130 banks holding $47 tn in assets commit to climate action

Last Updated: Mon, Sep 23, 2019 13:43 hrs
Bank of America (AP photo)

New York: In a massive boost for climate action and sustainability, leading banks and the UN have launched the Principles for Responsible Banking, with 130 banks collectively holding $47 trillion in assets, or one third of the global banking sector, signed up.

In the Principles, launched on Sunday, a day ahead of the UN Climate Action Summit in New York, the banks commit to strategically align their business with the goals of the Paris Agreement on Climate Change and the Sustainable Development Goals (SDG), and massively scale up their contribution to the achievement of both.

By signing up to the Principles, the banks said they believeed that "only in an inclusive society founded on human dignity, equality and the sustainable use of natural resources" can their clients, customers and businesses thrive.

With global leaders coming together to share the actions they are taking to attain the SDGs and address climate change on Monday, UN Secretary-General Antonio Guterres said at the launch event, attended by the 130 founding signatories and over 45 of their CEOs, that "the UN Principles for Responsible Banking are a guide for the global banking industry to respond to, drive and benefit from a sustainable development economy".

"The Principles create the accountability that can realize responsibility, and the ambition that can drive action."

The Principles are supported by a strong implementation framework that defines clear accountabilities and requires each bank to set, publish and work towards ambitious targets.

By creating a common framework that guides banks in growing their business and reducing risks through supporting the economic and social transformation required for a sustainable future, the Principles pave the way for the transformation to a sustainable banking industry.

"A banking industry that plans for the risks associated with climate change and other environmental challenges can not only drive the transition to low-carbon and climate-resilient economies, it can benefit from it," Executive Director of the UN Environment Programme (UNEP) Inger Andersen said.

"When the financial system shifts its capital away from resource-hungry, brown investments to those that back nature as solution, everybody wins in the long-term."

While action on climate change is growing, it is still far short of what is needed to meet the 1.5 degrees Celisus target of the Paris Agreement.

Meanwhile, biodiversity continues to decline at alarming rates and pollution claims millions of lives each year.

More ambition, backed by a step change in investment from the private sector, is needed to tackle these challenges and ensure that humanity lives in a way that ensures an equitable share of resources within planetary boundaries.

The banking and private sectors can benefit from the investment they put into backing this transition. It is estimated that addressing the SDGs could unlock $12 trillion in business savings and revenue annually and create 380 million more jobs by 2030.

"To transit to low-carbon and climate-resilient economies that support the goals of the Paris Agreement requires an additional investment of at least $60 trillion from now until 2050," said Christiana Figueres, Convener, Mission 2020, who is credited as the architect of the Paris Agreement in her role formerly as Executive Secretary of the UN Framework Convention on Climate Change.