Investor coalition spurs banks to display true climate credentials

On the 07/07/21 at 7:48AM


Adrien Paredes-Vanheule

A $4.2trn investor coalition urged the world’s 63 biggest banks to show real climate and biodiversity commitments ahead of upcoming global environmental conferences.

Pledging through sectoral initiatives is not sufficient, banks must go beyond. That is in substance the new message sent on Wednesday by a 115-strong institutional investor coalition - managing $4.2trn in assets - to 63 of the world’s largest banks. The investors call on banks to reinforce their climate and biodiversity strategies before the Kunming Conference (CBD COP15) and the UN Climate Talks (COP26) in Glasgow this autumn.

The coalition, coordinated by British non-profit organisation ShareAction, wants banks to publish short-term (5-10 years) climate-related targets covering all relevant financial services ahead their 2022 annual general meetings. Besides, its missive urges banks to phase out from financing coal by 2030 in OECD countries and by 2040 in non-OECD countries at the latest whilst encouraging them to publish phase out plans and commit to stop financing companies with coal expansion plans before COP26.

Furthermore, the investors expect the recipient banks to align their climate plans with the International Energy Agency’s net-zero scenario – or another 1.5C scenario with minimal reliance on Negative Emission Technologies. In their view, banks must review their sectoral policies, company targets, client expectations and financial statements based on the 1.5C scenario they have chosen.

The investors also pile pressure on the recipient banks to commit before the Kunming conference (CBD COP15) next October on publishing a biodiversity strategy. The coalition demands banks to “identify and disclose impacts and dependencies on biodiversity and to set science-based nature targets by 2024 at the latest.”

It also enjoins them to strengthen sectoral expectations on the management of biodiversity-related risks and impacts for clients in high-impact sectors as well as biodiversity and human rights safeguards in sectoral policies for high impact industries. Another commitment required from the banks is an engagement in the development of the Taskforce on Nature-Related Financial Disclosures (TNFD).

The recipient banks will have until 15 August to answer the investors’ call, with an overview of the steps that they plan to take to address the highlighted issues. Investor warned may take into account progress achieved by the banks against these issues in their future votes on special and ordinary resolutions at the 2022 AGMs.

Jeanne Martin, Senior Campaign Manager at ShareAction, said: “Leading investors have today called on global banks, including those that have already signed up to the Net-Zero Banking Alliance, to up the ante of their climate and biodiversity strategies ahead of COP26. The message from investors is clear: distant net zero targets and warm words about the importance of biodiversity are not enough. Investors want concrete action now, and those banks which fail to respond can expect serious challenges at their next AGMs.”

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