'Glacial pace': ShareAction slams European banks over sluggish action on climate crisis

The European banking sector has largely flunked a scorecard tracking efforts to tackle the climate crisis, with progress in delivering new green finance products undermined by many banks ongoing support for fossil fuel projects.

The report published today by investor campaign group ShareAction highlights how not one of Europe's largest banks has yet shown 'best practice' in managing climate-related risks and opportunities, with scores across the survey averaging out at just 40 per cent.

"The findings of our research could not be clearer: The European banking sector is moving at a glacial pace on the climate crisis, failing shareholders, clients, and society at large," said Sonia Hierzig, report author and joint head of financial sector research and standards at Share Action.

BNP Paribas topped the rankings with a score of 63.2 per cent, and Lloyds was singled out as most improved, having shot up to second place after being deemed the worst offender in a prior edition of the survey published in 2017.

However, Intesa Sanpaolo, Credit Suisse, Commerzbank, and UniCredit performed the worst, with ShareAction alleging that they demonstrated little evidence of reining in the harmful impacts of their investment activities on the climate. Overall, their approach was classified as 'business as usual' by the report.

ShareAction noted that the results should be of "major concern" to shareholders, clients, and regulators, given that the failure to meet climate goals will aggravate climate impacts and lead to increased long term risks for investors. An intensification in droughts, floods, and other extreme weather events will have long-term negative impacts on banks' portfolios, the report predicts.

Hierzig said that the poor results were disappointingly similar to those collected three years ago. "We expected much more progress to have been made since our last assessment three years ago, not a tinkering around the edges," she said.

Many banks are running the risk of being hit with formal shareholder action, she added, pointing to the climate-related shareholder resolution ShareAction coordinated against Barclays in January, which was hailed as the first such resolution lodged at a European bank.

Barclays has since unveiled a suite of new climate ambitions - including a plan to reach net zero emissions by 2050 and align its portfolios with the goals of the Paris Agreement - that will go to the vote at the bank's AGM in May.

ShareAction noted that the banking sector remained heavily implicated in carbon-intensive industries through its investments and financing of coal, tar sands, and other fossil fuel projects. And while many have largely stopped providing project financing for coal mining and power plants, they continue to bankroll coal-heavy companies, the report notes. In a similar vein, while tar sands and Arctic oil exploration have fallen out of favour with many leading banks, policies regarding lending to conventional oil and gas projects remain lax. Collectively, the banks achieved a 29 per cent grade on climate risk and management.

The report also argues that an encouraging uptick in the amount and type of green finance instruments offered by banks is being overshadowed by their ongoing financing of fossil fuels. It notes that green financing efforts are also slowed by "challenges in terms of defining what qualifies as ‘green', a lack of company- and project-level data, and higher transaction costs".

Commenting on the results, BNP Paribas chief executive Jean-Laurent Bonnafé said that the firm was "delighted" to top the list for the second time. "This is a strong recognition of the efforts made by BNP Paribas and its teams across the world to accelerate the energy transition and strengthen the management of climate-related risks," he said.

"Among other achievements, we have announced an exit date for thermal coal financing, phased out from companies which draw the majority of their revenues from non-conventional oil and gas, also we keep working on implementing the TCFD recommendations and we report annually on our progress," he added.

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• Net Zero Now
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