Ethos welcomes the publication of Boston Common Asset Management's fifth study on climate risk management by the world's major banks. This new study shows that the measures taken by the banks remain largely insufficient. Ethos has participated in this international initiative and is engaging in dialogue on this issue with Swiss banks, urging them to strengthen their commitments to finance the low carbon transition.
For more than five years, Boston Common Asset Management, in collaboration with a number of regional partners, has been engaging dialogue with 58 of the world’s largest banks, including Credit Suisse and UBS. The latest report identifies some progress in terms of governance, with a majority of banks endorsing the TCFD guidelines (69%) and carrying out climate risk assessments (78%).
However, the new research also reveals that despite these assessments 40% of banks surveyed failed to develop any new financing or investing restrictions as a result of their climate risk assessments. The upcoming IPO of the Aramco oil group illustrates the difficulty for banks to walk the talk. Credit Suisse's investment bank is one of the main financial institutions participating in this transaction.
Ethos supports the recommendations of the Boston Common Asset Management report, which calls on banks to:
- Adopt a clear strategy for decarbonizing balance sheets, including clear timelines for restrictions and phase-outs of financing for fossil fuels and deforestation
- Set explicit targets to increase the proportion of sustainable finance commitments relative to their overall financing activities
- Disclose their definitions of ‘low-carbon’ and ‘green’ investment, noting that some green finance commitments appear to be merely re-allocations or rebranding of existing commitments.
- Integrate public policy on climate into overarching climate strategy, engage trade associations on adopting progressive climate policies, and use the company’s public voice to promote progressive climate policy with governments and regulators.