Banks far from hitting Paris climate targets, warns study

Banks far from hitting Paris climate targets, warns study

NEW YORK- The Associated Press
Banks far from hitting Paris climate targets, warns study

The world’s most influential banks need to substantially accelerate climate efforts if global temperature rise is to be kept within the targets of the Paris Agreement, an assessment released yesterday by an institutional investors group warned.

The efforts of 27 giant banks in North America, Europe and Asia to align their policies with global warming of no more than 1.5 degrees Celsius are falling far short in every area measured in the pilot study.

The report said no major bank has committed to end financing for new oil and gas exploration, and only one has promised to cut all coal financing in line with International Energy Agency guidelines.

The evaluation was prepared by the Institutional Investors Group on Climate Change (IIGCC), whose more than 350 members are mainly asset managers and owners.

Group members have $52 trillion in assets under management and advice. That amounts to roughly a tenth of total assets held by financial institutions worldwide.

The study assessed banks for six areas where they should be showing progress if their lending and other services were aligned with a sharp ramp down of emissions: the strength of net zero pledges; short- and medium-term emissions targets; decarbonization strategies, namely, plans for exiting polluting industries; lobbying on climate regulation; how climate risk is reflected in accounts and audits, and governance, meaning how climate risks are incorporated into leadership structures.

Evaluators set benchmarks for each area. Banks were graded on how many they hit. A 100 percent rating would mean a bank was completely aligned with the Paris goals.

On their commitments to reducing emissions in their lending portfolios to zero, the banks, in aggregate, came in at 20 percent. On short- and medium-term climate targets they met just 10 percent of indicators. And the report found 1 percent of banks’ lobbying practices are consistent with the 1.5 C goal.

As gatekeepers of the world’s money, banks play a critical role in climate change, the study said.

Two-thirds of banks have committed to achieving net zero carbon emissions, the study found, but these commitments “vary widely.’’ Only UBS commits to net zero over its entire business, the study found.

Only three banks, Barclays, ING Bank and Societe Generale, have published short-term targets to reduce emissions from activities they finance, the study reveals.

“If too many banks plan to backload emissions reductions, global emissions will not be curbed rapidly enough,” the authors wrote.

Paris climate agreement, economy,