Banks Would Rather Make More Money Than Fight Climate Change
They don’t care about the future of the earth
Increasingly hot summers, prolonged rainfall, and more forest fires. The consequences of climate change are becoming increasingly evident around the world.
Global warming, natural disasters, and the resulting damage are worrying topics.
Banks don’t care much about climate change. The top 10 global banks including JP Morgan Chase, Barclays, Toronto Dominion Bank, and Mitsubishi UFJ Financial Group are the largest lenders to fossil fuel organizations.
The largest lender is JP Morgan Chase, followed by Citigroup, and next comes Scotiabank. In 2020 alone, $425.92 billion was spent on fossil fuel financing by this group.
Actually, the Net-Zero Banking Alliance project sounds like a good plan. Telling corporations and businesses that there is no money left over unless they at least make an effort to make their operations greener can act as a catalyst in their climate efforts.
But even after the founding of this project, doubt arises about how serious the banks are about their promises.
Many of them have targets, but many of these 2030 targets seem unambitious, and it is hard to imagine 2050 targets lasting that long in the fast-paced world of finance.
If Deutsche Bank and many other institutes also exclude their capital market business from climate efforts, the big promises will diminish dramatically.
Banks are not environmental organizations. Obviously, banks mainly want to maximize their profits and are in strong competition with each other. In this respect, it makes sense for them to set different goals for climate protection.
Of course, they must not be too lax or too saintly.
Banks only care about financial reports
And they ignore climate reports.
The statistics show how ignorant financial institutions are when it comes to the risks of climate change.
According to experts from the ECB (European Central Bank), more than 50 percent of banks have no procedures in place to assess the effects of climate risks.
Besides the ecological and political dimensions, the effects on our global economy are also recognized. In this context, banks are accused of complicity with climate change.
With major climate changes, the economy goes downhill. The chronic risks are the financial losses that credit institutions would suffer from floods, storms, forest fires, rising sea levels, rising temperatures, hot and dry periods, and changes in ocean and air currents.
However, banks should invest in new technologies and change preferences among consumers. Even if climate risks manifest themselves in the three to five-year horizon, they can also have a short-term effect on bank management.
In the face of climate change, the economy is facing the greatest transformation since the industrial revolution. Sustainability is now systemically important and should be an integral part of banks’ risk management.
Bringing it all together
Sustainability has become a defining trend in the financial sector. Climate change and the resulting negative environmental changes make it clear to the industry that there is a great need for action.
Banks are not environmental organizations, yet if they are committed to climate protection, they must also comply.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.