Skip to main content

Wells Fargo is latest U.S. bank to adopt net-zero financing pledge

Wells Fargo signage in San Francisco

All of the "big six" U.S. investment banks have vowed to significantly reduce the carbon emissions of their lending activity in a bid to deliver net-zero financed emissions by mid-century, after Wells Fargo announced this week it planned to align all its activities with global climate goals.

The San Francisco-based investment bank has pledged to achieve net-zero across its operations and investment portfolio by 2050, marking the third time inside the past week that a major U.S. investment bank has announced a dramatic overhaul of its lending activities. The announcement comes hot on the heels of similar announcements from rival banks Goldman Sachs and Citibank.

Wells Fargo said it would disclose its approach to measuring financed emissions within a year, and would measure, disclose and set interim financed emission reduction targets for specific carbon-intensive portfolios, including oil and gas and power, by the end of 2022. Disclosure and emissions reduction targets eventually will be expanded into other sectors, it said, as and when "sufficiently reliable data" becomes available to measure and report on those sectors' emissions.

The pledge comes after a shareholder resolution filed late last year by campaign group As You Sow and a number of investors demanded the bank report on how it would align its financing activities with the Paris Agreement's goal of limiting global warming to 1.5 degrees Celsius.

We have a responsibility to help find solutions and are committed to deploying our resources and working closely with our clients in this transition.

Wells Fargo CEO Charlie Scharf said the bank had a major role to play in helping its clients decarbonize, while also supporting solutions that could drive the development of a greener economy. "We have a responsibility to help find solutions and are committed to deploying our resources and working closely with our clients in this transition," he said.

"Climate change is one of the most urgent environmental and social issues of our time, and Wells Fargo is committed to aligning our activities to support the goals of the Paris Agreement and to helping transition to a net-zero carbon economy. The risks of not taking action are too great to ignore, and collective action is needed to avoid the significant impact on our most vulnerable communities.

In support of the new net-zero target, Wells Fargo also announced plans to deploy $500 billion of financing to sustainable businesses, projects and research programs by 2030 through a new Institute for Sustainable Finance.

In addition, the bank pledged to advocate for policies that help ensure the U.S. meets the goals of the Paris Agreement and support clients' efforts to slash emissions.

And it stressed that it would integrate climate considerations into the company's risk management framework, considering all new data as and when it becomes available, while also folding clients' carbon transition plans into its decision-making processes.

The announcement comes just one month after the investment bank published its first Task Force on Climate-Related Financial Disclosures (TCFD) Report, which highlighted the company's exposure to climate-related risks and opportunities for the first time.

Environmental campaigners have applauded the wave of climate commitments from major investment banks over recent months, while also calling for banks' longer-term net-zero targets to be matched with plans to phase out fossil fuel financing in the short term, arguing that pledges to deliver net-zero emissions in 30 years' time are undermined by the willingness of many banks to continue to finance the expansion of the oil and gas industry over the coming decade.

As You Sow President Danielle Fugere predicted the net-zero financed emissions targets in place at all six of the top U.S. investment banks would have a positive ripple effect across the broader banking sector. "Wells Fargo's announcement establishes a clear bar for the banking sector — now that six of the top U.S. banks have made this commitment, we expect that others will join in demonstrating that their own financing is in line with the Paris Agreement's global net-zero climate goal," she said.

"We underscore that a net-zero commitment is only the beginning of this important process. We will be looking to Wells Fargo to fill in the details of its climate plans by setting interim targets and transparently reporting progress toward those goals." 

This story first appeared on:

BusinessGreen

More on this topic