In light of Earth Day – which looks to spread awareness of factors contributing to global warming – financial institutions are upping their sustainability pledges. Evie Rusman writes
For many years, banks have invested in harmful environmental practices, including the funding of fossil fuels. According to a report by the Rainforest Action Network, 60 of the world’s biggest banks provided $3.8trn of financing for fossil fuel companies in the five years since the Paris Agreement.
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The Rainforest Action Network report also revealed that the UK’s top five banks provided around £220bn ($304bn) in finance of fossil fuels from 2016 to 2020.
These figures have sparked outrage amongst consumers and mean that banks are now under increasing pressure to change their ways.
The revelations also come as the climate change talk has intensified in recent months, with the United Nations climate change conference (COP26) set to take place this Autumn.
Adding to this, Earth Day took place on 22 April – the theme this year was #RestoreOurEarth. Over three days, experts in the climate change space held discussions on climate action measures.
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By GlobalDataRecycled cards
During this time, a number of financial institutions announced new sustainability pledges and targets. One of those was HSBC, who announced it would eliminate all single-use PVC plastic payment cards by 2026. Instead, the bank has plans to replace those cards with recycled PVC (rPVC).
The initiative is part of the bank’s strategy to reduce its carbon emissions and achieve net zero in its operations and supply chain by 2030 or sooner.
Our new #sustainable recycled plastic payment cards will help us save 73 tonnes of #plastic waste each year. Another step towards achieving our commitment to #NetZero by 2030 https://t.co/Tw6pmHldwy pic.twitter.com/VlfOvcXkvT
— HSBC (@HSBC) April 20, 2021
Richard Harvey, group head of retail banking products at HSBC, said: “This is another step as we move towards a net zero business, to help the bank and our customers make a positive impact on the environment.”
Despite its recent announcement, HSBC is currently the second biggest funder of fossil fuels among European banks. Since the Paris Agreement, the bank has provided $87bn (£64bn) to some of the biggest fossil fuel firms.
As long as HSBC continues to invest in fossil fuels, it is difficult to see how opting for recycled payment cards will make much of a difference to the bank’s carbon footprint.
Furthermore, due to HSBC’s history with fossil fuels, Extinction Rebellion activists held protests outside the bank’s Canary Wharf headquarters on Earth Day, with some even smashing windows. Activists wore patches featuring the slogan “better broken windows than broken promises”.
BBVA
Hot off the heels of HSBC’s announcement, BBVA also declared a move towards recycled cards. In line with its commitment to sustainability, the bank said that all its cards will be made from recycled materials by 2023.
Another big financer of fossil fuels, BBVA spent $17.6bn on harmful environmental practices between 2016 and 2019. However, in March 2021, the bank announced the phase out of its investment in coal-related activities.
The bank acknowledged that burning coal is a huge contributor to global warming and as a result will stop financing clients whose coal-based activities represent more than 5% of their revenue.
The decision is part of BBVA’s Environmental and Social Framework. BBVA Chairman, Carlos Torres Villa, said: “At BBVA, sustainability is an essential part of our strategy, including the fight against climate change, which is one of the greatest disruptions humanity has faced. “
Other financial institutions set to roll out recycled cards this year include Starling Bank and Santander.
Sustainable financing
One of the most significant things banks can do to reverse climate change is invest in sustainable projects.
In its Earth Day pledge, JP Morgan Chase promised to change its ways by committing to invest $2.5trn in initiatives to combat climate change and advance sustainable development over the next decade.
The bank also pledged to use cleaner energy sources as well as support developing countries and financial inclusion projects. This promise from a bank that has invested $189bn into financing fossil fuels since 2015 cannot come soon enough.
However, JP Morgan’s CEO Jamie Dimon stressed that the journey to sustainability will not be a smooth one. In a shareholder letter, he wrote: “We need to acknowledge that the solution is not as simple as walking away from fossil fuels.
“We will need resources such as oil and natural gas until commercial, affordable and low-carbon alternatives can be developed to meet all of our global energy needs.”
Citigroup also announced that it would finance $1trn in eco-friendly initiatives by 2030.
Net zero alliance
Ahead of President Joe Biden’s Earth Day, major financial firms revealed the formation of an alliance to reach net zero emissions.
Former Bank of England Governor Mark Carney organised the Glasgow Financial Alliance for Net Zero (GFANZ), which will bring together 160 of the world’s biggest banks, asset managers and insurers.
The aim is to accelerate the transition to net zero emissions by 2050 at the latest. In addition, all members must be accredited by the UN Race to Zero campaign and use science-based guidelines to reach net zero.
Carney said: “Most fundamentally, GFANZ will act as the strategic forum to ensure the financial system works together to broaden, deepen, and accelerate the transition to a net zero economy.”
Just empty words?
These moves being made by the finance sector are promising indeed but after decades of investing in polluting practices is it too little too late?
Climate change activists are already questioning the authenticity of the GFANZ, accusing the alliance of greenwashing.
Greenwashing happens when an organisation issues misleading information to present itself as being more environmentally friendly than it is.
Banks across the globe have also faced similar criticisms due the fact that many of them, despite pledging otherwise, continue to fund harmful environmental projects.
Therefore, it is difficult to know how serious these banks are when it comes to sustainability. But their recent moves highlight that the climate change conversation is getting louder and nods to a hopeful future.
