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HSBC tops climate change strategy survey

11 January 2008  |  10188 views  |  0 globe

British banking group HSBC has come out top in a study that examines how global banks are tackling the risks and challenges posed by global warming and climate change.

The study of 40 global banks evaluated how each institution is addressing climate change in five areas - board of director oversight, management performance, public disclosure, greenhouse gas (GHG) emissions, accounting and strategic planning.

European banks dominate the top of the table, with HSBC coming scoring 70 out 100 points. HSBC was found to be active in all five of the areas evaluated.

Last year HSBC unveiled a $90 million global environmental efficiency programme. The money will be spent over five years to reduce the bank's impact on the environment through a series of initiatives, including the introduction of renewable energy technology, and water and waste reduction programmes.

HSBC's direct banking subsidiary first direct also disclosed plans to to install automated computer shut down software in an effort to reduce its carbon emissions by 147 tonnes and save £24,000 per year on energy costs.

ABN Amro came second in the study with 66 points, followed by UK banking groups Barclays and Hbos which both scored 61 points. Germany's Deutsche Bank follows with 60 points.

Citigroup and Bank of America posted the highest scores among the 16 US banks included in the study, with 59 and 56 points respectively.

But more than half of the 40 banks studied scored under 50 points. The overall median score was 42 points.

US investment bank Bear Stearns came bottom of the table with zero points, just below San Francisco-based Franklin Resources which was awarded one point. Just above that Bank of China got four points and Industrial Bank of China earned eight points.

The research was conducted by RiskMetrics Group for Ceres - a coalition of investors, environmental groups and other public interest groups - which directs the Investor Network on Climate Risk (INCR), a network of 60 institutional investors.

Despite the poor results, Ceres says that a growing number of European, US banks and Japanese banks are responding to the risks and opportunities presented by climate change, primarily by setting internal GHG reduction targets, boosting climate-related equity research and elevating lending and financing for clean energy projects.

But only "a handful" of the 40 banks have begun integrating climate risks into their core business of lending by pricing carbon into their finance decisions or setting targets to reduce GHG emissions in their lending portfolios, says Ceres.

"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," says Mindy Lubber, president of Ceres. "As a key provider of capital and financing worldwide, banks must do more to move the economy away from fossil fuels and high-carbon investments that are exacerbating climate change."

The study found that only a dozen of the 40 banks have board-level involvement and all but one of those firms are non-US-based. Furthermore, only 28 of the banks have calculated and disclosed GHG emissions from operations and just 24 have set some set some type of internal reduction target.

Only a half-a-dozen banks are formally calculating carbon risks in their loan portfolios, and only one of the 40 banks - Bank of America - has announced a specific target to reduce greenhouse emissions associated with the utility portion of its lending portfolio.

No bank has set a policy to avoid investments in "carbon-intensive projects", such as conventional coal-fired power plants, says Ceres.

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