Banks not living up to climate pledges, says Christian Aid

Charity organisation Christian Aid has today (November 7) kick-started a campaign calling on UK's major high street banks to rapidly shift investments from fossil fuels to clean energy.

A new report released by Christian Aid today (7 November) assesses the policies of Barclays, RBS, Lloyds and HSBC in relation to climate change, finding that the banks are not seizing the opportunities presented by the shift to a low-carbon economy.

The research finds that the private finance institutions have formulated sub-par plans to keep their investments and lending in line with the internationally-agreed target of limiting global warming to 2C, which was enshrined in the recently ratified Paris Agreement.

Christian Aid senior private sector adviser and report author Ken Boyce said: “The big four banks have all signed the Paris Pledge for Action in which they affirmed their commitment to act to support the realization of the goals of the Paris Agreement. We tried to assess what concrete actions and commitments they are taking. We awarded them a ‘D grade’ because they are not living up to that pledge.

“They are still financing the building of coal-fired power stations which will lock countries in to high carbon infrastructure making it harder for them to meet their climate ambitions. They are still financing oil and gas companies far more than they are renewables. And they are reluctant to set measurable targets for scaling up support for renewables and phasing out support for fossil fuels.”

‘Grave problems’

The report calls for the banks to undertake several measures to accelerate the sector’s progress on climate change action. Christian Aid wants to see clear timelines and transition plans created to keep the institutions, and their clients, in line with the Paris Agreement.

The charity demands an immediate stop to the financing of coal-fired power plants, in favour of increased support for renewable energy. Closer collaboration between asset managers and asset owners is required to change how capital is invested to meet the challenge and opportunities presented by climate action, the report suggests.

“As the grave problems caused by climate change intensify, the financing of new fossil fuel projects such as these will become increasingly financially risky,” Boyce continued. “Banks that fail to take these risks into account are failing to safeguard customers’ money.”

Christian Aid highlights a need for policy changes by governments to facilitate a speedier shifting of investment. Phasing out fossil fuel subsidies is recommended, in addition to proposed frameworks for mandatory disclosure of carbon footprints at both individual company and portfolio level. Governments should ensure that the fossil fuel industry has a limited influence in determining the price when carbon pricing, Christian Aid states.

Green finance

To meet the objectives set at the Paris Agreement, the financial sector must shift more quickly towards a low-carbon economy. Last week, a major investor told edie that, as a stalwart of the world’s capital, the financial industry has the highest responsibility to ensure the low-carbon transition is a success.

Fortunately, some banks are already beginning to shift their attention to green finance markets. HSBC recently launched a $1bn green bond portfolio aimed at the renewable energy sector, while Goldman Sachs announced it will leverage $150bn into clean energy financing and investments by 2025.

Speaking exclusively to edie, Dutch multinational banking group ING revealed it was preparing itself for a new era of green finance, which is geared towards complimenting the low-carbon movement and closed-loop operating models.

Last year, meanwhile, the World Bank announced that it would boost funding for poorer nations coping with climate change from 21% to 28% of its budget, while the European Investment Bank (EIB) will increase its climate support from 25% to 35%.

George Ogleby

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