UK finance sector exposed as major backer of carbon emissions
The UK’s finance industry would be the ninth biggest emitter of carbon if it was a country, according to latest data.
Research unveiled by WWF and Greenpeace reveals that UK banks and asset managers financed projects which emitted 805 million tonnes of greenhouse gases in 2019. This is 1.8 times the UK's annual national carbon footprint of 445 million tonnes after discounting aviation and shipping.
The campaigning organisations say the figures are “the tip of the iceberg”, as the analysis was an indicative sample of the investment activities of 15 banks and 10 asset managers by climate solutions specialist South Pole. They expect the true extent of the carbon emissions funded by the UK’s finance sector to be far greater.
The campaigners added that UK finance should be considered a “high carbon sector”, like oil and gas extraction, coal mining, aviation and transport.
Despite this, UK financial institutions are not regulated in the same way as other high carbon sectors, they argue, and in cutting emissions, banks and asset managers are not legally required to align their activities with the UK’s or global climate commitments.
“Finance is the UK’s dirty little secret,” Greenpeace UK executive director John Sauven said. “Banks and investors are responsible for more emissions than most nations, and the UK government is giving them a free pass. How can we say we’re ‘leading the world on climate action’ while allowing financial institutions to plough billions into fossil fuel production every year?”
The banks assessed by the analysis are Barclays, CitiGroup Global Markets, Credit Suisse International, Credit Suisse Investments UK, Goldman Sachs Group UK, HSBC, JP Morgan Capital Holdings, Lloyds Banking Group, Merrill Lynch International, Morgan Stanley International, Nationwide, Nomura Europe Holdings, NatWest Group, Santander UK and Standard Chartered.
The asset managers covered in the research are Aberdeen Life Assessment, Aviva Investor, Ballie Gifford, HSBC Global Asset Management, Insight Investments, Legal and General Investment Management, Man Group, M&G Investments, Royal London Asset Management and Schroders.
The research argues that voluntary pledges by some financial institutions to cut their carbon emissions are not enough to deliver reductions required to meet the Paris Agreement.
The campaigners called on the UK government to mandate financial firms to cut financed emissions by 45 per cent by 2030, against a 2010 baseline. This is in line with the Intergovernmental Panel on Climate Change’s landmark report in 2018, and should be introduced ahead of COP26 later this year.
A spokesperson for ethical and sustainable specialists Triodos Bank UK commented: “Despite the net zero targets set by the UK government we are not on track compared to the IPCC scenarios. The latest IEA report shows that to hit net zero emissions by 2050 will mean that the more we delay in taking the carbon out of banking, the harder it’s going to be to keep as all safe from the effects of climate change.”