14/05/26
Institutions lack fossil finance phaseout plans: Report
London, 14 May (Argus) — Major financial institutions lack "robust commitments"
to restrict or end the financing of fossil fuels, data from non-profit
organisation World Benchmarking Alliance (WBA) show today. WBA assessed 400
financial institutions, including banks, insurers, asset managers and asset
owners. Of these, just two — Dutch bank ING and Swiss bank Zurcher Kantonalbank
— have commitments to both phase out existing exposure to fossil fuels and stop
new financing flows, WBA found. Of the institutions it evaluated, 15pc reported
on financed fossil fuel activity, WBA added. Financial institutions' reporting
on their finance for "low-carbon solutions" was higher, at 26pc, WBA found.
Moving away from financing fossil fuels is "a step companies must take to
demonstrate credible transition strategies and address escalating energy risks",
WBA said. Fossil fuel combustion accounts for around 70pc of global greenhouse
gas emissions. Of the financial institutions it assessed, more than a third
"have initial signs of transition planning towards a low-carbon economy", WBA
said. But it pointed to "major gaps" in the plans' credibility. For WBA to deem
the transition plans as credible, they must have "sectoral targets for financing
low-carbon solutions" for 2030, in line with a 1.5°C pathway. Banks lead the
way, according to WBA data, with a "time-bound" and 1.5°C-aligned financing
target present in a fifth of their transition plans. But such targets are
included in far fewer plans from insurers, pension funds and asset managers, at
10pc, 7pc and just under 3pc, respectively, WBA found. The Paris climate
agreement seeks to limit the global rise in temperature to "well below" 2°C
above pre-industrial levels, and pursues a 1.5°C threshold. Some financial
institutions have rolled back on climate-related pledges or action in recent
months, most notably in the US . UK bank NatWest has removed some prohibitions
on financing oil and gas producers , while UK-based HSBC and Spain's Santander
have "weakened commitments to shift capital away from high-polluting clients",
non-governmental organisation ShareAction said. Net zero investor initiative Net
Zero Asset Managers (NZAM) relaunched in late February with weakened climate
targets. And members of the equivalent initiative for banks, NZBA, voted in
October to wrap up the alliance . The group's guidance for banks on setting
climate targets remains available. By Georgia Gratton Send comments and request
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