Banks Focusing on Climate Change But More Action Needed, Says Report
Some of the world’s largest banks are beginning to address the business challenges associated with climate change, but none of them are doing enough to fully tackle the issue, says a new report from Ceres, a Boston-based network of investors and groups that promotes corporate sustainability. “More banks realize that climate change is a big business issue,” notes Ceres President Mindy S. Lubber, “but the responses so far are the tip of the iceberg of what is needed to tackle this colossal global challenge.”
The study, Corporate Governance and Climate Change: The Banking Sector, ranks 40 of the world’s largest publicly traded banks and financial services companies on how they address climate change in such areas as board oversight, management execution, public disclosure, greenhouse gas (GHG) emissions, and strategic planning. On a scale of 1 to 100, European-based HSBC Holdings scored best with 70 points. The five highest-ranking banks are all based in Europe, followed by Citigroup and Bank of America in the United States and the Royal Bank of Scotland. With zero points, New York-based Bear Sterns Co. ranked lowest.
Banks and financial institutions, representing nearly $6 trillion in market capitalization, are important players in combating the impacts of climate change and moving the economy toward reduced GHG emissions, according to Ceres. The assessed banks have together issued nearly 100 research reports on climate change and related investment and regulatory strategies. Twenty-eight of the banks have disclosed their GHG emissions from operations, 24 have set internal emissions reduction targets, and 29 reported financially supporting alternative energy.
But only a handful of the banks have begun pricing carbon risks into their finance decisions or setting targets to reduce GHG emissions associated with their lending, the report says. Bank of America is the only one of all 40 banks that has announced a specific target to reduce the rate of emissions linked to the utilities portion of its lending portfolio. And no bank has adopted a policy to avoid investment in carbon-intensive projects such as coal-fired power plants or Canadian tar sands.
The Washington, D.C.-based Worldwatch Institute, in its newly released State of the World 2008: Innovations for a Sustainable Economy, points to the vital role of finance and business in addressing global environmental challenges. “Once regarded as irrelevant to economic activity, environmental problems are drastically rewriting the rules for business, investors, and consumers, affecting over $100 billion in annual capital flows,” note project directors Gary Gardner and Thomas Prugh. “We have the tools today to steer the global economy onto a sustainable path. The task now is to bring them together and scale them up so that they become the norm across today’s economies.”
This story was produced by Eye on Earth, a joint project of the Worldwatch Institute and the blue moon fund. View the complete archive of Eye on Earth stories, or contact Staff Writer Alana Herro at email@example.com with your questions, comments, and story ideas.