Banks not transparent enough for climate progress

An analysis by GreenBiz has found that among 35 large development and commercial banks, most were unable to convey their overall climate progress. The transparency of their ‘brown’ investments was in most cases not satisfactory.

According to the report, many financial institutions report on climate-friendly ‘green’ investments but do not explain how the financing of their activities and technologies contribute to greenhouse gas emissions.

“Banks are connected to every part of the economy through their investing and lending activities,” GreenBiz wrote. “That means they play a crucial role in financing the transition to a low-carbon economy.”

Overall there are multiple trends pushing banks to a low-carbon economy as more and more business opportunities have emerged such as sustainable transportation and renewable energy.

Climate-related risks are posing an increasing threat to financial systems, forcing financial institutions to act and protect their assets in the long run. The Financial Stability Board also calls for effective disclosure of climate-related financial risks and promotes establishing new norms and expectations around the topic.

But while banks are fairly advanced in disclosing their financing of climate-friendly projects, they aren’t yet transparent enough about investing in ‘brown’ activities – in other words, activities that further emissions and fuel climate change according to the GreenBiz analysis.

“Until we know a financial institution’s contribution to the climate problem as well as its contribution to the climate solution, claims of climate progress can only be assessed as incomplete,” GreenBiz stated.

Image credit: Simon & His Camera via Flickr

 

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