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I'm frequently asked how to know whether banks/investors are serious with their "Paris alignment" and "net zero 2050" commitments.
I wrote about it way back in late Oct. Yes, some other stuff has been happening. So here is a THREAD: https://www.bloomberg.com/news/articles/2020-10-30/it-s-hard-to-tell-how-serious-wall-street-is-about-climate
I wrote about it way back in late Oct. Yes, some other stuff has been happening. So here is a THREAD: https://www.bloomberg.com/news/articles/2020-10-30/it-s-hard-to-tell-how-serious-wall-street-is-about-climate
First, is it a standalone declaration, or are they joining an industry or multi-stakeholder initiative? If it's standalone, an easy trick is to read it carefully. JPMorgan's, for example, is a commitment to adopt a commitment. https://www.jpmorganchase.com/news-stories/jpmorgan-chase-adopts-paris-aligned-financing-commitment
Secondly, for standalone declarations, look at how they are currently positioned in their industry on climate.
The big four banks to make net zero // Paris aligned pledges so far are: JPMorgan, Morgan Stanley, Barclays, & HSBC...
The big four banks to make net zero // Paris aligned pledges so far are: JPMorgan, Morgan Stanley, Barclays, & HSBC...
...the "Banking on Climate Change" data published each year by Rainforest Action Network + other NGOs is a widely-used ranking of big banks' fossil fuel financing. Notice where those 4 sit, especially by region:
Also consider that JP Morgan and Barclays were subject to quite successful shareholder resolutions. The JPM one very nearly passed. Barclays tackled a Shareaction resolution putting up its own net zero plan + resolution, but still got 23%: https://www.bloomberg.com/news/articles/2020-05-07/barclays-shareholders-vote-to-support-u-k-bank-s-climate-plan?sref=63ZrW3mM
Next, are they joining an initiative (not setting up their own "center"!)? If so, who else is in it, and what does it *do*?
Some are for developing comparable methodologies for accounting for banks' climate impact (see PCAF; also PACTA).
Some are for developing comparable methodologies for accounting for banks' climate impact (see PCAF; also PACTA).
Others mostly (but not always) fall into either:
- target setting, pledges & accountability, or
- industry-led efforts to identify best practice etc.
- target setting, pledges & accountability, or
- industry-led efforts to identify best practice etc.
Some of the initiatives are pretty complex, TBH, although a quick look at their websites should give a bit of an idea. This from PCAF in late 2019 is very helpful, though some things have since changed & it doesn't evaluate ambition (ie., are members really doing much?):
. @ClientEarth has some "Principles for Paris alignment" which are quite clear and, er, principles-based :) There are 3 principles, each with 3-4 "red lines":
https://www.clientearth.org/media/40omeroa/2020-10-16-principles-for-paris-alignment-position-paper-ce-en.pdf
https://www.clientearth.org/media/40omeroa/2020-10-16-principles-for-paris-alignment-position-paper-ce-en.pdf
. @RAN also published principles, supported by many NGOs, to set out their expectations. Includes a deadline of COP26 (ie late 2021, probably). https://www.ran.org/wp-content/uploads/2020/09/RAN_Principles_for_Paris-Aligned_Financial_Institutions.pdf
One point I made in my column is that there are two broad approaches to how banks can deal with big emitting companies: either work to change them, or be prepared to lose them as clients. Both however have a lot of devil in the detail. Many "committed" banks would do a mixture.
