The analysis finds some notable progress by major banks over the last year including:
- Over 70% of responding banks now undertaking carbon footprints or environmental stress tests, including banks such as Citigroup.
- Over 85% of responding banks disclosed financing or investment in renewable energy. For example, National Australia Bank plans to invest AUD 18 billion over seven years in energy efficiency, renewable energy, and low-emissions transport.
However with the Paris Agreement now entered into force, the report concludes that banks are still not doing enough to embed climate risk into their assessment of credit. Shortcomings of the banking sector include:
- Over 80% of responding banks are not yet integrating the results of environmental stress testing into their business decisions.
- Only 35% of banks disclosed goals for energy efficiency financing, and less than 40% have set targets for renewable energy financing.
Boston Common is encouraged by the marked progress at many of the largest global banks in addressing climate change, and commend their willingness to hold in-depth discussions and advance the dialogue around climate risk. However, the core conclusion that the banking sector as a whole is not doing enough to measure and manage the material risks from carbon intensive sectors is a major concern to investors. For example, bank lending and investment to carbon intensive sectors continues to significantly outpace green financing. In the past three years, European and North American banks have financed $786 billion to some of the most carbon intensive sectors.
Lauren Compere, Managing Director at Boston Common Asset Management, said:
"From stress tests to strategy, bonuses to benchmarks, investors are very pleased to see the new tools, policies and programs that banks are adopting to manage climate risk. But there remains room for improvement and serious issues of integration that must be resolved. The investors behind this report call on banks to not only expand the use of tools to collect climate data - but most crucially to integrate this data into their decision making process. There is no point in having tools without putting them to effective use.
"It makes little financial sense that bank financing of carbon intensive sectors such as coal - likely to become stranded assets, still outpaces green financing."
FULL REPORT AVIALABLE VIA THIS LINK: https://bostoncommonasset.com/Membership/Apps/Boston_Resources_Holder_App.aspx?IX_mId=18
Notes to editor
For more information contact:
- Yasmine Svan, ESG Communications, t: +44-7503-771694 | e: email@example.com
- Interviews with Lauren Compere, full copies of the report and list of banks and investors involved are available on request
SOURCE Boston Common Asset Management