Business and the environment
Corporate governance and climate change: the banking sector
Are the leading banks doing enough to combat climate change?
Authors:
D.G. Cogan; RiskMetrics Group
Publisher:
Ceres, 2008
This report analyses the corporate governance and strategic approaches of 40 of the world’s largest banks to the challenges and opportunities posed by climate change. It is designed as a benchmarking tool which highlights climate change ‘best practice’ within the financial sector – employing a “Climate Change Governance Checklist” to evaluate the banks’ approaches to climate change.
Key findings:
- climate change business opportunities: these are featuring more prominently in banks’ annual reports, with the volume of climate change-related research reports doubling in the last year
- emissions management: 28 of the 40 banks have calculated and disclosed their GHG emissions from operations, and 24 have set some type of GHG reduction targets for internal operations
- investment opportunities: growing demand for “climate friendly” financial products and services is leading banks into whole new markets
- emissions trading: investment banks have taken a leading role in supporting emissions trading mechanisms and introducing new risk management products in this rapidly growing market.
The document concludes that climate change is a “mega-trend” that will affect all facets of the financial services industry and all classes of investing. A key test is whether banks will continue financing business-as-usual, carbon intensive development strategies. Moreover, in addressing climate change, banks can spur new business, lessen liabilities for climate damage, and preserve their leadership role in wealth and capital formation.
