Europe’s biggest banks not taking biodiversity crisis seriously, report warns
Most of Europe’s largest banks are not considering financial risks relating to nature loss or setting out policies mandating that the businesses they invest in are protecting and/or restoring the environment, a new report has revealed.
Published today (12 December) by ShareAction, the new ‘In Debt to the Planet’ report assesses the actions taken by the 25 largest consumer banks in Europe to respond to the climate and nature crises. It looks at the quality of governance, the measurement of risks and opportunities, whether targets within key strategies are science-based, how banks are collaborating with stakeholders and how they are engaging with policymakers on environmental issues.
ShareAction has assessed the climate-related governance, targets and communications from these banks for several years now, but this is the first report of its kind from the organisation assessing biodiversity-related topics. Its publication notably coincides with the UN’s 15 biodiversity COP; meetings began in Montreal, Canada, last week and are due to wrap up this Saturday (17 December).
The conclusion from ShareAction is that Europe’s banking sector as a whole is “only just waking up to the biodiversity crisis” and that this topic is not a board-level priority for most firms. The mean average score for climate action across this cohort of banks was 48%, while the mean average for biodiversity action was just 35%.
ShareAction has stated that “target setting aimed at protecting and restoring biodiversity is almost non-existent”, with most of the banks having no overarching commitment in this space. Only three of the banks had such a commitment, namely ING, Societe Generale and BNP Paribas. The latter was the top scorer for biodiversity action, with 68%.
Without these top-line commitments, banks are, by and large, failing to set meaningful biodiversity-related requirements and targets in their sector-specific policies, ShareAction found.
They are also yet to provide enough detail on what will constitute as “green” finance under headline goals. 24 of the banks assessed have a green finance target, ShareAction states. However, the majority of these banks are not having their green finance transactions externally audited and are not providing detailed disclosures on their progress toward green finance targets. ShareAction accuses 17 of the banks of providing ‘green’ financing to clients that they would otherwise exclude on climate and/or nature grounds, with more than half of these banks doing so without additional conditions.
“The banks are paying far too little attention to the threat of biodiversity loss,” ShareAction’s director of financial sector standards Peter Uhlenbruch summarised. “Bank executives and their boards need to step up and take responsibility for the impact their activities are having on the ecosystems of the world’s oceans, forests and wildlife.”
He added: “Despite important steps forward, the leadership of Europe’s top banks are not moving fast enough to drive the change needed to protect people and the planet.”
“ShareAction has written to the chief executives of the banks with a set of tailored recommendations about how they can close loopholes in their climate and biodiversity strategies.”
Regarding biodiversity, ShareAction is recommending that banks treat nature loss “with the same urgency” as the climate crisis, developing science-based targets underpinned by interim and sector-specific ambitions. They will also need to integrate biodiversity into risk management frameworks and reporting processes. ShareAction would like to see banks building on these actions with the creation of a just transition plan, assessing and minimising the negative impacts of nature-related actions on workers and other key stakeholders.
ShareAction is also advocating for banks to bolster all biodiversity targets with a commitment to the principle of free, prior and informed consent for Indigenous Peoples. This is because, as has been the case with activities that have degraded land, activities for restoring nature can be used as ‘land grabs’ that exclude local communities.
With all of that being said, it bears noting that ShareAction does not believe that many of the banks assessed are treating the climate crisis with the appropriate degree of urgency.
The report reveals common loopholes in net-zero strategies. While all of the 25 banks have a top-level, long-term net-zero commitment in keeping with national and international policymaking, only six have interim commitments that cover all financing activities. And, while 21 have at least one sector-specific target, most do not yet have specific targets for all key transition sectors. None have targets for chemicals or agriculture, for example.
There also continues to be a proliferation of targets to reduce emissions on an intensity basis rather than an absolute basis. The average fossil fuel policy was awarded a score of just 43%.
ShareAction classes 19 of the banks as having a poor net-zero target. The banks receiving the best scores in this category are Lloyds Banking Group, Natwest and Nordea.
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