Banks and other leaders in the financial sector have committed to a global banking effort to track and monitor the carbon impact of their portfolio of loans and investments.
The Climate Change Commitment, otherwise known as the ‘3C initiative’, aligns with the Paris Agreement goals to keep global temperature increases this century well below 2 degrees Celsius. While initiatives like this still receive quite a bit of skepticism in the United States, in Europe this type of initiatives has become mainstream, even with institutional investors such as large pensions having strict investment requirements consistent with these goals.
“Values-based banks and financial institutions from right across the world have come together in recognition of the fact that where we allocate our capital matters for our environment,” says Peter Blom, Chair and co-founder of the Global Alliance for Banking on Values (GABV). “The Climate Change Commitment is a powerful, practical example of action the banking industry can take to contribute concretely to efforts to address the climate crisis.
By assessing and disclosing their greenhouse gas emissions, banks can see their contribution to greenhouse gas emissions. This enables them to make financial decisions that limit the impact of the emissions of their financed assets so they can keep their contribution within safe environmental levels, helping to safeguard the environment for future generations.”
A group of Dutch banks known as the Platform for Carbon Accounting Financials (PCAF) have taken the lead in this area by calculating the greenhouse gas emissions of their loans and investment portfolios. PCAF covers a number of relevant asset classes, including listed equity, project finance, mortgages, commercial real estate and corporate debt.
Participating banks of GABV have combined assets of $153 billion, and intend to influence the wider banking sector by demonstrating that banks can assess and report on their greenhouse gas emissions. By doing so they plan to demonstrate to their stakeholders what their contribution is to keep the global increase in temperature within safe levels. Perhaps not surprisingly despite U.S. Banks being a dominant player in the global banking industry, only five US banks are members.
- Amalgamated Bank (USA)
- Beneficial State Bank (USA)
- Sunrise Banks (USA)
- Verity Credit Union (USA)
- VSECU (USA)
- Goldman Sachs, J.P. Morgan and Citigroup Fintech Investments Growing Like Never Before
- U.S. Banks Leaders in Technology Innovation According to New Survey
- Online Bank Aspiration Launches Debit Card that Rewards Social Responsibility
- The Future of Asset Management, Part I: Where We’ve Been Explains Why We’re Here
- Freddie Mac and Fannie Mae Have Two Reasons to Celebrate