From ambition to action: banks and the net zero transition
For many businesses and individuals across the UK, 2020 was simply about survival. But, at the start of 2021, the tide is turning. The end of the COVID-19 crisis is finally in sight, which means that this year will, hopefully, be about recovery. This is the moment of truth for the ambition to build back responsibly – and retail banks have a critical role to play in shaping the recovery to make it inclusive and sustainable.
Retail banks are stitched into our economic fabric like no other sector – and while we may exist, first and foremost, to serve others, that does not mean we play a neutral, passive role. Decisions retail banks make every day – about who to provide financial products and services to, on what terms, with what end in mind – have a profound real-world impact. Our customers, investors and other stakeholders are, rightly, demanding more and better information about those real-world impacts.
Accountability is more important than ever in the run-up to COP26, as governments, businesses and financial institutions across the world commit to new or updated emissions reduction targets.Elisa Moscolin, Head of Sustainability and CSR at Santander
At Santander, we are committed to delivering greater transparency into both our positive and negative impacts. Importantly, we want to do so in a way that is rigorous and consistent with how our peers and competitors report on their impact, which is why we support and contribute to efforts to standardise accounting methodologies for non-financial information. The alphabet soup of initiatives and frameworks – Task Force on Climate-related Financial Disclosures (TCFD), Platform Carbon Accounting Financials (PCAF), and Paris Agreement Capital Transition Assessment ( PACTA) and the rest – may be off-putting to many, but, as a sector, it is vital we do the hard work of aligning methodologies so that we can all be held accountable for what we do, not just what we say.
If you are a Business in the Community member you can download our Challenge 2030 Jargon Buster, an easy to understand guide to environmental terms.
That accountability is more important than ever in the run-up to COP26 this year, as governments, businesses and financial institutions across the world commit to new or updated emissions reduction targets. The more ambitious those targets are the better, but ambition needs to be linked to action and accountability.
In December, the UK Government committed to a target of reducing CO2 emissions by 68% by 2030 (against a 1990 baseline). This is a welcome signal of intent, but the critical next step is for that ambition to be translated into robust policies that help tilt markets – and finance – in the direction of lower carbon production and consumption.
As a signatory to the UN Principles for Responsible Banking, we (along with more than 170 other banks worldwide) are committed to aligning our business strategy with the Paris Agreement. This includes our ambition to achieve net zero carbon emissions across the group by 2050 (including our own operations, which are carbon neutral since 2020, and all client emissions that result from any lending, advisory or investment services provided by Santander).We take that commitment seriously – both because limiting global warming to well below 2°C is a moral imperative and because our future success depends on it.
As BITC’s Responsible Retail Banking in the 2020s report (which Santander UK supported) highlights, addressing the climate crisis is not just about risk management – it is a strategic opportunity that many banks are already starting to act on by launching new products and services. The net zero transition means there will be new growth industries – from solar and wind to green hydrogen and carbon capture – that need finance in order to scale up. The decarbonisation of existing industry and infrastructure will also require finance – enabling businesses in carbon-intensive sectors to transition, and homes and buildings to be retrofitted and renovated.
Our collective goal must be to accelerate the net zero transition. Doing so requires a mix of competition and collaboration. Competition between banks to be the finance provider of choice for businesses and projects that contribute to the UK’s net zero trajectory is healthy. But collaboration between banks, through initiatives such as BITC’s Responsible Retail Banking Network, is essential too: collaboration to standardise our approaches to measuring and accounting for climate risks and impacts; collaboration to influence the development of ‘bankable’ net zero policies and regulations; and, crucially, collaboration to mitigate the risk of unintended consequences and to ensure no part of society gets left behind.
Building back responsibly
Join BITC in harnessing climate action to create new ways to build prosperity for businesses and communities as we emerge from COVID-19. Talk to one of our expert team today to learn how membership of BITC can help you take your responsible business journey further and drive lasting change.
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