As the UN climate summit COP27 begins in Egypt this week, there is renewed focus on the urgent need to limit warming to 1.5° C to avoid the most severe impacts of climate change. The climate crisis is already causing devastation around the world, contributing to the recent extreme floods in Pakistan affecting millions of people.
The financial sector and heavy industries such as chemicals have a leading role to play in the transformation of our economies that’s needed to halve global emissions by 2030, and reach net zero by 2050.
Banks are not acting fast enough to decarbonise our economies
Banks have a vital role to play in financing the transition to net zero that people around the world are counting on for a liveable future. The world’s biggest banks have committed to finance our transition to a world of net zero emissions by 2050.
ShareAction’s new research shows that their targets to decarbonise fall far short of what’s needed to prevent the worst impacts of climate change. We looked at 43 of the biggest banks in the Net Zero Banking Alliance that are the largest financers of fossil fuels. Overall, despite some progress, there are still major gaps and inadequate ambition.
To ensure they play their part, ShareAction is urging banks to step up with far more ambitious decarbonisation goals, and for governments to hold them to account with robust regulation. We also want to see stronger leadership from the Net Zero Banking Alliance to keep members on track, including asking them to set interim targets for 2030. These would provide a much clearer picture of banks’ actual action on climate.
We're leading the way to transition the highest carbon industries
Industrial activities (like manufacturing chemicals and steel) create nearly a quarter of all emissions. These sectors use fossil fuels as raw materials and burn fossil fuels in energy-intensive processes, and face challenging journeys to net zero.
Since 2021, ShareAction has been working with investors to accelerate the rapid decarbonisation of the petrochemical industry, which is responsible for 5.8 per cent of global emissions, in line with the 2050 commitment to net zero. This sector may have so far escaped the scrutiny that has been applied to coal, oil and gas – but it can, and must, act quickly to decarbonise.
Later this month, we’ll be publishing a decarbonisation standard for the chemical sector– a clear, measurable, and evidence-based standard for alignment with the goal of limiting global warming to 1.5° C. This will enable investors, who have the power to hold companies accountable to our collective goal, to engage with those falling short and accelerate corporate action on climate change.
Meeting climate targets will require an enormous acceleration in effort
Back in 2015 in Paris, the world committed to limiting global warming to 1.5° C above pre-industrial levels to protect our societies and ecosystems. Every fraction of a degree of warming increases human, environmental and financial loss and damage, and drives the planet closer to irreversible ‘tipping points’.
This is also about justice. The world’s most vulnerable and marginalised people, who have contributed least to climate-changing emissions, will face the greatest consequences. The UN recently warned that the world is off track, with current policies projected to result in a catastrophic warming of 2.8 degrees in the 21st century.
Leaders at COP27 this week need to focus on accelerating action and ambition and financing a just transition to net zero at scale and pace. The financial sector has enormous potential to drive positive change in this critical decade: curbing emissions, increasing renewable energy uptake and phasing out fossil fuels.
We already know what needs to be done. Now we need action. People around the world are counting on it.
