Study finds European banks failing to meet green finance targets

A new study by ShareAction has found that European banks’ green finance objectives fall far short of what is required to meet the goals of the Paris Agreement. The study, which analyzed the green finance propositions of 20 of the largest banks in the EU, UK, Switzerland and Norway, found that the banks failed to set sufficiently ambitious targets or disclose how they would achieve them, and included products and services that should not be considered green in their green finance goals.

The findings come as the world faces an escalating climate crisis. The United Nations has warned that the world has only a 14 percent chance of limiting global warming to 1.5 degrees Celsius, while the current rate of emissions reductions is expected to lead to a global warming of 3 degrees Celsius.

ShareAction is calling on banks to adopt practices that help stakeholders analyze their role in the climate crisis. These practices include publishing a transparent approach to green financing targets, ensuring that targets only cover financing activities that result in the allocation or promotion of bank capital, reporting on the impact of green financing activities, disclosing positions on green-related regulatory issues, and disclosing membership in climate-related industry associations.

The study also highlights a number of other areas where banks have failed to meet their green financing commitments. For example, most banks have not included capital market activities in their green finance objectives. There is also a lack of reporting on ‘impact’ and ‘additionality’, and ShareAction also found that most banks include products and services unrelated to finance in their green targets.

The findings are a wake-up call for European banks. They need to do more to align their lending practices with the goals of the Paris Agreement and help the world transition to a net-zero emissions economy.

Key point:

European banks’ green finance objectives fall far short of what is required to meet the goals of the Paris Agreement.
Banks have not set sufficiently ambitious targets, have not disclosed how they will achieve them, and have not included products and services that should not be considered green in their green finance objectives.
ShareAction calls on banks to take steps to help stakeholders analyze their role in the climate crisis.
The study also highlights a number of other areas where banks have failed to meet their green finance commitments.