- IIDMA has prepared an animated short film that explains the relationship between the banking sector’s activity and the fight against climate change.
The banking sector is one of the most significant in contributing to the goals set out in the Paris Agreement, which seek to limit global warming to 1.5ºC and to achieve climate neutrality by 2050. To this end, it is essential that they support a real decarbonisation of the economy.
The International Institute for Law and the Environment (IIDMA) has been examining the climate and environmental policies of the main Spanish banks (Bankinter, BBVA, CaixaBank, Sabadell and Santander) for four years. It has published several reports such as ‘Spanish banks and the reporting of environmental issues: Analysis of the Non-Financial Information Statements 2021’ or ‘Briefing 2021: Evaluation of the new sectoral commitments of Spanish banks’.
The Commercial Code sets forth that banks are obliged to publish “the significant elements of greenhouse gas emissions generated as a result of the company’s activities, including the use of the goods and services it produces; the measures adopted to adapt to the consequences of climate change; the reduction targets voluntarily established in the medium and long term to reduce greenhouse gas emissions and the means implemented to this end”. However, as IIDMA has been warning for a while now, these entities do not provide relevant information on the environmental impact of their financial operations.
How can banks support polluting projects?
Banks can support polluting projects in two ways. Firstly, they can do so by directly financing these projects. Secondly, they can grant loans to companies that carry out polluting activities. This second modality is known as corporate or indirect financing.
In recent years, some institutions have committed to decarbonising their financial portfolios. However, the climate emergency means that these commitments are insufficient. In the words of IIDMA lawyer Quentin Aubineau, “it is urgent to stop supporting carbon-intensive economic activities that are incompatible with the objectives of the Paris Agreement”.