The global banking sector is failing to respond to the climate emergency.
That’s the call from a new report published by Boston Common Asset Management (BCAM), which claims green banking initiatives and risk assessment tools have not changed lending and investment practices in reality.
In compiling the report, researchers engaged with 58 of the world’s largest banks – they found despite the majority of banks endorsing Task Force on Climate-related Financial Disclosures (TCFD) guidelines (69%), disclosing TCFD governance reforms (71%) and carrying out climate risk assessments (78%), they noted these tools are not having an impact on decision-making.
The report claims around 40% of banks are failing to develop any new financing or investing restrictions as a result of such measures, resulting in only “superficial progress” being made and financing for fossil fuels continuing to increase each year, despite new green services entering the market.
BCAM stresses banks must adopt a clear strategy for decarbonising their balance sheets, set explicit targets to increase the proportion of sustainable finance commitments they undertake, publicise their definitions of ‘low carbon’ and ‘green’ investment to ensure they are not simply rebranding and integrate public policy on climate into overarching climate strategies.
Lauren Compere of BCAM said: “The scale of the climate crisis demands a more radical transformation of the banking sector.