Four years ago, it was almost impossible to get financial institutions
to attend an investor summit on climate risk. Today, some of the world's
largest banks have embraced the issue by focusing on research on the
impact of global warming on investments, cutting their own greenhouse
emissions and funding clean energy projects, according to a report
released Thursday by Ceres.
However, a six-month study of the world's 40 largest banks also found
that only a few are integrating climate risks into their lending
practices, and setting targets to reduce greeenhouse gas emissions in
their lending portfolios.
"We're seeing a different mindset across the board," says Mindy S.
Lubber, president of Ceres, a leading coalition of investors,
environmental groups and other public interest organizations, which
published the report, Corporate Governance and Climate Change: The Banking
Sector.
"They've gotten more involved because the debate has changed," said
Lubber. " This is a capital market issue and a government issue."
The pressure to address global climate change is coming from clients,
employees, government and the banks' own research, the study said.
"It absolutely affects their bottom line," said Lubber.
The study rated banks on their efforts to deal with global warming. The
highest rated firms were focusing on setting internal greenhouse gas
reduction targets, boosting climate-related equity research and increasing
lending and financing for clean energy projects. HSBC Holdings
PLC (HBC) received the highest score of 70
points out of a possible 100,followed by ABN AMRO Holding NV (ABN) with 66. The highest scoring U.S. firm was
Citigroup (C), followed by Bank of
America Corp. (BAC), whose score was 56.
The lowest scoring firms included Lehman Brothers Holdings (LEH), which scored 26, and Bear Stearns
Cos. (BSC), which got a score of 0.
Many of the changes on the banks' stance toward global warming have
come in the last 12 to 18 months. Among other things, the banks have
issued almost 100 research reports on climate change. Twenty-eight of the
banks disclosed their greenhouse gas emissions from operations, and 24
have set internal reduction targets.
Additionally, 29 of the banks reported their financial support of
alternative energy, eight of them have provided more than $12
billion in financing and investments in renewable energy and other
clean energy projects.
However, only 12 of the banks have board-level involvement.
Additionally only six said they are formally calculating risk from global
warming in their loan portfolios. The report said Bank of
America was the only bank to announce a
specific target to reduce greenhouse emissions associated with the utility
portion of its lending portfolio.
Lubber said none of the institutions have set policies to avoid
investing in carbon-intensive projects such as conventional coal-fired
power plants or Canadian tar sands.
The report recommended that climate change become a governance priority
for company boards and CEOs, especially in the U.S. where there has been
almost no board involvement. There also needs to be better disclosure
about the financial and material risk posed by climate change.
"We're interested in climate change because it's an issue that impacts
all our clients," says Pam P. Flaherty, director of
corporate citizenship for Citi. " It's an issue that impacts all our
employees."
At Citi, the topic has gone from a blip on the screen in 2000 to a
commitment to green construction, investment and financing.
"If you're not addressing the issue, you'll have more risks and you may
not be taking advantage of opportunities," said Flaherty.
Several other banks mentioned in the report didn't have any immediate
comment.
A report released in 2007 by Oliver Wyman found that
climate change "is creating new markets and new risks," but financial
institutions are better equipped than most industries to address the
changes because of their capital mobility.
It recommended that firms reexamine the impact of global warming on
their portfolios.
-By Jilian Mincer, Dow Jones Newswires; 201-938-4042; jilian.mincer@
dowjones.com
(END) Dow Jones Newswires
01-10-08 1016ET
Copyright (c) 2008 Dow Jones & Company, Inc.
