All eyes are on the climate, with accusations financial firms are still piling billions into fossil fuel projects. But what is in place to curb this behaviour, and how can you find out if your bank is one of those financial firms?
The Cop26 climate summit is in full swing and a spotlight has been shone on the financial industry, with claims that institutions are still funding industries fuelling the climate crisis.
By 2023 big UK firms and financial institutions will have to publish details of how they will hit climate crisis targets, under Treasury proposals announced during the summit.
This fits into the UK’s 2050 net zero target, and a panel of experts will be set up to scrutinise these plans. However, many have criticised the move beause any commitments made won’t be mandatory.
Green groups have slated the announcement as greenwashing because it won’t be legally binding.
Veronica Oakeshott, head of forests policy and advocacy at Global Witness, said: “Many banks have already made commitments to align with the Paris climate agreement and have environmental and no-deforestation policies, yet their financing of climate-wrecking activities have continued apace.
“It’s crucial that the UK government follows up the announcement with binding legislation that holds the City of London to account for its climate impacts. Otherwise, banks’ net zero plans won’t be worth the paper they are written on and UK financiers will continue bankrolling fossil fuels and deforestation with impunity.”
To understand what needs to change, it’s important to look at the current situation.
Financial institutions are accused of funding fossil fuel companies and businesses promoting agriculture practices that harm the environment, while at the same time signing up to net zero commitments to publicly give the impression they are helping to solve the problem.
But is this an industry standard or is it possible to put your money somewhere without worrying about making the climate crisis worse?
There are many studies and reports naming and shaming big financial companies and, most recently, Barclays, HSBC and Standard Chartered have been marked as some of the worst offenders.
Research from climate campaigners Market Forces says these banks have put more money into fossil fuel projects than any other big UK banks this year.
The reports says Barclays financed $5.6bn (£4.1bn) new fossil fuel projects between 1 January and the start of Cop26. It was closely followed by HSBC at $5.3bn (£3.9bn) and Standard Chartered, at $4.3bn (£3.1bn).
The study accuses the banks of extending financing to fossil fuel projects despite publicly committing to net zero targets.
A spokesperson for Market Forces said: “By continuing to finance the expansion of the fossil fuel industry, banks such as Barclays, HSBC and Standard Chartered are sticking two fingers up to the goal of net zero emissions by 2050 – a goal all three banks have committed to support.
“Fortunately, there are plenty of options available to people who don’t want their money with a bank financing climate destruction. We don’t push people towards one bank over another, but sites like SwitchIt list the likes of Triodos, The Co-operative Bank and Nationwide among those that aren’t going to turn your deposits into more coal, oil and gas pollution.”
Earlier this year a report, Banking on Climate Chaos, was published naming a host of other UK banks with details of how much they are spending on fossil fuel projects. It said the UK’s five biggest banks have increased the amount they invest in environment-damaging firms since the Paris Agreement in 2015.
One of the problems with banks and the climate crisis is that there is no single standard for consumers to show them how their bank is acting. There’s no universal energy rating, for example, linked to how much is being invested in climate-harming firms, and there’s also little pushback for companies still doing this.
Publicly, a bank may be ticking all the boxes when it comes to tackling the climate crisis but how can you find out if they are following through with these commitments?
There are several tools to point you in the right direction, founded by campaigners using a variety of different reports and research.
SwitchIt, for example, shows you a score for all UK banks linked to the amount they invest in fossil fuel projects. It’s not all bad either, Nationwide and Triodos, for example, are two picked out for avoiding dirty energy firms.
The B corps certificate also names firms that are measuring their environmental and social impact, and publishes this online.
In response to the Market Forces report, an HSBC spokesperson said: “HSBC is firmly committed to aligning its provision of finance to net zero by 2050 or sooner. We have committed to phase out thermal coal financing by 2030 in EU and OECD markets and by 2040 globally, and to set out short and medium-term transition targets for the oil and gas and power and utilities sector. We expect to provide between $750bn and $1 trillion towards the net zero transition by 2030.”
A Barclays spokesperson said: “We are aligning our entire financing portfolio to support the goals of the Paris Agreement – significantly scaling up green financing, directly investing in new green technologies and helping clients in key sectors change their business models to reduce their climate change impact. By 2025, we will reduce the emissions intensity of our power portfolio by 30 per cent, and reduce absolute emissions of our energy portfolio by 15 per cent.
“Barclays has already facilitated £46bn of green finance. We are one of the only banks globally investing our own capital – £175m – into innovative, green start-ups. By deploying finance in this way, we are accelerating the transition to a low-carbon economy and will become a net zero bank by 2050.”
A spokesperson for Standard Chartered said: “We have announced ambitious new targets to reach net zero carbon emissions from financed activity by 2050, including interim 2030 targets for the most carbon-intensive sectors. We believe that a just transition to a net zero economy has huge potential to drive inclusive growth and innovation across the emerging markets where we operate.”
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