Gabby Brown, Sierra Club
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Today, Morgan Stanley announced new 2030 targets to reach its commitment to net-zero financed emissions by 2050. Last year, Morgan Stanley became the first major US bank to make a net-zero by 2050 commitment and it is one of the first major US banks, following JPMorgan Chase, to set interim 2030 targets.
The interim targets set goals for 35, 29, and 58 percent reductions by 2030 in “financed emissions lending intensity” from the bank’s auto manufacturing, energy, and power portfolios, respectively. The bank does not set absolute emissions targets.
While Morgan Stanley claims its targets are aligned with the “Net Zero Scenario” emissions pathway laid out by the International Energy Agency (IEA), it does not rule out support for companies expanding oil, gas and coal — despite the IEA’s finding that no investment in new fossil fuels is needed beyond current production.
Morgan Stanley’s target for the energy sector is stronger than that of JPMorgan Chase, in that Morgan Stanley’s covers midstream companies, and sets a more ambitious commitment for energy clients’ emissions (29% overall, versus JPMorgan Chase’s target of 15% reduction in Scope 3 emissions intensity for oil and gas clients). However any intensity-based metric can still allow for an increase in absolute emissions at a time when emissions need to be drastically cut in absolute terms.
“It's not complicated: achieving net-zero financed emissions by 2050 means stopping funding for the expansion of fossil fuels,” said Sierra Club Fossil-Free Finance Campaign Manager Ben Cushing. “It’s promising that Morgan Stanley recognizes the need to wind down production of fossil fuels, and we hope its peers will follow suit quickly. But without a commitment to stop supporting new fossil fuel expansion, these targets ignore an essential condition for aligning with the IEA's net-zero pathway and are not in line with a climate-stable future.”
“It is encouraging to see Morgan Stanley acknowledge that fossil fuels need to be significantly reduced by 2050,” said Alison Kirsch, Research and Policy Manager at Rainforest Action Network. “However, Morgan Stanley’s targets sidestep the IEA’s key finding that net zero means no fossil fuel expansion. It’s past time for intensity-only targets. We need absolute emissions cuts and clear client criteria: no support for companies expanding fossil fuels and a clear date for requiring clients to exit the sector.”
Between 2016 and 2020, Morgan Stanley provided US$ 111 billion in lending and underwriting to the fossil fuel industry, 12th among global banks. Its top fossil fuel clients over that time were ExxonMobil (US$ 8.3B), Shell (US$ 6.6B), TPF II Power (US$ 4.4B), BP (US$ 4.2B), and Saudi Aramco (US$ 3.9B).
Current best practice among the biggest global banks includes:
- Ending support for companies expanding oil and gas and committing to exit oil and gas by 2030 (La Banque Postale)
- Ending support for companies expanding coal and committing to exit coal by 2030 in the OECD and EU and 2040 in the rest of the world (BNP Paribas, UniCredit and other banks)
Morgan Stanley’s targets are tightly integrated with the Partnership for Carbon Accounting Financials, the important carbon footprinting initiative on whose steering committee Morgan Stanley serves.