Two men walks along a dirt road as smoke from a wildfire fills the air Saturday, Oct. 12, 2019, in Newhall, Calif. The region has been on high alert as notoriously powerful Santa Ana winds brought dry desert air to a desiccated landscape that only needed a spark to erupt. Fire officials have warned that they expect more intense and devastating California wildfires due, in part, to climate change. (AP Photo/Marcio Jose Sanchez)
Banks' support for the initiative is seen as crucial because of their role in financing activities that could contribute to global warming © AP
Experimental feature

Listen to this article

00:00
00:00
Experimental feature

Twenty-eight of the world’s largest banks have not signed up to a climate change initiative backed by Bank of England governor Mark Carney that encourages businesses to disclose the risks global warming poses to them. 

More than a third of the world’s top 75 banks by assets have still not declared their support for the Task Force on Climate-related Financial Disclosures (TCFD), an initiative to get companies to calculate their exposure to climate risk and disclose this to investors, according to a report from BCS Consulting. 

The list of banks that do not yet support the TCFD is dominated by institutions in China, where the initiative has had little impact. But there are also some large lenders in the US and Europe that have not signed up, including Italy’s UniCredit, Germany’s Commerzbank and San Francisco-based lender Wells Fargo, the report said. 

UniCredit said the bank would sign up in the “very near future” while Commerzbank said it was “on [its] agenda”. 

Wells Fargo said: “We recognise the growing concerns about climate change and environmental sustainability, and we’re working to find solutions.”

The TCFD was launched in 2015 by the Financial Stability Board and has been championed by Michael Bloomberg, the media billionaire and Mr Carney, a former FSB chairman.

A graphic with no description

Although the TCFD is an initiative aimed at all businesses, support from banks is seen as crucial because of their role in financing activities that could contribute to global warming. 

Some large investors have joined Mr Carney in pushing for banks to do more to model their climate risk, from the impact of increased flooding on their mortgage books to whether new green policies could damage the business models and creditworthiness of their corporate clients. 

Mr Carney last week warned in a speech that progress had been “uneven”, noting that even among supporters of the TCFD just 25 per cent had provided a “fuller set” of climate disclosures. 

He signalled that corporations had two years before regulators in some jurisdictions including the UK and EU moved to make such disclosures mandatory. 

The authors of the BCS report found that the rate at which banks are signing up to support the TCFD has “slowed significantly”. Only nine have endorsed the initiative this year, compared to 29 in 2018 and 38 in 2017, when companies could sign up for the first time. 

“If you look at the number of banks that are being added every year, the number gets smaller, and there seem to be signs of stagnation,” said Hector Fontaine, sustainable finance lead at BCS Consulting. 

He added: “Is it going to get any bigger? If not, there’s a question around mandatory disclosure.” 

In total, 76 banks have signed up as supporters of the initiative, accounting for 40 per cent, or $59tn, of global banking assets, the report said. However, just 39 banks have started disclosing climate risk information in line with the TCFD framework, accounting for 24 per cent of global banking assets. 

Additional reporting by Olaf Storbeck in Frankfurt 

Get alerts on Climate change when a new story is published

Copyright The Financial Times Limited 2020. All rights reserved.
Reuse this content (opens in new window)

Commenting on this article is temporarily unavailable while we migrate to our new comments system.

Note that this only affects articles published before 28th October 2019.

Follow the topics in this article