Businesses encouraged to tackle ‘hidden’ emissions from banking
The Exponential Roadmap Initiative has published new guidance on how businesses can measure and reduce emissions associated with their cash holdings, which are often overlooked in corporate climate plans.
The Initiative has called emissions associated with banking “critical yet overlooked”, noting that most large businesses are underestimating the emissions that would result from how banks are managing deposits from corporate clients.
As such, these financed emissions may be undermining otherwise robust plans to reduce climate impacts in line with science.
There has not been such guidance as that issued today (29 August) by the Initiative. The Greenhouse Gas Protocol’s guidance on measuring and reporting indirect (Scope 3) emissions does not cover corporate banking.
“This guide addresses a problem that we encountered when talking to the wealthiest companies in the world: that they are not aware of the magnitude of these emissions, and don’t know what to do about them,” said The Outdoor Policy Outfit’s founder and executive director Paul Moinester.
Engagement and divestment
Included in the guidance are steps companies can take to assess their bank’s climate commitments and performance. These include checking their carbon disclosures, their commitments to reduce emissions and their memberships to established campaigns on the net-zero transition.
Corporates are encouraged to engage with their banks if they have not yet taken these steps, putting pressure on them to set out such robust climate plans or else lose their custom. Advice is provided on shifting banking if necessary.
If their banks are publishing carbon information across all scopes, however, businesses can use this data to estimate emissions using the methods provided in the new guidance.
In a statement, the Exponential Roadmap Initiative said: “By proactively engaging with their banks and encouraging better data disclosure and climate practices, companies can use their role as corporate customers to send important market signals to their banks to reduce the carbon intensity of their loan and investment portfolios, which, in turn, helps accelerate the broader decarbonisation of the financial system.”
This summer, those working in the UK’s sustainability space will doubtless have seen a high-profile campaign urging businesses to stop banking with Barclays, due to its investment in fossil fuels. Money Rebellion had the backing of celebrities including Emma Thompson with its call to get the organisers of Wimbledon to end its sponsorship deal with the bank.
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