Toxic finance: The banks and investors funding the expansion of petrochemicals in the US
This report argues that banks and investors are enabling US petrochemical expansion despite rising market, legal, climate and public health risks, identifying major financiers and investors while warning that continued support may expose them to financial, reputational and regulatory harm.
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OVERVIEW
Introduction
The report examines how financial institutions are supporting the expansion of the US petrochemical industry despite growing environmental, social and financial risks. It highlights the role of banks and investors in enabling over 100 planned or ongoing projects, supported by public subsidies and abundant shale gas.
The petrochemical problem
Petrochemical expansion is accelerating, driven by demand for plastics and chemical products. The US is positioned as a global hub due to low-cost feedstocks and policy support. However, this growth raises concerns about overcapacity, long-term demand uncertainty and misalignment with climate targets.
What are petrochemicals
Petrochemicals are derived from fossil fuels such as oil, gas and coal and are used in plastics, fertilisers and industrial chemicals. Their production is energy-intensive and closely linked to fossil fuel extraction and processing, embedding carbon emissions across their lifecycle.
The human and environmental harms of petrochemicals
The report links petrochemical production to air and water pollution, biodiversity damage and adverse health outcomes, particularly in frontline communities. Facilities are often located near low-income or marginalised populations, raising environmental justice concerns alongside broader climate impacts.
Petrochemicals at risk: Market, legal, and financial headwinds
The sector faces structural risks including tightening regulation, litigation, declining plastics demand in some markets and increasing recycling initiatives. Financial risks include stranded assets, reduced profitability and reputational exposure for financiers. These factors challenge the long-term viability of continued expansion.
Results
The analysis identifies significant financial flows into petrochemical companies from major banks and investors. It finds that capital continues to support expansion despite mounting risks, with financing concentrated among a relatively small group of institutions.
Report scope
The report assesses financing provided to key petrochemical companies and projects, focusing on lending, underwriting and investment activities. It examines both direct and indirect financial support and includes a defined set of companies involved in expansion projects.
Toxic banks
Major global banks are identified as leading providers of loans and underwriting services to petrochemical companies. The report highlights the scale of financing and the concentration among specific institutions, noting inconsistencies between stated climate commitments and ongoing support for expansion.
Toxic investors
Asset managers and institutional investors are shown to hold substantial equity and bond positions in petrochemical companies. The report emphasises that passive and active investment strategies alike contribute to continued capital access for the sector, raising questions about stewardship and risk management.
Independent project developers
Independent developers play a key role in advancing petrochemical infrastructure, often relying on external financing and partnerships. Their projects contribute to overall capacity growth and may carry heightened financial risk due to dependence on future market conditions.
Spotlights
Case studies illustrate specific projects and companies, detailing their financing structures, environmental impacts and associated risks. These examples demonstrate how financial backing enables projects with significant local and global implications.
Policy review
The report reviews existing policies and regulatory frameworks, noting gaps in oversight and alignment with climate objectives. It highlights the role of subsidies and limited restrictions in facilitating expansion, suggesting that policy settings remain supportive of petrochemical growth.
Recommendations
The report calls on financial institutions to restrict or phase out financing for petrochemical expansion, strengthen risk assessment and align portfolios with climate goals. It also urges improved transparency, enhanced regulatory action and greater accountability for environmental and social impacts.
