The banking sector has a unique ability to mitigate climate risks by withdrawing financing from carbon-emitters...or hasten the climate crisis by continuing to finance high-carbon activities.
Currently, banks are choosing the wrong path: fossil fuel financing levels over the last five years remain dangerously high and show few signs of stopping. This reinforces the need for banks to establish effective policies that reverse this trend.
But, it is also in investors’ core interest to engage strongly with the banking sector on its related financing activities. If bank capital is left to flow uninhibited to coal developers and oil and gas expansionists, investors could potentially see imminent stranded asset risks and physical climate risks impacting returns across their investment portfolios.
Banks globally have made a timid start on climate action, with aspirational pledges to go net-zero by 2050. But these commitments invariably lack the policy changes needed right now to actually temper climate risks for investors. While many banks have adopted fossil fuel exclusion policies for project finance, only a few first-mover banks have adopted robust policies that address the core finance flows to fossil fuels like coal.
That’s why there will be a raft of ambitious shareholder resolutions and director votes filed at major banks in the 2021 AGM season.
In this webinar, Responsible Investor will explore the upcoming AGM season of investor action on banks.