£1.4trn investor group tackles banking giants on climate

ShareAction chief execution Catherine Howarth

A group of investors representing $1.8trn (£1.4trn) has pressed the world’s largest banks to act on climate change.

JP Morgan, Deutsche Bank, HSBC and Bank of America are among the banks that have been addressed in a letter signed by 100 investors, including Aviva Investors, Hermes Investment Management and Candrium Investors.

Responsible investment non-profit ShareAction and Boston Common Asset Management coordinated the effort. Banks could lose 5 per cent to 20 per cent in value if they continue in with business as usual, a recent study estimates.

One of the letter’s recipients, Australia’s Commonwealth Bank, currently faces an investor lawsuit over allegations it has failed to properly disclose climate change risks to the business.

ShareAction chief executive Catherine Howarth says it’s encouraging that a substantial group of global institutional investors has come together.

The letter calls for climate action through risk management, low-carbon banking products, public policy engagement and strategy and implementation.

In total 60 banks have been approached.

Hermes EOS associate director for engagement Roland Bosch says the letter is important in light of the Taskforce for Climate-related Financial Disclosures, which was launched by Michael Bloomberg and Mark Carney in June.

Bosch reckons the banking sector can do more to expand its disclosure of how climate risks and opportunities are being assessed and managed.

The Paris Agreement target to limit global warming to two degrees requires $93trn of investment by 2030. The international agreement, which Donald Trump announced US withdrawal from in July, also states that finance needs to flow towards low greenhouse gas emissions and climate-resilient development.

Candriam Investors global head of responsible development Isabelle Cabie says the risks and opportunities banks face as a result of climate change and the low-carbon transition are material to investors.  

“Better disclosure of climate risk allows us to judge how specific banks are performing compared to their peers, and so we ask that banks pay heed to this important call from the investor community.”