Post by bonnasuttadhar225588 on Feb 15, 2024 11:16:11 GMT
Apparently, for some bankers, net zero, that is, reducing Greenhouse Gas (GHG) emissions to a minimum, is like a New Year's promise that a person makes and breaks before fulfilling it. According to Bloomberg , the commitment of the banking sector is faltering due to the current situation with energy sources. Science clearly shows that to avoid the worst effects of climate change and preserve a habitable planet, global temperature rise must be limited to 1.5°C above pre-industrial levels. However, banks are trying to abandon Net Zero, the greatest commitment to economic transition in favor of the environment. Banks try to leave Net Zero Several of the world's largest banks, including JPMorgan, Bank of America and Morgan Stanley, headed to the 2021 United Nations Climate Change Conference (COP26) as members of the zero-carbon financial club. Its membership in the Glasgow Financial Alliance for Net Zero (GFANZ) initiative – a group of around 500 financial sector entities – publicly committed its banks to achieving net-zero carbon emissions by mid-century. But by September 2022, that same group was part of a faction ready to resign, according to sources familiar with the matter, although JPMorgan, Bank of America and Morgan Stanley have declined to comment.
And the UN has pointed out that achieving a transition of such precedents requires nothing less than a complete transformation of how we produce, consume and move to avoid the worst effects of climate Iceland Email List change and preserve a habitable planet. The above clearly frames the relevance of modifying the way of doing business and investments. So what happens? A year after COP26, some big banks appear concerned that they have joined climate commitments too soon, especially as oil and gas companies have seen a resurgence in the market. banks try to leave Net Zero Fossil fuel resurgence weakens banks' environmental commitments The resurgence of fossil fuels, especially coal, may explain some of the weakened decision to decarbonize. Since global bank loans to companies in this sector increased by 15%, to more than $300 billion, in the first nine months of this year, compared to the same period in 2021.
Harald Walkate, former head of environmental, social and governance investments at Natixis Investment Managers and now a sustainable finance consultant, explains that some banks may feel their hands are tied, as their fiduciary duty requires them to maximize financial value for the organization and their interest groups. Although, as you point out, from an ethical or ideological perspective, many people may not agree with the idea of investing in fossil fuels such as gas and oil, it is certainly not an illegal act to do so. "And, in fact, it may be a very good business for some time." Sustainability a long-term investment When GFANZ members voluntarily committed to completely removing GHG emissions from their balance sheets by 2050, some banks may have felt pressure from their peers to join GFANZ last year, perhaps following the former governor of the Bank of England, Mark Carney. But no one forced them to do it. In this context, banks may not have understood the litigation risks associated with signing net zero commitments at the time. So they currently fear that strict decarbonization requirements could make them legally vulnerable, because regulation of climate and environmental risk disclosure promises to be stricter in the coming years.