Fossil assets: the new subprimes?

The report warns that the 11 largest banks in the eurozone hold over 530 billion euros in fossil fuel assets, which represent 95% of their total equity on average. This overexposure creates a significant risk of 'stranded assets' as the world transitions to meet Paris Agreement goals. The authors argue that current 'green finance' is largely a greenwashing tool and that voluntary bank commitments are insufficient. They propose a two-step solution: first, implementing strict regulations and reforming European Central Bank (ECB) monetary policy to stop new fossil fuel funding; second, establishing a public 'fossil bank' under the ECB to buy back and gradually phase out these risky assets to protect financial stability and enable the ecological transition.

• The 11 largest banks in the eurozone hold more than 530 billion euros in fossil fuel assets, which equals 95% of their total equity on average. Individual bank ratios range from 68% for Santander to 131% for Crédit Agricole.
• In a worst-case scenario where fossil fuel asset values drop to zero, five banks—Crédit Agricole, Société Générale, Deutsche Bank, Commerzbank, and UniCredit—would not have enough equity to cover the losses.
• Current 'green finance' and ESG products are characterized as largely ineffective branding or greenwashing tools. For example, 94% of socially responsible investment (SRI) funds studied by Reclaim Finance were found to finance companies with harmful environmental and social practices.
• The European Central Bank's (ECB) 'market neutrality' principle creates a pro-carbon bias. Over 60% of corporate assets acquired through quantitative easing come from carbon-intensive sectors, and the ECB supports 38 companies in the fossil fuel sector.
• The report proposes the creation of a European 'fossil bank' as a subsidiary of the ECB. This 'bad bank' would buy back fossil assets from banks that commit to ending fossil fuel support, managing their phase-out according to a 1.5°C trajectory.
• To prevent a 'snowball effect' and a new financial crisis, the report argues for binding rules requiring banks to immediately stop financial support for new fossil fuel projects and the implementation of higher capital requirements for risky fossil assets.

APA

GIRAUD, G., NICOL, C., BENAITEAU, S., BONAVENTURE, M., CHAAOUB, V., JEGO, M., TSANGA, A., MITTEAU, G., PHILIPPOT, L., POIDATZ, A., & SCHREIBER, P. (2021). Fossil assets: the new subprimes? Reclaim Finance. https://reclaimfinance.org/site/wp-content/uploads/2021/06/Report-Fossil-Assets-the-new-subprimes.pdf

Chicago

GIRAUD, Gaël, Christian NICOL, Solène BENAITEAU, Marion BONAVENTURE, Valériane CHAAOUB, Martin JEGO, Audrey TSANGA, et al. Fossil assets: the new subprimes? Reclaim Finance, 2021. https://reclaimfinance.org/site/wp-content/uploads/2021/06/Report-Fossil-Assets-the-new-subprimes.pdf.

Wikipedia

{{cite report |last1=GIRAUD |first1=Gaël |last2=NICOL |first2=Christian |last3=BENAITEAU |first3=Solène |last4=BONAVENTURE |first4=Marion |last5=CHAAOUB |first5=Valériane |last6=JEGO |first6=Martin |last7=TSANGA |first7=Audrey |last8=MITTEAU |first8=Gilles |last9=PHILIPPOT |first9=Lorette |display-authors=etal |title=Fossil assets: the new subprimes? |publisher=Reclaim Finance |date=June 2021 |url=https://reclaimfinance.org/site/wp-content/uploads/2021/06/Report-Fossil-Assets-the-new-subprimes.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{giraud2021fossil, author = {GIRAUD, Gaël and NICOL, Christian and BENAITEAU, Solène and BONAVENTURE, Marion and CHAAOUB, Valériane and JEGO, Martin and TSANGA, Audrey and MITTEAU, Gilles and PHILIPPOT, Lorette and POIDATZ, Alexandre and SCHREIBER, Paul}, title = {{Fossil assets: the new subprimes?}}, institution = {Reclaim Finance}, year = {2021}, month = jun, url = {https://reclaimfinance.org/site/wp-content/uploads/2021/06/Report-Fossil-Assets-the-new-subprimes.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }