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Major banks are failing to adequately address the risk of climate change in their investment decisions, according to a major report released by PricewaterhouseCooper.
The study assessed the performance of a group of leading financial institutions -- Crédit Agricole, HSBC and Standard Chartered and insurance groups Munich Re and Swiss Re -- against the Climate Principles, a set of green investment guidelines launched by the Climate Group in 2008 and endorsed by the five companies.
It found that while the companies had made strides to reduce their carbon footprint, they scored badly in a review of the environmental impact of their project finance activities.
The report said that the institutions were continuing to finance projects that emit more than 100,000 tons CO2 equivalent per year without ensuring those projects are doing all they can to reduce emissions or look at alternative technologies.
John Williams of PwC, author of the report, told the Financial Times: "What banks should be doing is saying we know that there will be regulation of carbon, therefore why would you finance an asset that will become stranded in the next decade?"
The report found it difficult to ascertain how banks are engaging with their clients to ensure projects have emissions reduction plans, how their emissions are calculated, monitored and disclosed; and how projects are provided with the necessary support to mitigate emissions produced during their lifetime.
"Institutions need to make more information publicly available to explain how they are engaging with clients involved in carbon-intensive projects," the report states. "Greater transparency will improve stakeholder understanding of the challenges being faced and the solutions being implemented to resolve them. "
The report also found some of the institutions are not doing enough to finance low-carbon investments, revealing that only two of the five firms have put in place a plan to "develop viable financing solutions to facilitate investment in low-carbon technologies and GHG-reduction projects".
The banks fared much better in other areas, including reducing the carbon intensity of their own operations, integrating climate change issues into general business activities and working with their supply chains to reduce emissions.
The five institutions met with the Climate Group in Davos to discuss their progress and how they can improve their adherence to the Climate Principles.
They also welcomed fund manager F&C Asset Management as the sixth signatory to the Climate Principles.
Alain Grisay, chief executive of F&C Asset Management, said there was a compelling business case for financial institutions to adhere to green investment guidelines. "If there is one lesson to be learned from the credit crisis, it is that apparently rational, competitively driven behaviour can have tragic consequences when there is a systemic failure to recognise and price in unconventional risks," he explained.
"As with the credit crisis, we need a systemic approach to avert disaster. The Climate Principles represent our response to this crisis in the making and our commitment to do something concrete and powerful to avert it."
This article originally appeared at BusinessGreen.com.
Image CC licensed by Flickr user Refracted Moments™
Coercing banks and other businesses to be "GREEN"
This is typical communist, yes, I said it, communist puke. Why arn't more green banks forcing green mandates on their customers? Because they want to stay competitive, they want to stay IN BUSINESS! There are more common sense business owners, bankers, etc. out there than you "all-in the-bag", feel-good, weenie greenies want to recognize. Even forgetting "climategate", most Americans don't buy this scam. And don't attempt to slander anyone's education, background, affiliations etc. That ploy is old and holds no water. Also forget, Appeals To Authority, Appeals To Grandeur, ad-hominan, red herring, etc. Forget the name calling. The word "deniers" now applies to those who deny that warming is natural or those who try to ALARM the public by crying 'the sky is falling' and warming is caused by CO2 trapped in the atmosphere as GHG and is "accelerated". This fraud is all about governance and control. In light of all the CLIMATEGATE fraud, you sheep greenies are now on the defense. It is your organizations-->> the IPCC, the CRU, NASA, NOAA, the NCDC, etc., etc., that are all intertwined in this scam. It is all your green heros-Tom Karl, Tom Wigley, Michael Mann, Phil Jones, Mr. Pachauri (of NOAA), Ken Briffa etc. that have deleted temp data, reduced world temp. sites from 6000 to 1500-eliminating colder clime and higher alltitude sites. Why would bankers and other businesses take you lemmings seriously?
"The report said that the
"The report said that the institutions were continuing to finance projects that emit more than 100,000 tons CO2 equivalent per year without ensuring those projects are doing all they can to reduce emissions or look at alternative technologies."
What institutions finance what projects that emit more than 100,000 tons of CO2 per year? I read the report you referenced to find any instance of "alternative", "technolog" or "alternative technolog" and I see nothing to support for your claim.
I think you are making it up when you said all these projects are misbehaving and refusing to look at alternative technologies or reduce emissions. The report doesn't cite any single case where any single project has refused to "try" or "look" as you claim.
And why are banks expected to be enforcement of these principles that are not laws? Who made banks the carbon police? Who is the Climate Group to mandate that all banks will enforce their principles and agenda for them? I see no powers granted to that organization in the US Constitution. You likely don't ever try to read that document, but you should know Karl Marx probably never mentioned powers for the Climate Group, either.
I see the exact opposite of what you said, "Most of the banks involved in project
finance have some approaches in place for engaging with project sponsors on projects which generate
high emissions — measured as greater than 100,000 tons of CO2 equivalent per annum." Your interpretaion sounds unbalanced compared to that quote.
Look at the report you are quoting. Try reading it before opening your belligerent mouth.
I happen to be casually interested in alternative technologies. That line of yours caught my eye. So I did a search on the word "alternative" for the referenced report that was quoted.
page 11 "Options for ‘low carbon’ or ‘green’ bonds may offer an acceptable alternative
as they offer guaranteed returns but also support low carbon investment."
Page 15 "This includes the innovative use of alternative sources of funding
such as the capital markets and Insurance Linked Securities (ILS) such as
CatBonds."
I could find nothing that sounds even closely like these words you breathed. So I tried harder and I did a search for the word "technolog"
Page 17 "This may mean supporting
clients in the power and energy sector to finance new technology solutions that capture
and reduce carbon emissions. Equally important is working with clients to finance
development and acceleration of new low carbon technologies across the transport and
logistics, information and communication technologies and utilities sectors."
Principle 2.5.4 We will develop financing solutions to facilitate investment in low carbon
technologies and GHG reduction projects.
Page 17 "This repositioning
enabled it to place Wholesale Banking products across the whole value chain
from technology providers, asset developers, operators and investors into
the renewable and environmental sector...Standard Chartered Bank has committed to finance
$8–10 billion of renewable energy and clean technology projects by 2012"
Principle 2.6.2 Structured Lending & Venture Capital — We will develop viable financing
solutions to facilitate investment in low carbon technologies and GHG
reduction projects.
Page 19 "HSBC and Standard Chartered Bank are exploring a
range of opportunities for equity financing in renewable and infrastructure
projects, while also considering stakes in technology companies."
In the context of ever increasing regulatory pressure, alongside greater focus
on low carbon technology solutions, adopting institutions should consider
how they can incorporate climate risks and opportunities into corporate
advisory roles for clients as they become more material and relevant.To capture
opportunities, there is need for increased venture capital, private equity and
project infrastructure financing to support low carbon technology businesses
and emissions reduction projects.
Page 21 To prevent dangerous climate change,
it is crucial to ensure that these utilize the most effective technologies to minimize and
capture emissions.
None of these references say what you pretend they say. You are making stuff up or spinning some things out of control. I advise that your readers compare what you say against what is referenced because there is alot said and I don't have interest to chase down every last misrepresentation you could be offering here. It is so easy to see you are a liar, so why waste any more time when I can try to find a more honest writer at this website? I'm done with trying to understand anything you have to say.
Pathological with you kook burgers, worse every day. Did you forget your medication when you wrote this article?
Why don't you find me a study that says the carbon footprint of the work required to repay the U.S. national debt? Make yourself useful for something. Maybe China should quit loaning the USA money to build a "green economy!" Did you ever think of that?
Get this weak stuff out of here.
Of Course!
PWC would love to see this type of thing made mandatory. They and all other big bean counting firms would make a fortune for spinning out whatever the customer needed.
The best we could expect from this bunch is the equivalent of the services they have provided in the past. Not very impressive. İ guess they do tend to keep the extra MBA's off the street.