In response to mounting pressure from investors and activists, the world’s leading banks are facing calls to disclose data comparing their investments in renewable energy with those in fossil fuels.
The Banker reported last week that non-profit organizations such as Reclaim Finance, BankTrack, and Beyond Fossil Fuels are spearheading campaigns urging banks to adopt a target ratio of 6:1 for financing clean energy versus fossil fuels by 2030.
According to The Banker’s report, Brigitte Alarcon, a campaigner with Beyond Fossil Fuels, committing to such a finance ratio is crucial for banks to demonstrate the credibility of their support for the transition to sustainable energy. Investors are also intensifying their efforts to hold banks accountable for their financing practices.
In January, New York City Comptroller Brad Lander, along with trustees of three major U.S. pension funds, filed shareholder resolutions at several major banks, demanding transparency regarding their spending ratios.
Other experts cited by The Banker emphasized the discrepancy between banks’ rhetoric and their actual progress in transitioning towards cleaner energy financing. Shareholder proposals have been directed at prominent financial institutions including JPMorgan Chase, Morgan Stanley, Bank of America, Citigroup, Goldman Sachs, and Royal Bank of Canada.
This shareholder action has already yielded results, with JPMorgan committing to publish a “clean energy supply financing ratio” in 2024. Citi has also followed the trend.
As the pressure mounts, banks are increasingly compelled to prioritize transparency and accountability in their financing activities, particularly in the critical transition towards a more sustainable and environmentally responsible future.
