$ 47 trillion banks adopt new UN backed climate principles
UNITED NATIONS (Reuters) – Banks with more than $ 47 trillion in assets, or a third of the global industry, adopted new UN-backed ‘responsible banking’ principles to tackle climate change on Sunday that would divert their books of credit away from fossil fuels.
German Bank DBKGn.DE, Citigroup CN and Barclays BARC.L were among 130 banks to join the new framework on the eve of a United Nations summit in New York to push businesses and governments to act quickly to avoid catastrophic global warming.
“These principles mean that banks must consider the impact of their loans on society – not just on their portfolio,” Simone Dettling, head of the United Nations Initiative’s banking team, told Reuters. environmental financing, based in Geneva.
Under pressure from investors, regulators and climate activists, some major banks have recognized the role lenders will need to play in a rapid transition to a low-carbon economy.
Funding for oil, gas and coal projects has come under special scrutiny as climate scientists step up calls to change the global economy’s deep dependence on fossil fuels to avoid disastrous warming .
The principles, jointly developed by UN and bank officials, require lenders to:
– Align their strategies with the Paris Agreement of 2015 to fight against global warming and the objectives of combating poverty supported by the UN, called the Sustainable Development Goals
– Set objectives to increase “positive impacts” and reduce “negative impacts” on people and the environment
– Work with clients and clients to encourage sustainable practices
– Be transparent and accountable for their progress.
Major funders of the principles say the standards will encourage banks to divert their lending portfolios away from carbon-intensive assets and redirect capital to greener industries.
Critics argue that banks should go much further by making an explicit commitment to phase out funding for fossil fuel and agribusiness projects that lead to deforestation in the Amazon, Southeast Asia, and elsewhere. other regions.
However, the new standards could also force participating banks to choose between abandoning the activities of customers in carbon-intensive sectors and the risk of being accused of going back on the principles if they continue to finance such companies.
Although the initiative is voluntary, Dettling, who played a central role during 18 months of negotiations with a core group of 30 founding banks, said lenders would be reluctant to accept the reputational risk of losing their signatory status.
“They have to show that they are making progress – and progressing within a given time frame,” Dettling said.
“Ultimately, banks that fail to meet their commitments and make progress may be stripped of their signatory status,” she said.
Banks in Europe, in particular, also face increasing regulatory pressure to disclose their exposure to the potential impact of climate-related disasters and a low-carbon energy transition on their asset base.
Bank of England Governor Mark Carney, who joined his counterparts in France and the Netherlands to push for better monitoring of climate risk, was due to address the UN climate summit on Monday, according to a draft agenda.
Other banks to join the “Principles for Responsible Banking” initiative include Danske Bank DANSKE.CO, ABN Amro ABNd.AS, BNP Paribas BNPP.PA, Commerzbank CBKG.DE, Lloyds Banking Group LLOY.L and Societe Generale SOGN.PA, according to a statement.
Reporting by Matthew Green; Editing by Sam Holmes