If money makes the world go round, it should be no surprise that fossil fuel still powers the global economy. Ever since world leaders reached the Paris climate agreement in 2015 to limit warming and slash the pollution driving it, environmental groups have chronicled the continued flow of finance from the wealthiest banks to the oil and gas industry.

Climate advocates have been increasing the pressure on banks to change course, and many lenders have responded by adopting policies to reduce the climate pollution generated by their vast portfolios. Some have also pledged to stop financing certain types of fossil fuel extraction altogether, such as coal mining and Arctic drilling. But have those policies made any difference?

A pair of new reports provides a muddled picture. Banks lent significantly less money to fossil fuel companies last year, according to a report by a collection of environmental groups led by Rainforest Action Network. However, the decline was likely driven not by choices the banks made, the report said, but because oil companies were sitting on so much cash they didn’t need to borrow any. Many oil firms, including ExxonMobil and Chevron, earned record profits last year.

All told, the world’s top 60 banks plowed $673 billion in financing into fossil fuel companies last year, according to the report, which is the lowest amount since the groups began tracking in 2016. Despite the decline, the report’s authors said the banks’ fossil lending policies remain weak and inadequate, and that such financing is not declining nearly fast enough to curb climate pollution in line with the Paris Agreement’s more ambitious target of limiting warming to 1.5 degrees Celsius, or 2.7 degrees Fahrenheit.

“We still see just this tremendous flow of finance into fossil fuel companies, including into companies that are expanding fossil fuels,” said April Merleaux, research manager at Rainforest Action Network and the report’s lead author. The report singled out the largest companies involved in fossil fuel expansion—those exploring new oil fields, for example, or building new pipelines—and found that banks had lent them $150 billion last year. “Every dollar that’s going into expansion is a dollar that is pushing us past that 1.5 degree target.”

In 2021, the International Energy Agency said that no new oil and gas fields should be developed if the world is to meet that goal of the Paris Agreement.

A second report analyzed the fossil fuel lending policies of the top six American banks and similarly found them to fall short of meeting the Paris Agreement goals. That report was published by the sustainable investment nonprofit Ceres and the Transition Pathways Initiative Center, a low-carbon research institute based at the London School of Economics and Political Science.

The reports come amid increased scrutiny of the role of financial markets in cutting emissions across the economy. Climate advocates have taken to the streets to urge banks to phase out fossil fuel lending, and the Biden administration has adopted new rules to increase climate disclosures in financial reporting. Meanwhile, Republicans have been pushing back, with some states enacting laws meant to punish banks that restrict lending.

Pavel Molchanov, an analyst with the financial firm Raymond James, agreed that the decline in lending last year was driven largely by the fact that many oil companies earned more money than ever. But new pressure from investors is beginning to have an effect on how oil companies spend their money, too, he added. Much of that pressure is from conventional investors seeking higher returns and more disciplined spending from the industry, rather than lower emissions. The result is the same, he said, “which is drill less.”

In a note this week, Molchanov and colleagues wrote that although capital spending by oil companies climbed last year, it was still slightly below pre-Covid-19 pandemic levels and far lower than a decade ago.

“These companies were swimming in profits,” Molchanov said, “but they’re not spending nearly as much as they used to. What do they need to borrow? It’s just not necessary.”

According to the Rainforest Action Network report, at least seven major oil companies, including ExxonMobil and Shell, asked for zero in financing last year after having borrowed, on average, more than $50 billion annually over the previous six years.

Steven Rothstein, managing director of Ceres’ Accelerator for Sustainable Capital Markets, said banks have begun shifting more money from oil and gas to clean energy, “but not enough. They are still financing too much, and not just fossil fuels,” he added. “It’s also the industries that use fossil fuels.”

The Ceres report compared the fossil lending policies of the six largest American banks—four of which also happen to be the largest lenders to the fossil fuel sector over the past seven years—and found that none of them are aligned with the goal of limiting warming to 1.5 degrees. Only one, Bank of America, has a policy aligned with limiting warming to less than 2 degrees Celsius, the less ambitious goal of the Paris Agreement and a level of warming that would bring more dangerous impacts from extreme weather and higher sea level rise.

Rothstein said the Biden administration’s target of cutting climate pollution 50 percent below 2005 levels by 2030 will remain out of reach unless banks move faster.

“We’re not going to get there as a society if the banks continue to finance new fossil fuel areas,” he said.

JPMorgan Chase has provided the most by far to fossil fuel companies since 2016, more than $434 billion, according to Rainforest Action Network, followed by Citi, Wells Fargo and Bank of America. The other two banks profiled by the Ceres report, Morgan Stanley and Goldman Sachs, lent substantially less.

The Rainforest Action Network report also assessed the lending policies of the banks, and both shared some critiques, such as finding an over-reliance on carbon offsets to meet targets.

Charlotte Powell, a Chase spokesperson, said her company’s progress in reducing financing to oil and gas “may not be linear,” and that Chase had “facilitated more than $175 billion for green activities like renewable energy, energy efficiency and sustainable transportation” in 2021 and 2022. She said that placed the bank on its way to a goal of $1 trillion for green initiatives by 2030, and that “we are also taking pragmatic steps to meet our 2030 emission intensity reduction targets in the six sectors that account for the majority of global emissions, while helping the world meet its energy needs securely and affordably.”

The Rainforest Action Network report said that 49 banks with policies to reach net-zero emissions from their portfolios by 2050 had lent $122 billion last year to companies engaged in fossil fuel expansion.

Some banks have adopted limits on lending to oil and gas drilling in the Arctic or to mining in Canada’s tar sands, but those policies have achieved little, the report said. Many Arctic policies restrict lending to specific projects, for example, but do not curtail general corporate lending to companies that might happen to be drilling in the Arctic. Project-specific financing made up only 4 percent of all lending on average in recent years, according to Rainforest Action Network, and some banks with Arctic policies continued to lend to ConocoPhillips, which is poised to embark on a major drilling project in Alaska’s Arctic.

“In some ways they look like greenwash,” Merleaux said of the banks’ policies.

Emily Chasan, a spokesperson for Citi, said the bank’s 2030 emissions targets for energy financing were based on modeling by the International Energy Agency for reaching net-zero emissions by mid-century. “We are working with our clients on their transitions and supporting clean energy solutions to help meet the world’s future energy demand with clean, low-carbon sources, while also continuing to meet today’s global energy needs,” she said.

Bank of America, Morgan Stanley and Wells Fargo declined to comment.

Goldman Sachs did not respond to requests for comment.

The focus on banks’ policies assumes that their lending has the power to shape markets. That may sound intuitive, but some have pushed back on the idea that cutting off lending from major banks would be an effective lever for climate action.

“There is plenty of money out there looking for returns. The world is not short on capital,” said Samantha Gross, director of the energy security and climate initiative at the Brookings Institution. If major banks cut off finance to oil companies, Gross said drillers would likely find money elsewhere. European and U.S. banks have sharply cut back lending to coal, according to the Rainforest Action Network report. But Chinese banks have continued, and coal use hit a record high last year.

And if banks did reduce their lending to oil and gas, Gross argued, and oil companies were forced to reduce supplies of fossil fuels faster than people were reducing their consumption, that could lead to price shocks that would hit poorer people harder.

As an example, Gross pointed to the fallout of Russia’s cutting off its gas supply to Europe last year and the resulting embargoes on Russian oil and gas, all of which sent energy prices soaring.

“Everyone talks about the success story of Europe getting through this winter,” Gross said, “but what gets less talked about is this happened at the expense of the developing world.”

Pakistan, for example, faced gas shortages and reacted by announcing a plan to increase coal consumption in the future.

Merleaux rejected the idea that banks shouldn’t restrict financing, arguing they have an ability to help set the speed and direction of a transition off of fossil fuels.

“Our belief is that banks actually do play an important role in making these changes in the economy,” Merleaux said. They make risk calculations with broad social consequences, she added, and “this is a case where they are not evaluating the future climate risks with as much seriousness as they deserve.”