Boston Common Asset Management praises progress of large banks on climate issue, but finds they are still falling short

Written By: Stratton Report
January 18, 2017

On January 18, Boston Common Asset Management announced that it had examined 28 of the world’s largest banks on their management of climate-related risks and concluded that while there had been some progress in 2016, the institutions as a group are failing to align their business practices with targets to keep global temperature rises below two degrees.

The asset management firm found that on the upside, over 70% of responding banks are now undertaking carbon footprints or environmental stress tests, and that over 85% of responding banks disclosed financing or investment in renewable energy. However, Boston Common noted that over 80% of responding banks are not yet integrating the results of environmental stress testing into their business decisions and that only 35% of banks disclosed goals for energy efficiency financing, and less than 40% have set targets for renewable energy financing.

Boston Common commended bank’s willingness to hold in-depth discussions and advance the dialogue around climate risk, but noted that bank lending and investment to carbon-intensive sectors continues to significantly outpace green financing, with European and North American banks lending $786 billion over the past three years to some of the most carbon-intensive sectors[1].

Lauren Compere, Managing Director at Boston Common Asset Management, said: “From stress tests to strategy, bonuses to benchmarks, investors are very pleased to see the new tools, policies and programs that banks are adopting to manage climate risk. But there remains room for improvement and serious issues of integration that must be resolved. The investors behind this report call on banks to not only expand the use of tools to collect climate data – but most crucially to integrate this data into their decision-making process. There is no point in having tools without putting them to effective use.”