As Sergeant Joe Friday in Dragnet would often say: “Just the facts ma’am.” This is also good advice when it comes to approaching the issue of carbon emissions – especially for banks. In today’s Financial Times there was an excellent commentary from Marilyn Waite of the William and Flora Hewlett Foundation. She clearly outlined why banks and other financial institutions should provide consistent data on the carbon footprint of their portfolios. She notes: “(b)anks and other financial institutions are happy to make broad, long-term commitments about reducing climate impact by 2050, but granular metrics are essential to tracking such progress.” She further notes that the impact of climate change is likely to be quite high in the financial system due to the impact of it on portfolio quality.
She goes on to cover various initiatives underway within the financial sector of which the most important is the Partnership for Carbon Accounting Financials. This initiative began in The Netherlands with support from all of the major financial institutions. It is now expanding globally with significant support from the Global Alliance for Banking on Values. This drive to create an open source but consistent way of measuring the carbon footprint of financial portfolios will usefully create the transparency so that investors, clients, co-workers and regulators will have insight to just the facts about a financial institution’s exposure to climate change.
