Page 5 - AfrElec Week 07 2022

AfrElec COMMENTARY AfrElec

in production of fossil fuels. The IEA’s ‘Net-
Zero2050’ report tells us that for the world to Outside the banking world, major corpora-
avoid 1.5C of heating, then no investment is tions have also made commitments to go green
needed anywhere in any new coal, oil or gas and to reduce emissions, and the Alliance of
production. Now is the time for banks to get real CEO Climate Leaders has signed an open let-
with the science, and announce a science-based ter to world leaders committing themselves to
moratorium on funding new fossil fuel projects.” meeting the Paris Agreement’s climate change
targets and to reduce emissions by more than
Restricting investment 1bn tonnes per year (tpy) by 2030.
Commerzbank, Crédit Mutuel, and La Ban- The also said they would work together with
que Postale are the only banks to have begun governments to meet climate targets.
restricting finance to companies expanding oil ShareAction said that financing oil & gas
& gas production, although this only applies to expansion is a lose-lose bet for banks and their
new clients in the case of Commerzbank. investors. Xavier Lerin, Senior Research Man-
La Banque Postale created an important prec- ager, said:
edent in October last year by announcing it will “If oil & gas demand decreases in line with
exit the oil & gas sector entirely by 2030. In the 1.5C scenarios, prices will fall and assets will
interim, the French bank will no longer finance become stranded. On the other hand, if demand
oil & gas projects and companies if they have not does not fall enough to limit global warming
committed to a) phase-out their oil & gas activ- to 1.5C, the economy will suffer from severe
ities by 2040, and b) not develop new oil & gas physical climate impacts. Either way, value will
projects, in line with the IEA’s guidance. be destroyed for energy companies, banks and
The French lender has traditionally had their investors.”
much lower exposure to the fossil fuel sector As such, the NGO is urging asset manag-
than many of its counterparts, meaning it had ers to make full use of their shareholder rights
less to lose by imposing these restrictions. But to demand that banks implement policies to
its counterparts will need to implement similar restrict finance for oil and gas expansion.
commitments sooner or later if they are to meet This includes voting for shareholder resolu-
their net-zero ambitions. tions filed by ICCR at JP Morgan Chase & Co,
Banks say that they want to help their clients Bank of America, Wells Fargo & Co, Citigroup
to transition away from fossil fuels, but there is Inc, Morgan Stanley and Goldman Sachs Group
little evidence for this claim Inc, as well as a resolution filed by Market Forces
Banks often frame their objectives in terms at Standard Chartered.
of supporting clients to transition away from Kelly Shields, Senior Officer for Banking
fossil fuels, Share Action explained, rather than Standards at ShareAction, said,
imposing financing restrictions. “Last year shareholders were instrumental
For example, HSBC’s energy policy says, in pushing banks to adopt or strengthen restric-
“Our primary aim is to support our customers in tions on coal finance. This year they need to rep-
the transition from a high-carbon to a low-car- licate that success with oil & gas expansion by
bon economy.” voting for robust shareholder resolutions and
But most banks – HSBC included - are not against inadequate Say on Climate plans.”
demanding transition plans from clients, rais- Share Action’s research highlights that
ing doubts about their commitment to this while many investors and corporations have
transition. now signed up to climate targets and reducing
ShareAction’s research found that Danske emissions, there is less enthusiasm for reducing
Bank and NatWest are the only banks publicly investment in oil and gas, especially in spending
requesting some of their oil and gas clients to that supports existing production facilities.
publish transition plans by a set date and that La Indeed, faced with current gas market vola-
Banque Postale is the only bank requiring clients tility, many governments and corporations will
to rule out oil & gas expansion. conclude that continued investment in oil and
gas production is necessary to ensure future
Lose-lose bet energy security. ™

Week 07 17•February•2022 www. NEWSBASE .com P5