Finance leaders have been urged to ‘double down’ on sustainability, following a report by the World Benchmarking Alliance (WBA) that indicates that only 3% of financial institutions have climate transition plans in place.
WBA’s study assessed 400 of the world’s most influential financial institutions, including Bank of America, Allianz, and CIMB, who collectively manage around $200 trillion in assets. It noted that while financial executives and boardrooms have sustainability ‘on their agendas’, actual impact remains muted.
‘Evolutionary’ mindset’
“Whilst it is encouraging to see some progress made by the financial sector, especially at the executive and board level, we do not yet see this translating into real world impact,” commented Andrea Webster, World Benchmarking Alliance’s head of the financial system transformation.
“Leadership must move from a closed-minded compliance mindset to an open-minded evolutionary one. Finance knows businesses must evolve or die. It must do the same.”
Other findings from the report illustrate the continued link between financial institutions and the fossil fuel industry – major banks have provided $7 trillion in loans to the oil and gas sector since the Paris Agreement, it noted.
However, less than 5% have committed not to support new fossil fuel projects and only 6% have targets to scale their financing of climate solutions.
Environmental impact
More encouragingly, however, some 10% of institutions are beginning to identify the environmental impact of their financing activities, recognising the systemic risks posed by nature-dependent economies, WBA noted.
There are also pockets of progress evident, with CIMB, a Malaysian bank, topping the WBA’s Financial System Benchmark.
“Having CIMB, a Malaysian Bank, top the benchmark shows the relevancy of global principles on sustainability,” Webster added. “It is proof that the pain of getting global consensus around these key issues helps institutions from across the world move forwards in the same direction.” Read more here.
