Global banking giants pulled up for flashing a paler shade of green

Report says they haven't done enough to address climate change challenge
Chew Xiang, Business Times 11 Jan 08;

(SINGAPORE) The name and shame game continues apace. Banks are the latest target as environmental groups try to chivvy the corporate world into doing more by detailing their green (or not so green) practices.

And the banking sector still has a long way to go, according to a report released yesterday by Ceres, a US-based coalition of investors and environmental groups.

Its president, Mindy Lubber, said: 'More banks realise that climate change is a big business issue, but their responses so far are the tip of the iceberg of what is needed to tackle this colossal global challenge.'

The report surveyed 40 of the world's largest banks and financial institutions, including five from Asia and one from South America. The banks included HSBC, Goldman Sachs, Bank of America, Mitsubishi UFJ, Bank of China and Banco do Brasil.

The asset managers included BlackRock Inc, Franklin Resources and State Street Corp.

On the positive side, the report found that banks collectively produced nearly 100 research reports on the topic, more than half released within the last year.

Twenty-eight calculated their greenhouse gas emissions from their operations and all but four of these have committed to a reduction target.

Twenty-nine also reported their financial support of alternative energy projects and companies.

However, just 12 banks have board-level involvement in climate change policy and only six formally include calculations of carbon risk in their loan portfolios.

Carbon risk measures the potential cost to investors of carbon emissions by a firm, including the cost of purchasing emissions permits - for example, under the European Union Emission Trading Scheme.

The banks were given a score based on their performance in director oversight, management performance, public disclosures, greenhouse gas emissions accounting and strategic planning.

The highest scorers based on Ceres's scale were all European banks: HSBC, ABN Amro, Barclays, HBOS and Deutsche Bank made up the top five.

Citigroup and Bank of America were the top US banks, coming in sixth and seventh, while Mitsubishi UFJ and Sumitomo Mitsui were the best Asian banks, although both ranked in the middle overall.

Bear Stearns came in last, with a score of zero. It did not publicly address climate change at all as a policy issue and did not respond to requests from Ceres to comment, according to the report.

Bank of China and Industrial & Commercial Bank of China finished in the bottom 10.

The report analysed the banks using securities filings, company reports and questionnaires. The scores were weighted as not all banks (especially investment banks and asset managers) had products or activities assessed in Ceres's scheme.

The report recommended that banks make climate change a boardroom-level priority, provide better disclosure about the financial and material risks of climate change, and set progressively higher targets to reduce the emissions impact of their lending and investment portfolios.

Ranking is a common tactic to encourage companies to go green. Greenpeace, for example, ranks electronics manufacturers according to their recycling and toxic content policies.