Joint measures and targets agreed to achieve climate goals
30.06.2020 - 16 players in the German financial sector, with assets of more than €5.5 trillion and over 46 million customer connections in Germany, have signed a voluntary commitment to align their loan and investment portfolios in line with the goals of the Paris Climate Agreement. Through the agreed measurement, publication and target setting to reduce the emissions associated with the loan and investment portfolios, the financial sector intends to make a contribution to climate protection and support the sustainable and future-oriented further development of the economy. This brings the German financial centre one step closer to the goal set by the German government at the beginning of 2019 of making Germany one of the leading locations for sustainable finance.
This initiative, which originated in the banking sector of the financial sector, aims to play an active role in shaping one of the most important societal tasks for future sustainability, namely the successful societal transformation to limit climate change. The signatories align their respective products and services as well as their commitments and initiatives accordingly in order to limit global warming to well below 2 degrees and to aim for the 1.5 degree target by financing the transformation towards a low-emission and climate-resilient economy and society. At the same time, active support for the transformation will strengthen the competitiveness and resilience of the companies financed and reduce sustainability and default risks for the banks.
Specifically, this means that by the end of 2022, each signatory will develop and implement mutually acceptable methodologies to measure the climate impact of its credit and investment portfolios and then manage them in line with national and international climate targets. The agreement applies only to those investment portfolios that are not the subject of fund or mandate business. The fund and mandate business will be taken into account gradually without any fixed timeframe.
The signatories want to support each other in collecting the necessary emissions data and developing methods for measurement and approaches for managing the banking business in line with the targets. In order to meet the shared responsibility and that of each actor, each signatory commits to report annually (e.g. within its existing reporting formats) on individual progress towards implementation.
The impetus for this voluntary commitment came from a group of financial institutions initiated by Triodos Bank and at the same time via a WWF bank working group. Since March, these two groups of banks have merged the previously parallel discussions into the present voluntary commitment. This is open to all financial actors for adoption and signature.
The wide range of initial signatories in terms of company size (from large banks to small specialist banks) and affiliation to different areas of the financial sector (e.g. state banks, commercial banks, sustainability banks, foreign banks and pension funds), shows that this challenge is widely accepted and that implementation by financial players is possible regardless of size or specific asset classes.
In the international context, the Climate Agreement (June 2019), the Collective Commitment to Climate Action (UN Climate Summit in September 2019) and, in the context of the 25th Climate Conference (December 2019), a voluntary commitment by the Spanish financial sector have already been signed. All of these agreements have comparable structures and target levels on which the German voluntary commitment now made builds. Comparability with the other international agreements enables international financial institutions in particular to develop uniform processes and standards and ensures that the greatest possible impact can be achieved efficiently and without redundancies.
The current overview of the signatories as well as the complete voluntary commitment can be found at:
www.klima-selbstverpflichtung-finanzsektor.de
Keywords: Procurement, DE-News, Climate protection, Sustainable management, Transition Town, Environmental policy
