Survey shows widespread climate denial in global banks

April 26, 2022|Written by Graham Caswell|Bank of International Settlements, European Central Bank

Climate denial is widespread among senior decision-makers in global banks, a recent survey by Responsible Investor (RI) has found. Almost a third of respondents have encountered skepticism about climate science within the financial sector, the results show, with 93% saying they had encountered negative attitudes towards climate action among decision-makers.

Published on 22 April to mark Earth Day, the survey of RI readers was prompted by reports that senior executives of financial institutions have failed to grasp the urgency of the climate crisis or even the need for action. The biggest climate laggards were found in the banking sector, with more than 40% of respondents naming global banks as the least effective organisations in implementing climate-related measures.

Over half of those who completed the questionnaire work for financial institutions based in Europe, suggesting a reason for the widespread failure of European banks to meet supervisory expectations on climate-related risks set by the European Central Bank (ECB).

Data published last month revealed that none of the 115 banks under the ECB’s direct supervision currently meets its expectations for climate-related disclosures, and only 15% have published data on the emissions of the companies they finance.

Opposition to regulation, increased costs, political bias, and broad skepticism about environmental, social, and governance measures were the main examples of negative attitudes towards climate action among financial leaders. Over half of respondents expressed concern that these attitudes could delay or prevent effective climate action in their organisation.

“The deniers have often turned into delayers,” one respondent said. “The lack of urgency is palpable.”

The survey results will add support to growing demands for climate-related prudential measures to be incorporated into the existing Basel framework. Finance Watch, representing a network of 64 civil society organisations, has called for climate-related capital requirements to be incorporated into the Basel 3 international regulatory framework for banks, including mobilising Pillar I capital buffers against climate-related systemic risk.

It also advocates a “one-for-one” 1250% risk weighting to be applied to lending for new fossil fuel projects, requiring banks to finance such projects from their own funds.

The survey comes just weeks after a major report found that the world’s 60 largest private banks provided USD$742bn in fossil fuel lending during 2021 alone. This includes $185.5bn to 100 companies which are doing the most to expand the fossil fuel sector. Fossil fuel financing in 2021 was higher than in 2016, the study found, with a total of $4.6tn provided to the industry since then.

Analysis of bank governance indicates that a major reason for climate denial and delay among bank executives is a systemic conflict of interest. A 2021 study of 39 banks found that 65% of directors had connections to polluting industries and lobby groups obstructing climate action.

This page was last updated April 26, 2022

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