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Introduction: Banks and climate change
Climate change, a manmade phenomenon, is one of the greatest environmental threats of our time. According to the Intergovernmental Panel on Climate Change (IPCC), failure to reduce ever-growing greenhouse gas emissions may result in a global temperature increase of up to 6°C by the end of this century. To prevent the worst impacts on ecosystems and society from climate change, greenhouse gas emissions need to be reduced by 80% by 2050. Achieving this goal requires drastic action on each level of society.
Sadly, the world is quickly reaching a point of no return for preventing the worst impacts of climate change. Continuing on the current course will make it difficult, if not impossible, to prevent the widespread and catastrophic impacts of climate change. The costs will be substantial: billions spent to deal with the destruction of extreme weather events, untold human suffering and the deaths of tens of millions from the impacts by as soon as 2030.
Banks, like all companies, produce greenhouse gases (GHG) directly from their activities. Their most important contribution to GHG emission is indirect, through the financing of clients and projects that generate GHG emissions. Banks also continue to play a key role as major financiers of the coal and oil and gas industry, effectively delaying the much needed shift away from a fossil fuel-based to an efficient and renewables economy.
Bold steps to take
Banks must play their part in stopping climate change. To this end, banks should develop climate policies and practices along the following lines:
First, Banks should take steps to disengage from all activities and projects that substantially contribute to climate change. They should:
- End support for all new coal, oil and gas extraction and delivery;
- End support for all new coal-fired power plants; and
- End support for the most harmful and least efficient practices in other GHG-intensive sectors, such as agriculture, forestry and transportation.
Second, Banks should also minimize the extent to which their remaining activities and investments contribute to climate change. They should:
- Assess and report on GHG pollution associated with all their loans, investments, and other financial services;
- Establish sufficiently ambitious portfolio and business-unit emissions reduction targets in line with current science on climate stabilization; and
- Develop a set of tools to address climate issues and reduce GHG pollution across the full range of their operations and services.
Third, Banks should increase their support for the development and use of climate-friendly technologies and production processes. They should:
- Increase support for GHG pollution reduction technology, renewable energy production and energy efficiency in all business lines; and
- Develop products and services to help retail customers address climate change.
- Banks should not engage in so called ‘false solutions' to climate change, such as carbon trading and the financing of nuclear energy, large scale hydropower, biofuel production with a negative socio-environmental impacts, natural gas exploration and carbon capture and storage.
Our member groups work to pressure banks to deal with the climate catastrophe in a way that does justice to the severity of the threat.
- See the links in dark red at the top of this page for different focus areas within BankTrack's Climate and Energy campaign.
- See the Banks and Coal campaign page for more information on BankTrack's coal campaign.
- See BankTrack's 2009 position paper, A Challenging Climate, for more detail on what banks must do to combat climate change.