Wednesday, December 8

Europe’s Top 25 Banks Fail to Deliver on Green Promises, Activists Warn | corporate governance

Europe’s 25 largest banks remain without comprehensive plans addressing both the climate crisis and biodiversity loss, calling into question their sustainability commitments, activists warned.

While some lenders like NatWest are demonstrating leadership on specific issues, such as net zero targets and policies restricting financing for new fossil fuels, research by investment campaign group ShareAction found that none of the banks it reviewed was taking action at all. key areas.

These are: biodiversity; exposure to high-carbon sectors; policies that restrict services to sectors such as oil and gas; and linking executive compensation to progress on climate issues.

ShareAction said banks should expect protest votes against their directors unless they get in shape and start following the best practices of their peers. “When investors are dissatisfied with the banks ‘responses, ShareAction encourages investors to vote against the directors and to present and vote on shareholder resolutions on climate change and biodiversity at the banks’ AGM 2022”, the campaign group said.

The study found that executive pay policies are failing to encourage major changes at Europe’s largest lenders. In many cases, the payment is only related to reducing the carbon emissions of the bank’s offices and branches, rather than limiting loans for carbon-heavy industries.

NatWest, ING and Credit Agricole are the exception, according to the report, either by incentivizing their CEOs to set climate targets that impact the loans they make to certain sectors, or by linking the payment to specific climate commitments, such as the implementation of their policies. of coal.

While 20 of the 25 largest banks in Europe have committed to achieving net zero carbon emissions by 2050, only Lloyds Banking Group, NatWest and Nordea have committed to halving their financed emissions by 2030 to ensure they are on the right track to meet those goals. The financed issues are linked to companies or projects to which banks offer loans or underwriting services.

The report added that Barclays was also the only bank that had a policy covering capital market underwriting, in which investment banks help companies raise money by issuing shares, even though the practice is responsible for 65% of fossil fuel bank financing.

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“Our research shows that there is a huge disparity between the credentials of leaders and laggards on every environmental issue,” said Xavier Lerin, Senior Banking Analyst at ShareAction. “There is no excuse for banks that have not yet embraced the leading practices of their peers, although it should also be noted that, in many cases, even the leading practices in the industry continue to fail basic litmus tests on climate and biodiversity ”.

Banking lobby group UK Finance said the sector fully supports the government’s goal of achieving net zero climate emissions by 2050 and has a key role to play in the transition to a low-carbon economy.

“Lenders are putting climate responsibility at the center of their strategies, making zero net commitments and have already introduced a range of green financing options to their operations,” he added.

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