{"id":22570,"date":"2024-02-08T09:00:48","date_gmt":"2024-02-08T08:00:48","guid":{"rendered":"https:\/\/my-life.lu\/?p=22570"},"modified":"2024-03-07T08:45:28","modified_gmt":"2024-03-07T07:45:28","slug":"net-zero-and-the-banking-sector-21045","status":"publish","type":"post","link":"https:\/\/my-life.lu\/en\/net-zero-and-the-banking-sector-21045\/","title":{"rendered":"Net zero and the banking sector"},"content":{"rendered":"
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The world will have to work much harder to meet its climate goals. That is the tough conclusion of a recent report from the secretariat of the United Nations Framework Convention on Climate Change, which finds that national climate action plans remain inadequate to keep global warming to the maximum of 1.5C above pre-industrial levels set out in the 2015 Paris Agreement. The banking sector has a critical role to play in helping companies and individuals achieve targets for net zero greenhouse gas emissions, in most cases by 2050.<\/p>\n

Says UN Climate Change executive secretary Simon Stiell: \u201cGovernments combined are taking baby steps to avert the climate crisis. [They] must not only agree what stronger climate actions will be taken, but also start showing how to deliver them.\u201d<\/p>\n

At a time when many governments are increasingly concerned about the cost to their citizens of embracing net zero, Stiell says it is urgent to make the alternative case: \u201cIt\u2019s time to show the massive benefits now of bolder climate action: more jobs, higher wages, economic growth, opportunity and stability, less pollution and better health.\u201d The rewards can be significant, but companies need to be incentivised to achieve them.<\/p>\n

It\u2019s time to show the massive benefits now of bolder climate action.<\/p><\/blockquote>\n

In general, the intentions are in place – 140 countries have a net zero target, covering 88% of global emissions – but the problem lies with implementation. The UN says more than 9,000 companies, 1,000 cities, 1,000 educational institutions and 600 financial institutions have joined its Race to Zero, a global campaign to rally leadership and support for pledges of immediate action to halve global emissions by 2030. Luxembourg is committed to net zero targets through the EU.<\/p>\n

The role of banks<\/h2>\n

Banks are in a unique position. They need to work on both their own carbon footprint, ensuring that they use natural resources prudently in their day-to-day operations (as well as being responsible in the way they treat staff, as part of broader sustainability commitments). However, they also have a powerful influence through their approach to lending and investment \u2013 the source of the majority of the emissions related to banks, and where they can effect the greatest change.<\/p>\n

It is also a risk management consideration for institutions. Regulation is in a constant state of evolution \u2013 businesses that do not address their environmental footprint \u2013 at least in terms of transparency about their impact \u2013 could in the future face fines and other penalties. The adoption of carbon taxes, which require companies to pay a levy based on their emissions, is growing worldwide. There are also reputational considerations: increasingly shareholders expect companies to manage their environmental risks effectively, while employees and customers may favour groups that are making demonstrable progress toward reducing their emissions.<\/p>\n

The EU\u2019s Corporate Sustainability Reporting Directive will expand, eventually to an estimated 50,000, the number of companies that will be required to make environmental disclosures, and increase the level of detail they must provide, starting in 2025 and progressively increasing up to 2029. This is vital for the banking sector and other members of the financial industry, making it easier for them to measure the emissions impact of their lending and investment decisions.<\/p>\n

Emissions reporting is governed by international standards. The Greenhouse Gas Protocol, first launched by the World Resources Institute and the World Business Council for Sustainable Development, sets out three categories of greenhouse gas emissions:<\/p>\n