San Francisco, California, the placement of Bank of the West’s headquarters
Author: Augustin de Kerversau, Head of Corporate and Commercial Banking, Executive Vice President, Bank of the West
August 5, 2021
“Yesterday I used to be intelligent, so I needed to alter the world,” the Persian poet Rumi wrote. “Today I’m sensible, so I’m altering myself.”
The banking enterprise can be sensible to alter, too, and shortly.
In April, 43 global banks, together with Bank of the West’s dad or mum firm BNP Paribas, joined the industry-led and UN-convened Net-Zero Banking Alliance (NZBA), committing their funding and lending portfolios to achieve net-zero emissions by 2050. The NZBA is essential to assist meet the Paris Agreement’s targets by mobilising the whole monetary system to deal with the specter of local weather change. Yet, not the entire main US banks, a few of whom are the biggest funders of fossil fuels, joined this global effort to cut back and monitor emissions. We can’t remedy the local weather disaster with out banks.
Our low-carbon future relies upon partially on banks not making the local weather disaster worse by underwriting carbon-intensive industries
Even if greenhouse fuel emissions stopped right this moment, lingering carbon dioxide within the environment would preserve global temperatures from cooling anytime quickly, in accordance with the National Academy of Sciences and the Royal Society. This raises the urgency for banks – together with these making pledges to guard the planet – to take extra substantive steps concerning their portfolios. Research from the non-profit CDP finds that emissions attributed to banks’ investing and lending actions are 700 instances bigger than emissions from banks themselves.
Bank of the West took motion years in the past to make sure that what it does and doesn’t finance are in step with supporting the planet’s well being. We don’t have all of the solutions, and we all know there’s extra work forward, however the classes we’ve discovered alongside the best way could also be useful for others in our enterprise to impact change.
We should shut the local weather financing hole
Financing concentrating on the local weather disaster grew in 2018 to $546bn, with the personal sector offering the bulk at $323bn, in accordance with the Climate Policy Initiative (CPI). However, the UN says as much as $3.8trn is required yearly till 2050 to stop an irreversible rise in global warming. We want to shut this financing hole and shortly. Private-sector banks have an essential position. In truth, banks doubled their share of local weather finance between 2013 and 2018 (see desk).
In 2017, Bank of the West applied insurance policies that prohibit or prohibit financing of sure environmentally dangerous actions, reminiscent of fracking and Arctic drilling. And in 2018, the financial institution dedicated $1bn over 5 years to finance a renewable vitality transition. Our insurance policies are publicly obtainable, and we are properly on our option to assembly our financing objective.
As a part of BNP Paribas, we have been motivated to behave as a result of we consider the personal sector has a global accountability to proactively deal with the local weather disaster. We have been pushed by function.
Global finance is usually a recreation changer
A planetary disaster impacts us all. With that in thoughts, Bank of the West has used its global attain for the betterment of our prospects and the planet.
For instance, we’re offering working capital to the US subsidiaries of main European vitality firms, supporting the expansion of renewable vitality era throughout North America. This is a part of our three-pronged technique specializing in the event of renewables, cleantech and sustainable finance throughout industries.
We’re additionally utilizing our stability sheet to encourage company debtors to satisfy extra formidable social and environmental targets. Building on the industry-leading experience of BNP Paribas, Bank of the West launched its sustainability linked loans provide in April.
What isn’t financed makes a distinction
What banks stand for and what they finance are crucial. So is what they resolve to not finance. Our low-carbon future relies upon partially on banks not making the local weather disaster worse by underwriting carbon-intensive industries. We know proscribing financing based mostly on ideas isn’t simple as a result of we’ve got been on this path for some time. And we stand with the 43 global members of the UN’s NZBA as a result of we firmly consider it’s needed for the planet.
I’m humbled by the immensity of the duty earlier than us to cease the local weather disaster. I additionally consider our global enterprise, collectively, could make a big distinction.