European banks lead pack on climate changeFebruary 2008
HSBC and ABN Amro are ahead of their peers in responding to climate change, according to a survey of 40 retail and investment banks.
The five best performers were all based in Europe, with Barclays, HBOS and Deutsche Bank also well above the median score of 42.
Bank of China and Bear Stearns (US) scored four and zero respectively, in part because of a lack of disclosure but also because there were no signs of ‘addressing climate change as a governance issue’.
The Investor Network on Climate Risk, an alliance of US institutional investors that commissioned the research, found only a handful integrating climate risks into their core business of lending.
One positive indicator was that, in 2007, the financial institutions in the study between them published more than 50 research reports on climate change and investment – more than in all previous years combined.
Just over half (28) disclosed their greenhouse emissions and 24 set internal reduction targets.
However, only a dozen had board-level oversight of climate change and only one – Bank of America – had announced a target to reduce greenhouse emissions associated with its lending portfolio.
The Risk Metrics Group study of 16 US, 15 European, five Asian, three Canadian and one Brazilian bank looked at management performance, strategic planning, and accounting and disclosure practices, using data from securities filings, direct company communications and third-party questionnaires.
Members of the Investor Network on Climate Risk, who include the treasurers of states such as California, Florida, New York and Oregon, collectively manage more than $4trillion (£2tn) in assets.
Four British institutional investors have started a project to explore the investment consequences of climate change. Henderson Global Investors, Insight Asset Management, Railpen Investments and the Universities Superannuation Scheme (USS) have more than £200billion assets under management ($400bn). David Russell, co-head of responsible investment at USS, said the broad impacts of climate change are well understood but ‘there remain many uncertainties around how it will affect specific sectors and companies –and we need more and better information about these impacts in order to make informed decisions as to how we allocate our capital’. As the project progresses, the four will publish their findings on the electric utilities, oil and gas, real estate and water utilities sectors, in conjunction with the Acclimatise consultancy.
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