A coalition of 130 banks, representing one-third of the worldwide banking sector, have committed to aligning their actions with the aims of the Paris Agreement.
The move, made at the UN’s Climate Summit in New York, will see the banks work to align their portfolios and practices with the UN’s Principles for Responsible Banking. Collectively, the participating banks manage $47trn in assets.
Launched on Sunday (22 September), the Principles for Responsible Banking commit signatories to operate in line with “individuals’ needs and society’s goals”, including the Paris Agreement and the Sustainable Development Goals (SDGs). The framework additionally includes commitments to set and regularly review public, time-bound, numerical sustainability targets; collaborate with clients, customers and other stakeholders to maximise positive impact, and to maintain transparency and accountability.
By signing up to the Principles, banks state a belief that “only in an inclusive society founded on human dignity, equality and the sustainable use of natural resources” can their clients, customers and businesses thrive.
Signatories include Barclays, Santander, BNP Paribas, RBS, UBS, Lloyds China's Industrial Bank, DNB, Citi and Credit Suisse.
The UN’s hope is, given that the banking industry covers 90% of financing in developing countries, that Principles will help spur a low-carbon transition which protects and benefits those most vulnerable to climate change impacts.
“A banking industry that plans for the risks associated with climate change and other environmental challenges can not only drive the transition to low-carbon and climate-resilient economies, it can benefit from it,” the UN Environment Programme’s executive director Inger Andersen said.
“When the financial system shifts its capital away from resource-hungry, brown investments to those that back nature as a solution, everybody wins in the long-term.”
Nonetheless, the UN was keen to highlight the fact that the Principles allow signatories to choose between alignment with the Paris Agreement’s more ambitious 1.5C trajectory or its 2C pathway. Research from the IPCC has found that this half-degree difference is likely to have sizeable impacts on human health, biodiversity and the global economy.
“More ambition, backed by a step-change in investment from the private sector, is needed to tackle these challenges and ensure that humanity lives in a way that ensures an equitable share of resources within planetary boundaries,” the UN stated.
Photo by Floriane Vita on Unsplash