Global banks lagging on climate change action, report warns

investmentnews.com:

The world’s biggest banks aren’t telling stakeholders what they need to know to judge how big the industry’s carbon footprint is, according to a fresh study.

Only five global banks have disclosed the quantitative results of climate scenario analyses to shareholders and clients, according to a report published on Tuesday by the Transition Pathway Initiative Global Climate Transition Centre, an independent research and data provider based in London. And only six of the 26 banks analyzed have disclosed a commitment to immediately end all on- and off-balance sheet finance for new coal capacity, the study shows.

North American and Chinese banks fared worst in the study, with the TPI Centre finding that lenders based in Europe and Japan “are far ahead” of others when it comes to taking action on climate change, according to the report. 

The role played by banks in financing greenhouse gas emissions is drawing increasing attention from activists and regulators as time runs out to limit global heating to the critical threshold of 1.5C. Yet years after the biggest banks in the US and Europe committed to eliminate their financed emissions, few banks have moved beyond target-setting.

Burned trees beside a road during the McDougall Creek wildfire in West Kelowna, British Columbia last month.

The TPI report said it found a few “encouraging” signs of progress, as banks increasingly incorporate climate policies into their overall business strategies. It also noted that more lenders are setting a greater number of targets to reduce portfolio emissions, amid an awareness that climate constitutes a key financial risk category. 

However, banks aren’t including all types of financing activities nor all high-emission sectors in their