures of the ESFR often contain methodological biases that undermine their credibility, such as limiting the scope to loans only—excluding capital market activities which accounted for over 42% of fossil fuel financing for the 65 largest banks from 2021 to 2025—or including fossil-fuel-related technologies like carbon capture and storage (CCUS) and fossil hydrogen in the 'low-carbon' category.
• There is a regional divide in how banks report the ESFR: North American banks (including JPMorgan Chase, Citi, Scotiabank, and RBC) generally use a broader scope including bonds and the full fossil fuel value chain but include problematic 'low-carbon' technologies, while French banks (BNP Paribas, Crédit Agricole, and BPCE) often set targets but use a narrower scope limited to loans and partial fossil fuel value chains.

APA

Hermant, R. (2026). Understanding the Energy Supply Financing Ratio (ESFR) and Decyphering Banks’ Publications. Reclaim Finance. https://reclaimfinance.org/site/en/2026/09/21/understanding-the-energy-supply-financing-ratio-esfr-and-decyphering-banks-publications/

Chicago

Hermant, Rémi. Understanding the Energy Supply Financing Ratio (ESFR) and Decyphering Banks’ Publications. Reclaim Finance, 2026. https://reclaimfinance.org/site/en/2026/09/21/understanding-the-energy-supply-financing-ratio-esfr-and-decyphering-banks-publications/.

Wikipedia

{{cite report |last1=Hermant |first1=Rémi |title=Understanding the Energy Supply Financing Ratio (ESFR) and Decyphering Banks’ Publications |publisher=Reclaim Finance |date=21 September 2026 |url=https://reclaimfinance.org/site/en/2026/09/21/understanding-the-energy-supply-financing-ratio-esfr-and-decyphering-banks-publications/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{hermant2026understanding, author = {Hermant, Rémi}, title = {{Understanding the Energy Supply Financing Ratio (ESFR) and Decyphering Banks’ Publications}}, institution = {Reclaim Finance}, year = {2026}, month = sep, url = {https://reclaimfinance.org/site/en/2026/09/21/understanding-the-energy-supply-financing-ratio-esfr-and-decyphering-banks-publications/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }