Banks pressured to divest from fossil fuels and deforesters ahead of COP26
MPs, trade bodies and the UN's Environment Programme are urging banks to unify their response to the net-zero transition ahead of COP26 next November and commit to time-bound phase-outs for fossil fuel finance.
The call to action is being made by Bankers for Net-Zero – an initiative convened by the APPG on Fair Business Banking, along with Volans and Re:Pattern.
Bankers for Net Zero was formed shortly after the UK set its net-zero target in law and was confirmed as COP26 co-host along with Italy. Now, members have developed a commitment framework which is hoped to garner the support of all major banks ahead of the summit in November 2021.
The commitment includes a requirement for signatories to “state the date” to end all financing for fossil fuels and for companies with links to deforestation. On the latter, a recent ‘Bankrolling Extinction’ report found that 50 global banks collectively provided loans and underwriting worth more than $2.6 trn to the food, forestry, mining, fossil fuels, infrastructure, tourism and transport and logistics sectors in 2019. According to the report, these industries are primary drivers of biodiversity loss and overfishing.
Bankers for Net-Zero’s framework also includes requirements to commit to net-zero financed emissions by 2050 at the latest and to disclose the scenarios they use as the basis for climate targets, in line with the recommendations of the Task Force on Climate-Related Disclosures (TCFD).
Additionally listed are requirements for signatories to lobby for supporting policies and to develop innovative green finance products.
Members of Bankers for Net-Zero represent financiers including Triodos UK, Barclays, Handelsbanken and the Ecology Building society, along with the likes of the UKGBC and Grantham Research Institute on Climate Change. Bodies including CDP, WWF, the UN’s Principles for Responsible Investment, the Institutional Investors Group on Climate Change and Make My Money Matter also supported the development of the commitment framework.
“Banks play a key role in managing societal and financial risks and opportunities in the Race to Zero,” Volans’ chief executive Louise Kjellerup Roper said.
“The Bankers for Net-Zero initiative brings together banks and business to improve understanding and changing that relationship in the long term to drive action and unblock barriers for a move further and faster towards net-zero.”
The news comes shortly after the UK Government confirmed that it will stop financing fossil fuel projects overseas before COP26 and announced plans to launch a National Investment Bank with net-zero as a key remit.