From Environmental Leader , Published 17 July 2014
The banking industry has not successfully integrated climate change risk into its long-term strategic planning, or understood the implications for its business operations, according to a report by Boston Common Asset Management.
The report, Financing Climate Change: Carbon Risk in the Banking Sector, warns investors may unwittingly be investing in financial institutions that will be adversely impacted by the effects of climate change and calls on investors to push for systemic change in the banking industry to address climate change risks.
For nearly two decades, the Boston Common Asset Management team has engaged the global financial industry including regional development banks, the International Finance Corporation (IFC), and the World Bank, to proactively address the environmental and social risks associated with project financing, lending and investments. This includes Barclays, Deutsche Bank, HSBC, JPMorgan Chase, Mitsubishi UFG, ORIX, PNC Financial and Standard Chartered.
Boston Common Asset Management advises investors to identify best practices and seek out the banks that use them while encouraging the development of strategic management plans to address climate change risk, capture new market opportunities, and increase data collection and reporting.
The report encourages banks to reassess climate risks and to vet opportunities through the following three action steps:
In conjunction with the publication of this report, Boston Common Asset Management is organizing a global investor coalition to write to 50 banks that are the largest underwriters to carbon intensive industries. The letter calls upon banks to develop a long term climate strategy, helping investors make informed decisions and encouraging banks to play a positive role towards a more sustainable future.
Last year some 22 US investment firms with about $240 billion in assets under management, led by the California State Teachers' Retirement System (CalSTRS) and the Oregon State Treasurer's office, signed the Climate Declaration, calling upon federal policymakers to address climate change as an economic opportunity.
For more information on sustainable environmental practices in the financial sector, please refer to the following links below:
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