Europe’s 25 largest banks fail to meet their green commitments, activists warn | Corporate governance
Europe’s 25 largest banks still do not come up with comprehensive plans that address both the climate crisis and biodiversity loss, questioning their sustainability commitments, activists have warned.
While some lenders such as NatWest are showing leadership on specific issues – such as net zero goals and policies restricting funding for new fossil fuels – research by investment campaign group ShareAction found that none of the banks examined did not act in all key areas.
They are: biodiversity; exposure to high carbon sectors; policies restricting services to sectors such as oil and gas; and link executive compensation to progress on climate issues.
ShareAction said banks should expect protest votes against their directors unless they train themselves and start following the best practices of their peers. “When investors are unhappy with responses from banks, ShareAction encourages investors to vote against directors and to file and vote for shareholders’ resolutions on climate change and biodiversity at bank AGMs in 2022,” said the campaign group.
The study found that executive compensation policies do not encourage major change among Europe’s largest lenders. In many cases, compensation is only tied to reducing carbon emissions from bank offices and branches rather than reducing loans to carbon-heavy industries.
NatWest, ING and Crédit Agricole are the exception, according to the report, either by encouraging their managers to set climate objectives having an impact on the loans they grant to certain sectors, or by linking remuneration to specific climate commitments such as than the implementation of their coal policies.
While 20 of Europe’s 25 largest banks have pledged to achieve zero net carbon emissions by 2050, only Lloyds Banking Group, NatWest and Nordea have pledged to halve their funded emissions by 2030 to ensure that they are on track to achieve these goals. Funded issues relate to companies or projects to which banks offer loans or underwriting services.
The report added that Barclays was also the only bank to have a capital market underwriting policy, in which investment banks help companies raise funds through the issuance of shares, although the practice is responsible for 65% of banks’ fossil fuel financing.
“Our research shows that there is a big disparity between the credentials of executives and laggards on every environmental issue,” said Xavier Lerin, senior banking analyst at ShareAction. “There is no excuse for banks that have yet to adopt the best practices of their peers, but it should also be noted that in many cases even the best practices in the industry continue to fail tests. base on climate and biodiversity. “
Banking lobby group UK Finance said the sector fully supports the government’s goal of achieving zero net 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 heart of their strategies, making net zero commitments and have already introduced a range of green finance options into their operations,” he added.