Wells Fargo will accelerate its commitments to tackling climate change with new plans to support low-carbon and conservation businesses. The banking behemoth, which has total assets of $1.9 trillion, has pledged to spend $200 billion over the next decade, 50 percent of which will go into renewable energy, clean technologies, sustainable transport, and green bonds. The remainder will finance sustainable agriculture, recycling, and conservation projects.
Wells Fargo CEO Tim Sloan broke the news during a keynote conference speech last week, commenting that the bank is “committed to taking a leadership role in supporting the transition to a low-carbon economy and promoting environmental sustainability through our products and services, operations and culture, and philanthropy.”
The new commitment follows on from its 2012 goal of investing $30 billion in clean technologies by 2020, which it met within three years. Wells Fargo has also committed to greater transparency on the carbon intensity of its portfolio, and it will regularly report on the impacts of its lending, in line with the recommendations of the Task Force on Climate-related Financial Disclosure.
“With this commitment, we are combining a strong financial goal with enhanced transparency and disclosure practices that we believe will lead to sector-wide progress on responsible, sustainable finance,” Sloan added.
Since the Paris Agreement was signed in 2015, a “transition in thinking has taken place” in the financial world. This was illustrated most keenly at the One Planet Summit in Paris last year where work to increase disclosure of the risks posed by climate change on financial institutions was supported by a group responsible for managing $80 trillion of assets. These include a variety of leading global banks, pension funds, asset managers and the largest sovereign wealth fund in the world.
The global companies are now much more aware of the risks posed by climate change, “whereas in previous years it barely registered as a risk, now close to a third of global CEOs are ‘extremely concerned’ about the threat climate change poses to their organisation’s growth prospects”. Year
2017 also saw a tripling of the number of shareholder resolutions which related to climate change, and the largest asset managers in the world, Blackrock and Vanguard, are now calling for increased disclosures.
Mindy Lubber, CEO of the non-profit organisation Ceres, said the bank’s new commitments were “significant” and help contribute to the growing momentum within the financial sector to make more investments in clean energy.
“More and more investors and companies understand the economic imperative and strategic long-term benefits of keeping global temperature rise to well-below 2-degrees Celsius,” she added.
In March, Spanish bank BBVA also announced plans to spend €100 billion by 2025 on fighting climate change. The group’s new strategy, called Pledge 2025, is a significant step forward in the large-scale financing needed to meet the goals of the Paris climate agreement. The pledge contains a suite of new policies, including a target of investing €100 billion in supporting “green finance, sustainable infrastructures, social entrepreneurship and financial inclusion” over the next eight years.
BBVA will also work to manage its own environmental risks and energy usage, targeting 70 percent of its energy consumption to come from renewable sources and cut carbon dioxide emissions by 68 percent, using 2015 as a baseline. BBVA Group Executive Chairman Francisco González said,
“At BBVA, we want to play a key role in mobilizing resources to halt climate change and promote sustainable development. It is an ambitious, long-term goal in line with our purpose of ‘bringing the age of opportunity to everyone.’”
The bank is also planning to scale-up its work within the industry to promote sustainable finance and increase transparency. It has revealed its current exposure to fossil fuels at 3.4 percent of total assets.
HSBC will also invest a similar amount in low-carbon projects. The London-based banking giant has pledged to provide $100 billion in sustainable financing and investment by 2025, as part of its set of commitments to support the transition to a low-carbon economy and promote sustainable growth. HSBC also announced that it will source 100 percent of its electricity from renewables by 2030, with an interim target of 90 percent by 2025.
Long-term power purchase agreements will contribute to this goal, but HSBC is also planning on developing on-site renewable energy power facilities. Currently, it procures 24 percent of its electricity needs from renewables and is a member of RE100, a group of global businesses committed to 100 percent renewable power led by Climate Group in partnership with CDP, as part of the We Mean Business coalition. The banking giant will reduce its exposure to thermal coal projects financing, and will progressively transition away from other carbon-intensive sectors, meaning it will discontinue financing new coal-fired power plants in developed markets and thermal coal mines worldwide.
Read more at Climate Action