Carbon Bankroll: Emissions from corporate cash far greater than across operations and supply chains

Major businesses are failing to account for the “hidden climate impacts” of their finances and investments, with a new report warning that emissions from these areas can far exceed traditional Scope 1,2 and 3 emissions combined.

Carbon Bankroll: Emissions from corporate cash far greater than across operations and supply chains

A major new report has been published this week, claiming that some of the world’s most recognisable companies, including Google, Microsoft and Meta, aren’t accounting for the climate impacts of their cash holdings.

The Carbon Bankroll report, jointly published by the Climate Safe Lending Network (CSLN), The Outdoor Policy Outfit (TOPO), and BankFWD, notes that company cash, investment and financial practices are exceeding all other emissions combined and undermining noteworthy efforts to decarbonise across traditional reporting scopes.

The report found that in some cases, finance can increase total emissions by 91% to 112% compared to what the company is reporting across Scope 1, 2 and 3 emissions.

In 2021, for example, the emissions generated by Microsoft’s $130bn investments was “comparable to the cumulative emissions generated by the manufacturing, transportation, and use of every Microsoft product in the world” the report notes. Elsewhere, Amazon’s $81bn holdings and short-term investments in 2020 alone generated more emissions than the energy purchased to power its facilities worldwide.

“Tackling climate change effectively at this critical time depends on ensuring the financial system aligns with maintaining a liveable planet for generations to come,” CSLN’s executive director James Vaccaro said.

“By helping businesses recognise how the financial system converts the money they manage day-to-day into the activities that shape our economies for the decades to come, with the associated positive and negative impacts, we hope to stimulate a new dialogue between corporations and the finance sector that could super-charge the net-zero transition.”

The report tracked the publicly available data from 10 major corporations, which also included Johnson and Johnson and PayPal, warning that private sector finance is being used to support fossil fuels. The report’s research was produced in partnership with finance data experts at leading climate solutions provider South Pole.

“The Carbon Bankroll” suggests that just as companies need to pay closer attention to the impacts of their cashflows, warning that it is undermining otherwise stellar efforts to decarbonise operations, energy and supply chains.

There are numerous studies warning of the climate impacts of the finance sector.

Collectively, 24 of Europe’s biggest banks provided $33bn of new financing to firms planning increased oil and gas production since the International Energy Agency (IEA) warned last year that all new fossil fuel expansion should be stopped.

That is according to a report from ShareAction released earlier this year. The report tracks how 25 of Europe’s banks have invested in fossil fuel firms with plans for expansions since 2016, and whether these investments come with conditions relating to environmental sustainability, such as the publication of transition plans.

Collectively, these banks have provided $400bn to such companies since 2016, the report concludes. HSBC provided the most finance during this period – $59bn – followed by Barclays ($48bn) and BNP Paribas ($46bn).

More broadly, G20 member countries have collectively allocated subsidies topping $3.3trn to the oil, coal, gas and fossil-fuelled electricity generation sectors between 2015 and 2019 – a level incompatible with the Paris Agreement.

The research, from BNEF, highlights the fact that direct support for fossil fuels from the G20 governments in 2019 topped $636bn – a decrease of just 10% since the ratification of the Paris Agreement in 2015.

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie