Europe’s biggest banks lagging behind on emission reduction efforts – report

Europe’s largest banks are lagging behind on setting climate targets needed to reach net-zero emissions by 2050, according to a report by German consulting firm Zeb seen by the Frankfurter Allgemeine Zeitung. The institutions lack transparency when it comes to concrete emission reduction targets and trackable metrics, the consultancy writes. Most of the 50 financial institutions surveyed have not yet set specific climate targets and do not provide any insight into the greenhouse gas footprint of their loan portfolios. The consulting firm has therefore examined externally available data to determine the emissions intensity of the loan portfolios, looking at the size of the portfolio and which economic sectors are financed in which countries. According to the analysis, Western European universal banks cause the most emissions because they have a very strong international exposure and CO2-intensive sectors such as transport, traffic or energy have a high share of business. While the report does not name any of the ranked financial institutions, it is likely to include major German banks such as Commerzbank, FAZ writes. Scandinavian institutions fare better because they benefit from the high share of renewable energies in their region, the report states.

The consulting firm advises banks to develop the reporting of their emissions, set concrete targets and continuously publish and review them. "Early measurement of emissions in bank portfolios as well as concrete plans for their reduction within the next decades are the key challenges for Europe's financial institutions on their way to net zero. Previous announcements must now be followed by consistent action," said Dirk Holländer, Zeb senior partner and co-author of the study.

Germany presented its sustainable finance strategy in May 2021, announcing it should make the country a global leader in greening the financial sector and help mobilise money for transforming the economy in line with climate targets. The strategy proposes a “traffic light” system to identify green investment opportunities, announces the reallocation of nine billion euros in equities Germany holds in pension and welfare funds into green investments, and the plan to make sustainable finance the priority of Germany’s G7 presidency in 2022.