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COP26: Triodos targets net zero by 2035 – and encourages peers to follow suit

COP26: Triodos targets net zero by 2035 – and encourages peers to follow suit

Triodos Bank has just announced its aim to reach net zero by 2035.

As an independent bank founded in 1980, Triodos has been a trailblazer in sustainable banking globally for four decades.

Today, on day two of COP26’s World Leader’s Summit, the bank has declared its intention to become net-zero as early as possible.

Using a science-based targets approach, the bank intends to significantly reduce the greenhouse gas (GHG) emissions of all its loans and funds’ investments. Any remaining emissions will be balanced or ‘inset’ by investing in nature-based projects that pull GHGs from the atmosphere.

Through this target - based on Partnership for Carbon Accounting Financials (PCAF) methodology - the group will align with the Paris Agreement’s maximum global temperature rise of 1.5 degrees Celsius goal.

In an exclusive interview with Finextra at COP26, Bevis Watts, CEO of Triodos Bank UK, said: “We spent a lot of time going through, sector by sector, our decarbonisation challenge. We are getting that pathway verified by the Science-Based Targets initiative (SBTi), and then we will look at our plans and progress in a methodical manner. Our impact reporting is already aligned to the United Nations’ Sustainable Development Goals (SDGs), and the PCAF methodology - which is now recognised by TCFD as the best standard - will be the foundation of our net-zero reporting.”

How will Triodos reach net zero?

To meet its goal, Triodos Bank will execute the following:

1. Support mortgage customers to make their homes more energy efficient

Residential mortgages form 21% of the bank’s portfolio, so helping make customers’ homes net zero will be key. Triodos will also promote the use of bio-based materials in construction and renovation.

2. Ensure the entire future portfolio supports biodiversity

This involves new natural capital, nature-focused finance, regenerative organic agriculture, and sequestering carbon.

3. Finance new green energy infrastructure

This will include supporting generation, storage, green jobs, and a path to a fully renewable energy sector.

4. Ensure all investments limit carbon intensity

This includes listed, private debt and equity.

The bank has also confirmed that it will review its progress in 2025, to assess the success of its approach and adjust if needed.

“What we're trying to do is an ambitious thing,” said Watts. “The fact that we think we could only get there by 2035 - despite already being free of fossil fuels and high-emitting sectors - gives some idea of the challenge the entire industry faces today.”

A record of climate action

This latest announcement from Triodos galvanises its commitment to improving environmental impacts and outcomes. Just last year, for instance, the bank financed renewable energy projects and energy saving projects which avoided the equivalent emissions of over 5.7 billion kilometres travelled by car.

It also finances forestry and nature development projects - to date resulting in the sequestration of around 14 ktonne CO2 eq., equal to at least 316,000 mature trees. Naturally, fossil fuels or environmentally destructive industries and businesses are excluded from the group’s approach.

Watts said: “The two things I'd like the finance industry to take from our announcement is first that even from a low carbon intensity baseline, achieving net zero is difficult and faster action is needed. We believe in the importance of transparency, and we do not have all the answers. This is like the Apollo 13 mission - we're trying to get back from the moon, and nobody knows quite how to do it. Secondly, simply regulating the finance industry for climate risk is too slow a reflex to address the difficult challenge ahead. We need mandatory, science-based targets aligned to 1.5C, and mandatory transition plans are vital to ensure a faster and fair transition.”

Comments: (1)

A Finextra member
A Finextra member 03 November, 2021, 14:57Be the first to give this comment the thumbs up 0 likes

This action is precisely what UK consumers want to see and it's a far cry from how the major Retail Banks and Building Societies are currently perceived.  The gap between the urgency of tackling climate change for consumers and how committed they feel their bank provider is to acting urgently needs to be addressed.

Kudos to Triodos for being the standout performer according to our own research (available here).