In the fight against climate change, did the financial sector cut secular ties with the oil industry or merely camouflage them?

At a time when the links that bind the oil industry – both corporate and state-owned - to finance and governments seemed inextricable and unquestionable, some major changes have occurred that have prompted major financial players and governments to seek a separation strategy. From the Paris Agreement to the change of administration in the United States, the wind suddenly seems to be blowing in the opposite direction, and many banks change course. The UN-convened Net-Zero Banking Alliance (NZBA) is one prominent example of this new trend. However, banks are only one part of this complex and varied landscape of global finance, which, among institutional investors, includes investment funds, hedge funds, mutual funds, insurance funds, pension plans and ETFs (exchange-traded funds). Despite the promise to divest or reduce investments, global finance still holds profound ties with the fossil fuel sector. The high energy prices due to the war in the Ukraine and concerns over energy security are seemingly strengthening these ties. We provide an insight of the complexity of these interlinkages and explain to what extent the domain of public governance is trying to exert (still insufficient) control over the financial sector under the scope of climate mitigation policies.