Citigroup and Bank of America have joined Morgan Stanley one of the roster of international banks pledging to quantify and disclose the effect their financing decisions have about climate change. As members of this Partnership for Carbon Accounting Financialsthe banks may also collaborate to establish industrywide standards for quantifying the climate risk related to lending activities. The PCAF, that has almost 70 associates who hold over $9 trillion of resources globally, intends to push the financial sector to satisfy the aims of their Paris climate accord. “By joining PCAF, we are helping to drive a consistent framework for institutions to measure financed emissions, as well as providing a useful tool in the management of these emissions, which is a critical component when addressing climate change,” Anne Finucane, vice chairman in Bank of America, stated in a media release.
“If there’s one lesson to be learned from the COVID-19 pandemic, it is that our economic and physical health and resilience, our environment and our social stability are inextricably linked,” said Citigroup CEO Michael Corbat.Bloomberg
Both statements, issued individually on Wednesday, could create Bank of America and Citigroup the third and second big U.S. monetary institutions to join with the group, also Citi’s chief sustainability officer, Valerie Smith, stated she considers other big banks will probably follow suit. Before this month Morgan Stanley became the first big U.S.-based bank to combine the partnership. The $5.7 billion-asset Amalgamated Bank at New York united PCAF in 2018.“I expect we’re going to see other institutions join on in the near term because this really does need to be a collaborative effort,” Smith stated in a meeting Wednesday.Citigroup also vowed to fund $250 billion in low-carbon jobs as part of a brand new five-year sustainability devotion announced Wednesday. The business said it needs to create new “innovative financing structures” to finance actions in areas like renewable energy, water conservation and sustainable agriculture which will help hasten a wider transition into a low-carbon market. “If there’s one lesson to be learned from the COVID-19 pandemic, it is that our economic and physical health and resilience, our environment and our social stability are inextricably linked,” stated Michael Corbat, Citi’s CEO. Environmental, social and governance problems happen “been front and center in Citi’s response to this health crisis, and evermore present in conversations with clients and partners.”Some of banks have carved out niches in lending to renewable types of electricity or integrated clean energy in their own operations, however few in North America have gone so far as to analyze their lending procedures to observe how they may be leading to climate change.Stress analyzing for climate threat and demonstrating that the carbon footprint of financing activities remains more prevalent in Europe, where authorities lately informed the banks they manage to think about environmental risks in their financing decisions. Big North American banks have resisted calls by shareholders to disclose the effects of their financing activities, however. The four biggest U.S.-based banks, JPMorgan Chase, Wells Fargo, Citi and Bank of America, will also be the world’s biggest financiers of fossil fuel mining, based on a investigation by the Rainforest Action Network. In its statement Wednesday, Citi stated it will examine its portfolios for transition dangers and physical risks related to climate change from 1.5- and 2-degree Celsius warming situations. Those thresholds are noteworthy because scientists broadly concur that climate-related risks to natural and human systems will rise appreciably with a 1.5-degree growth in average global temperatures. Citi will evaluate its portfolios in accordance with recommendations from the Task Force on Climate-related Financial Disclosures. Citigroup also establish new inner targets for energy efficiency and waste reduction in its operations. The business said it plans to satisfy its own aim of sourcing 100% renewable energy across its worldwide footprint prior to the year’s end. In addition, it stated that because 2005 it has reduced its electricity usage from the equivalent of approximately half a million cars on the street for a year.