Finance

ShareAction says Europe’s biggest banks lag pledges to cut carbon emissions

Europe’s largest banks have pledged to phase out financing carbon dioxide emissions by 2050. But an activist group supported by big shareholders says the lenders aren’t doing enough to meet their goals.

ShareAction, a London-based nonprofit that coordinates investor campaigns to push banks including Barclays and HSBC Holdings on the environmental action, said the lenders are slow to back their commitments with practical steps.

“Many banks are showing up on the starting line but few have started to run,” Jeanne Martin, an author of a ShareAction report, said in an interview. For banks to achieve 2050 targets, significant changes must happen now in the way they operate, Martin said.

No European bank, for instance, has committed to completely end lending for new fossil-fuel expansion, according to ShareAction. In May, the International Energy Agency said that new fossil-fuel supply projects must immediately cease if the world is going to slash net carbon emissions to zero by 2050.

Only three of the 25 European banks surveyed by ShareAction have committed to halve their financed emissions by 2030, an interim step toward the 2050 goal. They are the UK’s Lloyds Banking Group and NatWest Group, and Nordea Bank ABP, the largest Nordic bank.

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Climate change is a cause of growing concern for many investors. The role of capital in fueling carbon emissions—and in financing green energy — is expected to be a key topic at a United Nations-sponsored summit due to take place in Glasgow in November.

If banks don’t meet their climate targets then it will be harder for investors to own shares of the banks and meet their own commitments to cut carbon emissions. Fund managers with a combined $43tn of assets have signed up to the Net Zero Asset Managers Initiative, which supports the UN goal of net zero emissions by 2050.

“If banks cannot get transition plans from clients, they might have to say goodbye to such clients,” said Roland Bosch, an executive at fund manager Federated Hermes’ EOS unit who advises companies on how to improve environmental policies.

Europe is the epicenter of a growing movement among investors and regulators to force banks and companies to cut exposure to carbon. US lenders have also made commitments. Several, including Citigroup, Bank of America and Morgan Stanley have joined the Net-Zero Banking Alliance, created this year in cooperation with Mark Carney, the former Bank of England governor and UN special envoy for climate action and finance. It includes 55 lenders from 28 countries.

The ShareAction report said Barclays is the only lender surveyed to include capital markets underwriting in its interim targets. But the London-based bank hasn’t yet committed to stop financing coal, ShareAction said.

A Barclays spokeswoman said the bank welcomes ShareAction’s views and is accelerating the transition to a low-carbon economy.

HSBC plans to phase out thermal-coal financing globally by 2040 and hasn’t financed any new coal-fired power plants since April 2018, a spokeswoman said. HSBC will set out transition targets for oil, gas, power and utility companies to produce less carbon dioxide by the end of this year, the spokeswoman said.

NatWest will stop lending and underwriting to major oil and gas producers unless they have a credible transition plan to produce less carbon dioxide by the end of 2021, a spokeswoman said. Nordea plans to publish new fossil-fuel sector guidelines this year, a spokesman said. Lloyds is committed to take more action to reach its goal, a spokeswoman said.

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Only Italy’s Intesa Sanpaolo has committed to phasing out its exposure to all unconventional oil and gas sources, such as fracking and drilling in the Arctic, according to the report. An Intesa spokesperson declined to comment.

In July, ShareAction coordinated a letter to bank chief executives from 115 investment firms that collectively manage $4.2tn, including Fidelity International, Man Group and Federated Hermes. Their requests included phasing out the global financing of coal by 2040 and the publication of climate-related targets for the next five to 10 years before annual general meetings take place next year.

Write to Simon Clark at [email protected]

This article was published by Dow Jones Newswires

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