Fair Finance Sweden: New guide helps companies put climate pressure on banks
Emissions generated by how banks manage corporates’ cash holdings can significantly add to a company’s total greenhouse gas emissions and constitute a large part of its total climate impact. With the help of a new guide, developed with the participation of Fair Finance Guide Sweden, companies can reduce their emissions by setting climate requirements on their banks and in doing so support accelerating the decarbonization of the financial sector.
Many companies are struggling to reduce their greenhouse gas emissions; however, few have considered how their money in the bank contributes to emissions. The money can, for example, be used by the bank to finance other activities, including funding the worst-offending companies when it comes to the climate such as oil companies and companies that drive deforestation.
These so-called financed emissions represent almost the entire climate impact of a bank but have long been excluded in the banks' climate reporting. In the past year, however many banks have started measuring and reporting their funded emissions. This makes it possible to measure banks' carbon footprints more accurately.
"This is an incredible opportunity for both consumers and companies to get a clearer picture of how money in the bank affects the climate," says Jakob König, who leads the Fair Finance Guide at the Swedish Consumers' Association.
The climate initiative Exponential Roadmap Initiative has together with Fair Finance Guide Sweden, BankFWD and TOPO developed a guide for how companies can measure and reduce their financial climate footprint. Above all, this can be done by imposing climate requirements on the bank.
"If companies start setting climate requirements, it can really increase the pressure on the banks' transition. Companies are often major customers of the banks and customer pressure plays an important role, as we see from the work of mobilising consumer pressure on the industry," says Jakob König.
The guide contains seven steps, the first of which is about measuring the climate footprint of money today and then following a checklist to examine the bank's goals and plans to reduce the footprint in the future.
"Making the climate footprint of the money visible increases the pressure on banks to develop robust transition plans that can reduce emissions at a rapid pace," says Jakob König.
Download Greening Cash Action Guide