21st Nov 2023 06:24
(Alliance News) - Europe's 20 largest banks have been accused of a "structural lack of transparency" over their green finance activities.
ShareAction, which campaigns for responsible investment, carried out research into banks promoting their green finance credentials.
It found that while all banks investigated have set a target or report their green finance activity, just four banks publish partial information on how they calculated those targets, including UK bank Barclays PLC.
ShareAction warned that this lack of clarity leaves all 20 banks open to allegation of greenwashing.
The banks were found to frequently include products in their targets which do not lead to more funding going toward green activities such as sustainable technology development or renewable power generation.
The research cited examples like Standard Chartered PLC meeting their green finance target by advising clients on mergers and acquisitions.
Many banks also included carbon-intensive energy generation activities in their green financing targets such as Credit Agricole SA including natural gas extraction and Deutsche Bank AG including certain forms of biomass for power generation, ShareAction said.
Elsewhere, the banks were found to be applying double standards to reducing emissions and increasing green financing.
The investigation uncovered that almost no banks account for their capital markets facilitation, where banks help companies to raise funds like bonds, in their decarbonisation targets.
Meanwhile, almost all banks include capital markets facilitation in their green finance targets.
ShareAction noted that Barclays is the only bank that includes capital markets in its emissions reduction targets although it only counts 33% of its share in a deal, whereas it counts 100% of its share in a deal when it goes toward its green finance target.
The investigation also found that just 35% of banks measured the real impact of their financing, such as the level of renewable energy capacity installed through funding.
It highlighted how banks reported even less on whether their green financing was for new assets or already existing projects with HSBC PLC reporting that 77% of its 2022 green bond allocation was to already existing projects.
Xavier Lerin, senior research manager at ShareAction, said: "Banks widely promote their green credentials to their customers and shareholders.
"However there is a structural lack of transparency on what their green finance activities achieve.
"It remains unclear from what the banks themselves are reporting and in the targets they are setting whether they are actually providing the finance required to transition our economy and mitigate against the most damaging consequences of climate change.
"Banks must put their money where their mouth is and set clearly scientific targets that illustrate their working, or the public and investors will be left in the dark about how meaningful the contributions they are making to preventing the worst impacts of climate change and adapting our economy for a low carbon future."
The ShareAction report calls on policymakers and standard-setting bodies to establish standards that tackle greenwashing and ensure banks are properly measuring the impact of their financing.
Credit Agricole said it is fully committed to financing a green energy future and strives to be completely transparent and clear in its communication and information on the energy transition.
A spokesperson for Deutsche Bank said: "As part of our broader sustainability strategy, Deutsche Bank established in 2020 its Sustainable Finance Framework, which is updated on a regular basis.
"Our goals are to ensure that our clients have access to financing that helps them to pursue the necessary transition to an environmentally sustainable and socially stable future.
"The framework transparently outlines our classification logic, which e.g. also considers successfully passed Environmental & Social Due Diligences for certain sectors and transactions as condition for a classification as sustainable finance."
Standard Chartered declined to comment.
PA has contacted Barclays and HSBC for comment.
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