UK banks 'pouring billions into fossil fuels and deforestation', despite green pledges
UK banks have allocated almost £150bn of funding for fossil fuel projects since the start of 2016 and continue to collectively hold 146 investment pots in firms driving significant levels of rainforest deforestation.
That is according to two damning new reports, out this week. The first report, from NGO BankTrack and commissioned by Triodos Bank UK, tracks investments made in fossil fuel projects since the Paris Agreement was ratified in late 2015.
UK banks are ranked as some of the world’s worst offenders. The report states that banks invested £150bn in fossil fuel-related projects, including £45bn on expanding existing oil and gas sites and £13bn on new fracking projects, between January 2016 and July 2019.
Drawing on analysis of text published on 800 web pages hosted by UK banks, the report adds that most of these banks are “leaving people in the dark about the fact that their own money could be contributing to [fossil fuels]”, given that information regarding these investments is not prominently displayed, while claims regarding sustainability pledges are.
The second report, entitled 'Money to Burn' and developed by BankTrack and Global Witness, analyses investments made in large agri-food businesses linked to rainforest destruction between 2013 and 2019.
The report states that UK banks currently hold 146 investments in major agri-food firms found to have been compliant in setting rainforest fires, and have given such companies 6,389 loans since January 2013.
The only nation whose banks made more investments and loans to these soy, beef, palm oil and rubber companies over the six-year period analysed was Brazil (3,339 investments and 5,372 credit packages).
In order to combat these trends, the reports urge banks to align their portfolios and practices with the Paris Agreement, and, in order to ensure that the low-carbon transition mandated by the Agreement is “just”, the UN’s Sustainable Development Goals (SDGs).
On forestry specifically, the 'Money to Burn' report recommends the creation of “zero deforestation and zero land-grab” policies by individual banks; the implementation of more stringent due diligence checks; the validation of all progress and programmes by a third party; and greater public disclosure of investments in commodities linked to deforestation.
Policymakers can bolster these moves, the report urges, with regulation mandating due diligence checks and public disclosure from investors and other financial sector actors. For governments in nations which are home to forest communities, the report specifies that all policies “must enable” these groups to “uphold and defend their rights”.
Consumers, meanwhile, are encouraged to check their bank’s green policies and to consider switching banks if they are either not transparent enough or ambitious enough.
“We are in a state of climate emergency and the banking industry needs to radically transform to be part of the solution,” Triodos Bank UK’s chief executive Bevis Watts said.
“Banks should be using the money deposited with them in their customers’ long-term interests – yet many have continued to prioritise funding the fossil fuel industry, despite its devastating impact on the planet and our future wellbeing.
“Although we’re aware that the change cannot happen overnight, we’d like to see greater transparency from all banks in where they are investing their money, so that customers can make informed choices.”
The reports come in the same week that a coalition of 130 banks, representing one-third of the worldwide banking sector, committed to aligning their actions with the aims of the Paris Agreement.
The pledge, made at the UN’s Climate Summit in New York, was shortly followed by news that investors collectively controlling $2.4trn of assets will work to make their portfolios carbon-neutral by mid-century.
Green finance at edie’s Sustainability Leaders Forum
edie’s Sustainability Leaders Forum returns in 2020, as some of the biggest companies, individuals and organisations championing sustainability gather at the Business Design Centre on 4 & 5 February.
Green finance will be a key discussion point, with speakers including Green Finance Institute CEO Rhian Mari Thomas, M&G Investment's head of responsible investment and ESG Anita McBain and Aviva Investors' global head of governance Mirza Baig.
Other keynote speakers at this flagship, multi-award-winning event features include Mary Robinson, former President of Ireland; Rebecca Marmot, Unilever CSO; Tom Szaky, TerraCycle CEO; and Gilbert Ghostine, Firmenich CEO. For details and to register, visit: https://event.edie.net/forum/