A new study has found that banks are not doing enough to support their net-zero pledges.
What's happening?
Financial institutions are under scrutiny as recent research by the European Central Bank, detailed in The New York Times, suggests they are not doing enough to reduce their lending to some of the world's biggest polluters.Â
The banks, insurers, and asset managers in question are a part of the Glasgow Financial Alliance for Net Zero, which was formed at the UN climate change summit in Glasgow in 2021. This alliance agreed to plow $130 trillion in capital into reducing harmful carbon pollution and providing funding for the transition to renewable energy.
However, the study has found that the alliance is still lending its support to certain sectors, including gas, oil, and transport, and that any reduction in lending that has occurred has been matched by banks not in the alliance. This defeats the purpose of the alliance, which was to change the way banks behave and encourage them to move away from investing in dirty energy projects.
"It's not OK for the net-zero bank to act exactly like the non-net-zero bank, because we need that to scale up financing," said one of the researchers, Parinitha Sastry, to the Times.
Why is this important?
Net-zero is a plan to reduce harmful carbon pollution and prevent the planet from warming to no more than 1.5 degrees Celsius, or 2.7 degrees Fahrenheit. Financial institutions have a key role to play in helping reduce this pollution and cooling our planet down.
Several big banks are major lenders to dirty energy industries. A recent report revealed that the world's biggest banks have given the oil and gas industry close to $7 trillion in funding since 2016 alone.
Reducing this funding can help minimize air pollution and facilitate the switch to green energy, which will protect our environment.
What's being done about it?
While the report states that banks aren't doing enough, members of the alliance told The New York Times that they felt it was premature to draw conclusions on whether banks had reduced the financing they provide to industries that pollute our environment.
However, it is still important for people to hold financial institutions accountable for funding dirty energy industries and indirectly contributing to harmful carbon pollution.
You can help by educating yourself about the financial activities of your bank and taking part in responsible banking by keeping your money in a bank that doesn't support dirty energy. While this story shows there may be other banks lining up to do it anyway, enough customer migration to green banks can make a difference.
There are many options to choose from. A good place to start is Bank For Good, which lists over 30 banks that are committed to being dirty energy-free.
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