The Climate Lending Comet
What does it mean for banks to 'pick up the pace' on climate action?
By James Vaccaro, January 2022
If you work anywhere close to the field of climate and sustainability, 2022 is likely to have kicked off with only one cultural reference point: Don’t Look Up. It’s been a film phenomenon that’s been harder to avoid than an actual comet hurtling towards you. Striking though they are, the messages haven’t always landed neatly for everyone. In the real world, the citizens of planet ‘finance’ don’t necessarily represent the same polarisation portrayed in the film. Sure, there might be pockets of denialism, but for the most part sustainability concepts have been integrated in the mainstream, so financial institutions know that the comet (climate crisis, biodiversity crisis etc) is coming. The financial world is stocking itself full of ESG, disclosure and sustainability scientists, busily scurrying around producing graphs, charts, analysis and reports.
Climate Safe Lending is focused on banks – where decarbonisation strategies in loans over the next few years could determine what is ‘baked into the economy’ of 2050 and beyond. If we accept that most of the banking sector is all ‘looking up’ – then what’s the problem? It’s certainly more nuanced than a problem of awareness.
What I observe is that many financial institutions are so busy doing the scurrying round, complying with the panoply of frameworks, that they’ve not realised that not enough of what is being produced is actually impacting the comet (I mean climate). The narrow focus of inward-ESG risk management attempts to keep financial institutions ‘safe’ while the world breaks down. That, despite the largest rollout of an online education program on how ‘no one is safe until everyone is safe’ in world history (in case you missed it, look up ‘Covid-19’ – available for at least the next few years!)