BAKU, Azerbaijan, October 12. A recent report
titled State of Transition in the Banking Sector from the
Transition Pathway Initiative (TPI) Centre at the London School of
Economics (LSE) has raised serious concerns about the alignment of
38 international and US banks with global decarbonisation
benchmarks. Utilizing its Net Zero Banking Assessment Framework
(NZBAF), the TPI Centre assessed how these banks are performing in
relation to their climate commitments and found significant gaps
between targets and actual actions.
The report highlights that a staggering 85% of the banks
assessed are still financing new coal projects, with none
committing to phase out coal financing in line with the 1.5°C
global warming limit. Furthermore, only 8% have pledged to stop
project financing for new oil and gas fields, while none have
committed to ending all financing for deforestation activities by
2025.
The TPI Centre’s findings also reveal a troubling disconnect
between the banks’ stated net-zero targets and their practical
efforts. According to the report, these targets cover less than 22%
of the banks’ revenues, leaving critical business segments,
particularly capital markets, largely unaddressed. Alarmingly, only
19% of the banks’ pathways align with targets that would keep
global warming to 1.5°C or below 2°C for the period from 2028 to
2035. Additionally, the report indicates that banks lack clear
short-term and long-term targets necessary to achieve net-zero
emissions by 2050.
While many banks acknowledge climate-related risks, only a few
have integrated these risks into their financial statements.
Furthermore, there is a lack of transparency regarding how much of
their total financing is directed toward climate-related
initiatives.
Regional differences in commitment levels were also noted in the
report. European and Japanese banks have established more targets
compared to their counterparts in North America and China, with
Chinese banks notably lacking any decarbonisation targets. Among
the banks evaluated, Barclays, BNP Paribas, Groupe Crédit Agricole,
HSBC, ING Bank, and JP Morgan Chase were identified as having set
the most targets, covering eight out of the 14 assessed sectors.
ING, Deutsche Bank, and JP Morgan Chase were highlighted as having
the most ambitious targets aligned with the 1.5°C and below 2°C
benchmarks, primarily in the electricity utilities sector.
In the United States, the situation appears dire. Only one
super-regional bank has committed to achieving net-zero emissions
by 2050, and none have established sectoral decarbonisation
targets. Half of the banks have specific climate finance targets,
while only Fifth Third, Huntington Bancshares, and PNC disclose
their absolute financed emissions. Truist stands alone in
disclosing its exposure to high-emission sectors.
Simon Dietz, the TPI Centre’s research director, commented on
the findings, stating, “While some progress has been made since our
initial assessments in 2022, banks are not moving fast enough to
meet global climate goals. Without stronger action, the banking
sector exposes itself—and by extension, the global economy—to
greater regulatory, market, and physical risks associated with
climate change.”
