(Tuesday 17th December) Today, responsible investment NGO ShareAction has written to the CEOs of Europe’s 20 largest banks, including HSBC, Barclays and BNP Paribas, urging them to set targets based in science to show how they are funding sectors crucial for the net-zero transition, such as renewable power and green infrastructure and technologies. ShareAction is warning that banks can expect to see shareholder action if they fail to meet investor expectations of urgent progress on this issue.
The charity is increasing its focus on banks’ approach to sustainable financing following its recent report exposing their low-ambition and incoherent climate targets.
The report showed that while all 20 banks had set a sector-specific target for decarbonisation and cutting emissions, only nine had set one for sustainable finance clearly showing how it would fund one of these transition-critical sectors. Banks rarely provided a breakdown of how much sustainable financing they would provide to each sector.
Kelly Shields, Senior Campaign Manager at ShareAction, said: “The role that we need Europe’s biggest banks to play in financing our transition to net-zero economies cannot be underestimated. Unless banks act now to increase ambition, the finance needed to scale up areas like clean energy and the rollout of green infrastructure will simply not be available.
“Crucially, investors want to see banks set targets grounded in science that clearly show how they will finance the sectors like renewable energy that are critical to transitioning our economies and protecting people from dangerous levels of global heating. Banks should heed the warning that shareholders will take action next year if they fail to meet investor expectations of urgent progress on this issue.”
Investor concern over banks’ approaches to sustainable finance falling short has been on the rise over the past year. Over summer, investor coalitions backed statements that were read to boards and senior executives raising the issue of sustainable finance at both Société Générale and HSBC at their annual general meetings. These both called on the banks to set targets for key transition sectors.
Katharina Lindmeier, Head of Sustainability Strategy at Nest commented: “We support ShareAction’s call for Europe’s largest banks to set science-based targets, demonstrating how they are funding sectors vital to the net-zero transition.
“By embracing renewable energy and green technologies, banks can contribute to environmental sustainability whilst unlocking new avenues for growth and innovation. These sectors will create jobs, drive economic development, and pave the way for a more resilient and sustainable future.
“This initiative is a crucial step towards ensuring that the banking sector is accountable and transparent in its role in addressing climate change. It offers European banks the chance to lead meaningful change and build a future that is both economically prosperous and environmentally secure.”
Notes to editors
The letters can be read in full here, which calls on the banks to act on five areas related to their sustainable finance targets:
- Provide a clear and robust methodology;
- Set sectoral targets;
- Ensure sustainable finance targets and decarbonisation targets are consistent and comparable;
- Demonstrate the impact of targets;
- Complement these with robust sector policies.
The report can be read in full here, including in-depth analysis and case studies on banks’ financing for critical transition sectors including renewable power, real estate and steel production.
More information on the investor statement read at the HSBC annual general meeting can be found here.
