The European Central Bank is moving forward in its policy greening plan
The European Central Bank published new indicators this week to assess the impact of climate change on the financial sector. Also new indicators to track the development of sustainable finance.
In this data farm, indicators refer to the volume of bonds issued with a “green” label. Objective: to measure progress in financing the low-carbon economy.
The European Central Bank (ECB), although there is no internationally recognized standard that defines what constitutes a “green bond”, is to double the amount of these bonds in two years. Certainly good progress, but they still account for only 5% of total emissions.
Another set of indicators, in contrast, focuses on carbon emissions supported by financial institutions. These latest data, by the ECB’s own admission, sometimes include significant limitations. However, according to preliminary results, the euro area has the highest carbon emissionsheld by investment funds financed by stocks or bonds. However, it seems that the banking sector finances the most carbon-intensive activities.” the activities of the companies they finance produce relatively more emissions to achieve a certain level of income “.
Acceleration in energy transition for BNP Paribas
BNP Paribas, the leading European bank, intends to reduce the financing of the oil production and extraction sector by 80% by 2030.The entity also plans to reduce outstanding financing for gas production and production by 30%.. At the same time, loans for low-carbon projects should increase.
The bank, which prides itself on having 55% “low carbon” energy in its portfolio versus 45% fossil fuels, plans to split 80-20 by 2030.
Commitments made by environmental NGOs shortly before the official notification deadline. They gave three months from last October 26 to today [26 janvier], jar to view a copy of it. According to them, between 2016 and 2021, BNP Paribas established itself as the world’s leading financier of eight oil and gas giants.
As the collective is still not satisfied
Oxfam France, Friends of the Earth and Notre affaires à Tous regret. commitments are very weak “. They certainly mention the goal of reducing outstanding debt in oil production and production, but they criticize the enterprise for not committing to all the levers of financing, aside from stocks and bonds.
Reclaim Finance, for its part, believes in this this will not prevent BNP from supporting several large clients despite its expansion strategy into fossil fuels.
BNP Paribas is not the only bank
Nine NGOs have compiled an initial assessment of the Banking Alliance for Carbon Neutrality, an affiliate of the Glasgow Financial Alliance for Net Zero (GFANZ), a financial alliance established in Glasgow for COP26. According to these organizations, including Reclaim Finance, 350.org or Recommon, “ the 56 largest members have contributed between the date each bank joins the Alliance and August 2022, […] $269 billion to 102 major fossil fuel producers “.
And it’s not just this study that calls this alliance into question. according to Financial Times, American banks such as Bank of America, JP Morgan and even Morgan Stanley threatened to leave after the Race to Zero campaign updated its criteria in September.. Among the fears revealed are fears of legal liability in the event of violations. There was also pressure from the political class, especially from the Republican side. Texas, for example, is hostile to institutions that do not support fossil fuels as much as it would like.
But should we really rely on this Alliance and voluntary approaches? Some are skeptical and are asking government agencies and regulators to step up the game.
Not all public institutions are concerned. Jerome Powell, Chairman of the US Federal Reserve (FED). believes that the US central bank has no desire to be a “climate decision-maker”. It brings the ball back to the government and Congress.