UK Banks’ Climate Change Strategies Take Shape

DBRS Morningstar has released a commentary “UK Banks’ Climate Change Strategies Take Shape”, which discusses the major United Kingdom (UK) banking groups' climate change strategies, in particular the expected trajectory of reaching "net zero" in their financing activities and exiting from lending to the most carbon-intensive energy activities such as coal.

Key highlights:

• Barclays and HSBC have a substantial involvement in the financing of carbon-intensive activity due to their relatively large Corporate and Investment Banking (CIB) businesses with footprints in global and emerging markets. Both banks have an ambition to reach net zero in their financing portfolios by 2050. We believe that publicly disclosing near to mid-term targets defining the path for reducing emissions from their loan portfolios would make both banks' strategies more complete.

• Funding the most carbon-intensive and polluting activities in the energy sector has been subject to heightened scrutiny. As a consequence, all UK banks have introduced restrictions to the financing of clients which rely on coal in their activities.

• Another pro-environmental element of UK banks' strategies in combatting climate change is the provision of "green" financing. This area of activity has been growing fast in recent years.

“We believe that the provision of financing to renewable energy and clean technology sectors by UK banks will be crucial in successfully managing the transition to a "low emission" economy” said Tomasz Walkowicz, Vice President in DBRS Morningstar European FIG team.