Betting on net zero | Eurocurrency
One of the successes of the COP26 summit, held in Glasgow, was the commitment of more than 450 financial institutions in 45 countries that by 2050, the $130 billion in assets under their management will be aligned with net zero emissions .
The pledge, known as the Glasgow Financial Alliance for Net Zero (GFANZ), theoretically covers the $100 billion in investments that economists estimate will be needed over the next three decades to achieve net zero.
As Mark Carney, former Governor of the Bank of England, now UK and UN climate envoy, said: “The architecture of the global financial system has been transformed to deliver net zero … [This] a rapid and large-scale increase in net-zero capital commitment, through GFANZ, makes the transition to a 1.5°C world possible.”
This follows the April 2021 launch of the United Nations-convened Net-Zero Banking Alliance (NZBA), which brings together banks from around the world, representing more than 40% of global banking assets, who have committed to align their loan and investment portfolios on the net. zero emissions by 2050.
In line with our tradition of sustainable banking, our ambition is to become a pioneer in the global sector by promoting a sustainable transition for our clients and society as a whole. Walk the talk for real change
Eugenio Solla, Director of Sustainable Development, CaixaBank
The NZBA will strengthen, accelerate and support the implementation of decarbonisation strategies, providing an internationally consistent framework and guidelines in which to operate, supported by peer learning from pioneer banks. It recognizes the vital role of banks in supporting the global transition of the real economy to net zero emissions.
CaixaBank, Spain’s largest bank in terms of assets and customers, is a member of both groups. She joined the NZBA as a founding member and has been a member of the United Nations Environment Program Finance Initiative of 197 banks (this calls on banks to align their business activities with the Paris Agreement) since 2018. CaixaBank has also been a signatory to the Principles for Responsible Banking since 2019, the year in which it also joined the Collective Commitment to Climate Action (CCCA). This latest agreement committed the bank to mobilizing products, services and partnerships to facilitate the economic transition necessary for climate neutrality.
In 2021, the bank also joined the Alliance for Carbon Accounting in the Financial Industry (PCAF). This will provide an internationally accepted framework for measuring financed emissions, accepted globally, and will mean the inclusion of CaixaBank in the list of “financial institutions taking action”, which identifies entities that have committed to measuring and disclose their emissions financed with the PCAF Global Standard.
Action speaks louder than words
Signing up for pledges is nothing without action. Sustainability must be integrated into banks’ business models. For CaixaBank, the environmental strategy is one of the five pillars of its Socially Responsible Banking Plan. The bank is committed to ensuring sustainability beyond its legal obligations and has integrated environmental management into its business activity.
In 2019, CaixaBank published its first Climate Change Statement, a proposal with five lines of action, including commitments related to decarbonization: Financing solutions to climate change; manage the risks derived from climate change; minimizing and offsetting the carbon footprint; collaborate with other organizations for common progress; and report progress transparently. And, in order to keep up with the latest developments in this area, CaixaBank will soon launch an update to the document, reinforcing the bank’s net zero ambitions, in line with the objectives set by CaixaBank’s new Sustainability Director Plan 2022-2024. , which will be presented to the market in the coming months.
More importantly, the banking sector must help channel finance and investment into sustainable activities. Through its activity, CaixaBank supports initiatives and projects that respect the environment, which contribute to preventing and mitigating climate change, promoting the transition to a low-carbon economy and social development. In 2021, it mobilized €11.6 billion in capital for green and environmental, social and governance-related financing (+131% compared to 2020). Simultaneously, CaixaBank also participated in the issuance of 18 ESG-related bonds for a total of €16.2 billion (excluding its own issuance). Some €8 billion of this total was green bonds.
The asset management operation can also be repurposed to help with the transition to net zero. Through its subsidiaries VidaCaixa (insurance) and CaixaBank Asset Management (fund management), CaixaBank is committed to sustainable investment, understood as an investment that not only offers financial returns for investors, but also promotes consistent management with value creation for the whole. of the society.
To take this commitment to sustainable investing to the next level, in June 2021 CaixaBank signed a strategic partnership with BlackRock, whereby BlackRock’s Fundamental Equity Impact team provides advice on impact investing in portfolios. of equity investment, due to its differentiated methodology in the selection of companies that have a real impact on society and the planet. As a result, in 2021, CaixaBank launched a new range of investment funds and pension schemes, the SI Impact Solutions range, with the highest sustainability score in the new European regulation on sustainable finance disclosure (SFDR).
VidaCaixa and CaixaBank Asset Management (with BPI GA) have the highest rating (A+) in responsible investment according to the PRI principles, an initiative supported by the UN. VidaCaixa and CaixaBank AM are the largest fund managers in their respective sectors in Spain in terms of assets managed according to ESG criteria.
Sustainability starts at home
But, of course, the banks themselves must strive to stay green too. CaixaBank has an active emissions control policy, which has succeeded in reducing emissions by 80% since 2009. It contracts electrical energy entirely from renewable sources and offsets 100% of its calculated emissions, including indirect emissions. And the bank has been carbon neutral since 2018, a pioneer in the Spanish banking sector.
In addition, CaixaBank issued green bonds under the Green Bonds to support the United Nations Sustainable Development Goals (SDP7 and SDP9) for a total value of €3 billion and £500 million. The report on the environmental effect generated by these bonds, carried out in collaboration with Deloitte and reviewed by PwC stated that the net proceeds allocation generated a GHG reduction of 1.46 million tonnes of CO2 (equivalent), emissions savings equivalent to the GHG generated by 285,000 vehicles/year, and generated 7,443 GWh of clean energy/year, equivalent to the annual consumption of 2 million households in the Union European.
It is not easy to determine what these initiatives and actions mean and how they compare to the industry as a whole. Fortunately, there are third-party experts who follow the progress of the financial services industry and provide advice in this area.
One of these rankings is compiled by Morningstar, a leader in ESG rating and corporate governance. Its Sustainalytics group ranks CaixaBank as the best bank in Spain in its ESG risk rating. This year, the bank jumped eleven places to 30and out of 406 banks analyzed in their global ranking.
This recognition follows the recent inclusion of CaixaBank, for the 10and consecutive year, in the Dow Jones Sustainability Index (DJSI), where the bank obtained the highest score (100 points) in the areas of risk management and social and environmental reporting.
In 2021, CaixaBank obtained the highest recognition granted by the CDP, the main global platform for collecting information and analysis on climate and environmental performance, as a leading company in terms of sustainability, management of the environment and climate change, and has been included in the 2021 edition of List A, the best possible ranking of the global disclosure system, becoming the only Spanish bank to achieve this score.
To read other CaixaBank articles in this series, see below:
The battle for the succession of private banking
The bank of the future – key considerations for success
Strengthening the European banking sector through consolidation
Sustainable banking is coming of age