Driving the green transition

“My hope is that we pioneer the way, others follow, and through that we live in a nature rich world.”
– Bevis Watts, CEO, Triodos UK

Banks have enormous potential to drive environmental change through what they finance. Signatories are taking a closer look at their investments from an environmental perspective. For example, signatory banks are undertaking a full review of emissions across its portfolio. This is the first step towards setting science-based targets for their entire carbon footprint.

They are also exploring novel ways to make green investments. For example, they are bringing together new partnerships of commercial, non-profit and governmental organisations that use finance in innovative ways to achieve better outcomes for the planet.

Developing green products

Banks have been driving change through developing new products that prioritise lending to green industries, encourage behaviour change amongst customers, for example by facilitating purchase of solar panels and electric cars.

They have made credit available to support industries to change, for example to reduce water pollution and improve harmful emissions reduction. A European bank developed a line of social dividends worth around $8.8 million to support water system cleansing and the local green transition. Another has a programme of green credits in the transport and agricultural sectors, worth $26.8 million in 2019.

Other banks have created saving products aimed at preventing water and air pollution. One bank has launched their country’s first green mortgage, which accounted for 11% of new mortgage lending in the most recent quarter.

With respect to climate change, banks are pricing environmental risk into their expected returns, which encourages the financing of solutions with the most positive climate or environmental impact. 

Some are tightening their policies around fossil fuel lending, for example a number of banks are no longer providing project finance to thermal coal mining or for new coal-fired power generation capacity. Some have moved away from providing general purpose financing to companies where greater than 25% of revenues are thermal-coal related.

Encouraging green spending

A number of banks are implementing favourable borrowing terms to encourage customers and clients to adopt socially and environmentally focused products. Other new loans are designed to encourage the purchase of electric or hybrid vehicles and solar panels.

One bank developed a financial product to facilitate a government-led plan for national energy transition through the purchase of solar water heaters. A signatory bank has developed a dedicated corporate sustainability advisory service to help both new companies supporting the low carbon economy and established businesses looking to become more sustainable.

One signatory bank certified a green credit line to facilitate sanitation works in its local river system. This will contribute to the removal of industrial waste, including arsenic, copper, zinc and lead.

A bank providing lower interest rate loans for investment in hybrid and electric cars has financed over $9 million for individual customers and more than $17 million for corporate clients.

One bank developed one of the first Certified Green Loan operations in the region. It was designed to support an aluminium company to reduce their emissions per ton, making them possibly the most carbon efficient company in their sector worldwide.

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