Financing fossil fuels risks a repeat of the 2008 crash. Here's why

The author contends that financing fossil fuel expansion is the modern equivalent of betting on subprime mortgages, warning that a focus on short-term profit and inadequate oversight could lead to economic catastrophe. The text highlights a gap between sustainable finance commitments and actual lending, noting that 33 major global banks invested $1.9 trillion in fossil fuels since the Paris Agreement. It advocates for a shift from voluntary measures to mandatory regulations, including 'brown penalties' for high-carbon lending and the inclusion of climate scenarios in stress tests by central banks.

• Since the signing of the Paris Agreement, 33 major global banks have invested a total of $1.9 trillion into fossil fuels. Analysis from WRI shows that between 2016 and 2018, banks with active sustainable finance commitments provided annual fossil fuel finance at nearly double the rate of their sustainable commitments.
• The document identifies 'failure to transition risk'—the systemic consequence of failing to meet Paris Agreement goals—as a more significant and likely threat than 'transition risk'. This is described by Mark Carney as a "catastrophic business as usual scenario".
• Progress among major companies is insufficient; a Climate Action 100+ report found that only 9% of 161 target companies have emissions targets aligned with a 2˚C or lower goal. Furthermore, fossil fuels receive nearly three times more subsidies than climate solutions, despite a requirement of $90 trillion over 10 years to meet the Paris Agreement and 2030 Agenda for Sustainable Development goals.
• The author proposes several mandatory regulatory measures to address systemic climate risk: implementing 'brown penalties' (higher capital requirements) for high-carbon lending, excluding fossil fuels from central bank asset-purchasing programmes, making Task Force for Climate Related Financial Disclosure reporting mandatory, and ending supply-side subsidies and export credit financing for fossil fuels.

APA

Morgan, J. (2020). Financing fossil fuels risks a repeat of the 2008 crash. Here's why. World Economic Forum. https://www.weforum.org/stories/climate-action/financing-fossil-fuels-repeat-2008-crash-heres-why/

Chicago

Morgan, Jennifer. Financing fossil fuels risks a repeat of the 2008 crash. Here's why. World Economic Forum, 2020. https://www.weforum.org/stories/climate-action/financing-fossil-fuels-repeat-2008-crash-heres-why/.

Wikipedia

{{cite press release |last1=Morgan |first1=Jennifer |title=Financing fossil fuels risks a repeat of the 2008 crash. Here's why |publisher=World Economic Forum |date=3 January 2020 |url=https://www.weforum.org/stories/climate-action/financing-fossil-fuels-repeat-2008-crash-heres-why/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{morgan2020financing, author = {Morgan, Jennifer}, title = {{Financing fossil fuels risks a repeat of the 2008 crash. Here's why}}, publisher = {World Economic Forum}, year = {2020}, month = jan, url = {https://www.weforum.org/stories/climate-action/financing-fossil-fuels-repeat-2008-crash-heres-why/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }