Scorecard published by responsible investment group shows that banking sector is falling well short of best practices for climate risk management and disclosure.
The European banking sector has largely flunked a scorecard tracking efforts to tackle the climate crisis, with progress in delivering new green finance products undermined by many banks ongoing support for fossil fuel projects.
The report published on Friday by investor campaign group ShareAction highlights how not one of Europe’s largest banks has yet shown ‘best practice’ in managing climate-related risks and opportunities, with scores across the survey averaging out at just 40 per cent. “The findings of our research could not be clearer: The European banking sector is moving at a glacial pace on the climate crisis, failing shareholders, clients, and society at large,” said Sonia Hierzig, report author and joint head of financial sector research and standards at Share Action.
BNP Paribas topped the rankings with a score of 63.2 per cent, and Lloyds was singled out as most improved, having shot up to second place after being deemed the worst offender in a prior edition of the survey published in 2017. However, Intesa Sanpaolo, Credit Suisse, Commerzbank, and UniCredit performed the worst, with ShareAction alleging that they demonstrated little evidence of reining in the harmful impacts of their investment activities on the climate. Overally, their approach was classified as ‘business as usual’ by the report.
Many banks are running the risk of being hit with formal shareholder action, she added, pointing to the climate-related shareholder resolution ShareAction coordinated against Barclays in January, which was hailed as the first such resolution lodged at a European bank. Barclays has since unveiled a suite of new climate ambitions – including a plan to reach net zero emissions by 2050 and align its portfolios with the goals of the Paris Agreement – that will go to the vote at the bank’s AGM in May.
The report also argues that an encouraging uptick in the amount and type of green finance instruments offered by banks is being overshadowed by their ongoing financing of fossil fuels. It notes that green financing efforts are also slowed by “challenges in terms of defining what qualifies as ‘green’, a lack of company- and project-level data, and higher transaction costs”.
Source: Business Green
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