Major European banks leave global climate initiative - impact on investments in fossil fuels

Major European banks leave global climate initiative - impact on investments in fossil fuels

According to a report by www.faz.net, four major European banks have left the Science Based Targets Initiative (SBTi), according to insider information. This United Nations-backed initiative to review climate targets was abandoned by the French Societe Generale, the Dutch ABN Amro Bank and the British financial institutions Standard Chartered and HSBC. Banks fear that they will have fewer opportunities to invest in fossil fuels in the future as their goals are no longer validated by the SBTi.

The SBTi initiative was launched to help companies set science-based climate targets that are aligned with the Paris Climate Agreement. The aim is to limit global warming to 1.5 degrees. The initiative has supported more than 4,000 companies worldwide in setting climate goals.

Some banks believe that the SBTi requirements are too difficult to meet. As a result, they withdrew from the initiative within the last year. Instead, they have invoked membership in the Net-Zero Banking Alliance (NZBA), which is considered less strict and allows banks to continue investing in fossil fuels as long as progress is made in reducing emissions.

HSBC said it sets its emissions targets in line with the NZBA's guidance. Societe Generale, ABN Amro and Standard Chartered also found an alternative to SBTi in the NZBA.

The SBTi initiative has responded to feedback and amended some of its requirements to continue to allow banks to invest in fossil fuels, but on the condition that they stop financing projects that burden long-term emissions targets.

It is expected that this step by the major European banks will have an impact on the market and the financial sector. By withdrawing from the SBTi initiative, banks could potentially increasingly invest in fossil fuels, which would contradict the climate goals of the Paris Agreement. It remains to be seen how these decisions will influence the future direction of the financial sector. To date, no major U.S. bank has joined the SBTi initiative. Instead, US financial institutions opted for the NZBA's weaker standards.