Major banks are facing increased public pressure to reduce financing for fossil fuel projects.
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"In this decade of action for the UN Sustainable Development Goals (with a focus on SDG 13 – climate action), all sectors, including the financial sector, are urged to recognize the ways in which they impact these goals and how they can best contribute to their realization", Jasmine Elliott and Åsa Löfgren said.
"But how are the top 10 most active banks in financing the fossil fuel industry responding to this pressure? Using qualitative textual analysis of these banks’ annual reports and a proposed categorization of how banks are talking about climate change, we highlight how these banks see their role in reducing climate impacts through their financing and whether their response has evolved since the Paris Agreement.
"We find that while these banks are stating an increasing number of climate change actions since the introduction of the Paris Agreement, there are few clear commitments in relation to their financing of fossil fuels.
"This absence of commitments in the annual reports may reflect an absence of critical reflection on their responsibility for financing climate change.
"Climate-related financial disclosures should target banks’ climate impact regarding their client financing; most importantly this should be done in a clear, contextualized way so that regulators and the public can hold the banks accountable based on their disclosures.
"Effective policies need to explicitly consider how banks should measure and reduce climate impacts in a way that is comparable, aligned with the Paris Agreement, and in relation to banks’ credit financing operations to clients (not only from the direct operations of a bank, as has been the focus of banks’ commitments against climate change to date).
"Legislation mandating human rights and environmental due diligence with explicit considerations in relation to climate change is an example of a policy that would require banks to consider a broader scope of their impact assessment and disclosure reporting which could potentially establish clearer claims for remedies by impacted communities.
"If one should ‘follow the money’ to find the culprits of a crime, what does that say for the significant amounts of money that the financial industry puts into fossil fuels?
"Our assessment of 10 banks’ annual reports – focusing on banks that are the most active in financing fossil fuels – shows that they are increasingly talking about climate change, but that there is a lack of critical reflection in relation to their impact on climate change through their own financing or lending practices." ■
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