The current climate action plans of the three largest banks (ING, ABN Amro, Rabobank), the three largest insurers (Achmea, ASR, NN Group) and the four largest pension funds (ABP, PFZW, PMT, BpfBOUW) fall ‘seriously short’, reads the conclusion of the research carried out by research agency Profundo.
Although the financial institutions have now all committed themselves to the Paris Climate Agreement, their plans to achieve those goals are too vague, according to criticism. They also sometimes continue to lend money to polluters and do too little to move their customers towards a greener future.
Three years time
In July 2019, banks, pension funds, insurers and asset managers promised to come up with clear climate plans before the end of 2022. But according to Barbara Oosters, project leader of Fair Money Guide and working at Oxfam Novib, too little has come of this.
“That while these financial institutions have actually taken quite a lot of time for this,” says Oosters to RTL Nieuws. “Of course steps have been taken, but we are now at the beginning of 2023 and we say that the overall conclusion must be that their plans do not meet international criteria for credible and qualitative climate plans. None of these ten companies actually scores higher than a 5.”
What can financial institutions do according to the Fair Money Guide to combat climate change?
Stop financing new oil and gas projects. Drafting a policy for phasing out fossil energy. Setting concrete intermediate targets for lower emissions, targets to which they can also be held. Set an ‘absolute’ reduction target for their entire customer portfolio.
Although companies and institutions publish their so-called emission reduction targets (emit less harmful substances) for 2030, according to the study they only do so for a handful of sectors or for selection of investment categories. This while the climate plans must be in line with the goal of limiting global warming to 1.5 degrees Celsius, as agreed in the agreements of Paris (2015) and Glasgow (2021).
Oosters: “The very difficult thing is that you actually have to believe them on their blue eyes. Because based on the plans they have now drawn up, that cannot be measured. In conversations with their customers, it often stops at drinking coffee. But ten years of drinking coffee leads nowhere.”
‘Insufficiently not justified’
The financial sector does not agree with all the criticism from the study. They say they have presented their promised climate action plans on time, and that the sector is taking responsibility by financing as many profitable sustainable projects as possible, and by focusing portfolios even more on sustainability. The unsatisfactory score they receive for their climate action plans is therefore not justified, according to the NVB.
“Profundo believes that instruments such as engagement and exclusion are still not given enough substance in the plans of the financial institutions”, the Dutch Banking Association (NVB) said in a response. “That is partly correct. This has to do with the fact that accelerating sustainability requires coordinated cooperation between government, business and the financial sector. The government by setting standards, deploying and subsidizing the right financial incentives. business by embracing the transition, and developing sustainable products and services and making them profitable.”
The banking organization also points to compliments from Minister Kaag (Finance) and Minister Jetten (Climate and Energy), who stated last week that the financial sector is ‘well on track’ with their climate objectives. But the two ministers also concluded that an acceleration of the transition is necessary. “The differences between action plans are sometimes large and actions often have to be more concrete.”
That is precisely what the organizations behind the Fair Money Guide are hoping for: more concrete plans. “The financial sector must be the turning wheel,” says Oosters. “Otherwise they will hold back that climate transition. While they should be boosting it.”
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