‘Tis the reporting season for most companies, which overlaps with Earth Day celebrations in April. I am joining the countdown to the ratification of the Paris Agreement on Earth Day (22 April) by analyzing the latest corporate disclosures of the banks that have been criticized for financing the fossil fuel and coal industries. I will be looking into banks’ commitments on lending to the fossil fuel and coal, the progress on these commitments, and future actions.
For the purpose of this blog series, I am drawing on a November 2015 report by Fair Finance Guide, which identified the top 25 banks that finance fossil fuel companies. I am unable to independently verify the data behind the research, however, I believe that the research conducted by the team behind the report is credible and worth highlighting.
Why am I looking into banks instead of the energy companies themselves? Because banks are the enablers of business as while they are a step removed from operations that have a negative impact on the environment, they are in fact exposed to risks associated with climate change through their lending portfolios. Over the years, the world’s biggest banks have entered into an arms race of commitments to invest in renewable energy and clean technologies, but have not addressed their lending to environmentally sensitive industries. The report by Fair Finance Guide, therefore, shows that banks continue to be highly exposed to risks associated with the fossil fuel sector. To reduce these risks, banks need to take a hard look at their lending portfolios and come up with actionable plans to reduce risks. The time to do that has come, and the time is now.
Stay tuned for the first installment of this series.