Study Ranks 40 Leading Banks on Climate Change Strategies

By Crystal Davis

Earth Trend - Friday, January 11, 2008.

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Some of the world's largest financial institutions have begun responding to the challenges of climate change, acknowledging that efforts to mitigate and adapt to rising temperatures are a growing driver of global business. A recent report ranked 40 of the world's largest banks based on their actions to address climate change. On a 100-point scale, the top-performing bank achieved only 70 points and the median score was 42, indicating that significant opportunities for progress remain.

The Banking Sector Will Play a Vital Role

Growing the global energy supply over the next 25 years will require an estimated $20 trillion in capital investment. Our ability to reduce greenhouse gas (GHG) emissions during this time will largely depend upon the types of energy sources and technologies utilized, which will be strongly influenced by the lending and investment decisions of major banks. By factoring a market price for carbon dioxide into these decisions, for example, banks can help move the world economy towards a less carbon-intensive future.

Furthermore, the effects of warming, emerging GHG emissions regulations, and growing demand for "climate friendly" financial products and services promise to transform the global markets in which banks operate. Banks that take early action to address the risks and opportunities presented by climate change will likely be at an advantage in a warming world.

Rankings Show Positive Momentum But Greater Action Still Needed

The rankings were released this week in a report by Corporate Governance and Climate Change: The Banking Sector, employs a "Climate Change Governance Index" to evaluate the 40 selected banks over five governance areas: board oversight, management execution, public disclosure, GHG emissions accounting, and strategic planning.

The report provides evidence of many positive actions on behalf of banks to respond to climate change, many of which occured in the past 12 to 18 months. Highlights include:

• increased investment in renewable energy projects,
• nearly 100 research reports on climate change strategies, and
• public disclosure of GHG emissions from the operations of 28 of the banks.

Growth in Clean Energy Investment Worldwide (Billion US$)

Source: Ceres 2008

However, the report concludes that banks must step up action to achieve significant GHG reductions in the global economy. Many of the banks surveyed have taken little to no action, and even the best performers need to elevate climate change as a priority.

Access the full report and rankings at the Ceres website.

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