Not so green after all
Ceres, a coalition of investors, environmental groups and other public interest organizations, believes that the financial services industry – with nearly $6 trillion in market capitalization – should play a role in combating climate change.
Most recently, Ceres released a first comprehensive assessment of how the world's 40 largest banks fulfill their commitments to the reduction of greenhouse gas emissions.
The study found that, despite an overall widespread positive trend, only 12 banks made climate change a governance priority; only 6 said they were calculating carbon risk in their portfolio and "no bank has set a policy to avoid investments in carbon-intensive projects such as coal-fired power plants."
Cares' recommendations:
- Elevate climate change as a governance priority for board members and CEOs, especially at U.S. banks where direct board involvement has been virtually non-existent;
- Provide better disclosure about the financial and material risks posed by climate change, their own emissions reduction strategies, and emissions resulting from financing and investment;
- Explain how they are factoring carbon costs into their financing and investment decisions, especially for energy-intensive projects that pose financial risks as carbon-reducing regulations take hold worldwide;
- Set progressively higher targets to shrink the carbon footprint of their lending and investment portfolios, and be more transparent about how they intend to meet these objectives.
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Clearly there is a lot that still needs to be done to get instit
Clearly there is a lot that still needs to be done to get institutions involved in doing their part.
Voluntary action on climate change can only take us so far...
Voluntary action on climate change can only take us so far. The manager and board of any major bank has one goal: to maximize shareholder value. And because most shareholders want a high return on their investment (and will move their money elsewhere if they see a higher return), the bank has no incentive to reduce their carbon footprints. We need market-based incentives to reduce greenhouse gas emissions and stop catastrophic climate change. Not surprisingly, leaving it up to the board of directors won't get it done.
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