How the industry is meeting calls for meaningful environmental standards with passion and purpose
With Earth Day just past and Earnings Season in full swing, the banking industry is keenly aware of the impact of their organization’s environmental and sustainability policies as the industry heads into its annual shareholder meetings. As we recently outlined in Spotlight on Environment and Sustainability, news about big banks making larger “commitments to cutting greenhouse gas emissions from energy-lending clients – and their own footprints – is further evidence of a sea change in financial services.” But is it changing fast enough?
For many financial institutions, balancing the demands of shareholder return and calls for sustainability at the same time put their organizations on the hot seat. Take, for example, a recent Reuters panel featuring executives from Citibank and JPMorgan discussing sustainable finance where they were interrupted by an activist group asking about their continuing to finance fossil fuels, even as they are reducing them as part of their overall portfolios and making bigger institutional investments, like the one Bank of America just announced.
As nine of the largest North American banks are set to vote at the end of April on ending fossil fuel financing, financial institutions have an opportunity to take the lead. “Big banks are known for putting their shareholders first – and should listen closely to what they’re saying now,” says Randell Leach, CEO of Beneficial State Bank, in his recent Fortune article in on fossil fuel divestment. “I want to assure financial institutions that it is 100% possible to divest from fossil fuels, invest in climate-friendly projects, and remain profitable.” He says his bank is living proof sustainable finance works.
Meanwhile, the SEC is tracking toward transparency – standardizing climate-related disclosures provided by public companies – as challenger and traditional banks offer even more eco-friendly options in their products and services. In NerdWallet’s recent roundup, Ivan Frishberg, chief sustainability officer at Amalgamated Bank, says sustainable banks “look to further economic, social, racial and environmental justice through its voice, resources and every aspect of how it operates.” With consumers prioritizing purpose-driven brands, banks have even more opportunities. Or as Frishberg says, “Our mission areas are our business.”
Stay tuned as Believe in Banking continues to provide news and insights on the industry’s latest developments, like environmental, social, and governance issues in banking. For insights on best practices in banking, contact the banking and credit union experts at Adrenaline at info@adrenalinex.com.