Not Banking on Climate Change...Yet

The banking sector still has a long way to go in confronting the business challenges posed by global climate change, according to a report by Ceres, a coalition of investors, environmental groups and other public interest organizations.

Banks and financial institutions, with nearly $6 trillion in market capitalization, are a key player in combating the impacts of climate change and supporting the investments necessary to move the world economy toward reduced greenhouse gas (GHG) emissions, Ceres officials stated.

ccording to the report, some banks are setting internal GHG reduction targets, boosting climate-related equity research and elevating lending and financing for clean energy projects. Many others are still not addressing climate change, and only a handful of the 40 banks studied have begun integrating climate risks into lending by pricing carbon into their finance decisions or setting targets to reduce emissions in their lending portfolios.

"More banks realize 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," said Mindy S. Lubber, Ceres president. "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 report employs a "Climate Change Governance Checklist" to evaluate how 16 U.S. and 24 non-U.S. banks are addressing climate change through board of director oversight, management performance, public disclosure, emissions accounting and strategic planning. The report uses data from securities filings, company reports, company Web sites, third-party questionnaires and direct company communications.

The report ranked 16 U.S., 15 European, five Asian, three Canadian and one Brazilian bank. The 40 companies include several different classes of financial services firms, including diversified banks, investment banks and asset managers. The final scores are weighted to reflect the fact that some of the banks -- specifically, asset mangers and investment banks -- are not engaged in the full spectrum of product and service offerings assessed by the Climate Change Governance Checklist, Ceres officials stated.

For more information on the report, "Corporate Governance and Climate Change: The Banking Sector," visit www.ceres.org.

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