Green financing targets fall far short of what is needed

According to new research by ShareAction, European banks' green financing targets are falling far short of what is needed.

The analysis by the UK-based non-profit, which examined the green financing targets of the 20 largest lending banks in the European Union, the UK, Switzerland, and Norway, revealed that "targets and disclosures are not fit for purpose and could lead to misleading claims."

ShareAction found that most of the banks it examined have green finance targets that "fail to demonstrate" how they will realistically reach net-zero emissions by 2050. The organization also criticized the sector for not publishing the methodologies that explain the criteria upon which green commitments are based.

ShareAction further stated that most banks also included products and services that should not be classified as green financing. In its report, the non-profit said, "Banks do not always disclose which activities count as green, and those that do include some controversial activities as eligible."

BANKS ANALYZED INDIVIDUALLY

ShareAction said that banks generally do not include their capital markets activities in their green finance targets.

While Standard Chartered Plc declared that its sustainable finance asset base grew by 45% between July 2021 and September 2022, largely due to the identification and labeling of $3.8 billion in so-called green mortgages, according to ShareAction, the lack of reporting on impact makes it difficult to assess what the banks' green finance volumes are actually achieving.

ShareAction also said that most of the banks it examined included products and services unrelated to financing in their green targets.

The report cited Banco Bilbao Vizcaya Argentaria SA as an example in this regard. It points to the bank's 300 billion euro ($330 billion) 2025 sustainable finance target, which covers structured deposits. The non-profit also cited HSBC Holdings Plc's 2030 target of between $750 billion and $1 trillion as an example because it includes asset management.

News Source: 12punto