CARBON FOOTPRINT: THE HIDDEN RISKS OF FINANCED EMISSIONS

Large banks are driving climate change by pumping billions of dollars into carbon-intensive extreme fossil fuels and tropical deforestation, with significant hidden environmental, social and governance (ESG) risks. While banks report their operational emissions, emissions resulting from their financing activities can be 100x larger1 and are typically undisclosed. Climate change can have enormous financial implications, as recognized in the Recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) published in June 2017. “Responsible Investment” indexes such as the MSCI ACWI Low Carbon Target Index deceptively classify banks as “low-carbon” even as they heavily finance dangerous new carbon emissions (see below). The Paris Climate Agreement goal of keeping temperature rise to 1.5˚C won’t be achievable if banks and investors continue to fund and facilitate the burning and destruction of high-carbon assets. It’s time for banks to fully disclose the carbon footprint of their financing, decarbonize their portfolios, and accelerate the transition towards a sustainable low-carbon future (see Recommendations in the back).

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