The amount of climate pollution financed by the UK financial sector is nearly double Britain’s annual domestic carbon emissions, a report has suggested.
Campaigners are calling for legislation to force UK financial institutions to reduce the emissions they finance in line with goals to limit global temperature rises agreed by countries under the international Paris climate accord.
The call from Greenpeace and WWF comes after their analysis found that major UK banks and asset managers are responsible for 805 million tonnes of emissions linked to loans and investments in sectors including energy, IT and industry, as well as mortgages.
That is almost 1.8 times the UK’s emissions for 2019, of 455 million tonnes of greenhouse gases, and if the financial sector was a country it would have the 9th largest emissions in the world, a report for the green groups said.
And they warned the analysis of “financed emissions” was likely to be just the tip of the iceberg as it used an indicative sample of 15 banks and 10 asset managers and excluded certain financial activities such as underwriting.
Limiting global temperature rises to 1.5C above pre-industrial levels to avoid the worst impacts of climate change, requires carbon emissions to fall by 45% from 2010 levels to 2030 and to net zero by 2050, scientists warn.
But the green groups say that since countries including the UK signed up to the 1.5C goal in the Paris Agreement in 2015, the world’s 60 largest banks have provided £2.7 trillion to the fossil fuel industry.
Greenpeace and WWF warn that without legislation that requires UK banks and investors to align their financial activities with the Paris Agreement goals, the world will not avoid catastrophic climate change.
They want the Government to show climate leadership ahead of hosting the key Cop26 summit later this year by committing to legislation that requires all UK regulated financial institutions to adopt and implement a transition plan that aligns with the 1.5C goal in the Paris deal.
The Government should also use its presidency of the G7 group of leading economies and of Cop26 to urge other countries to follow the same approach, they argue.
Greenpeace UK’s executive director, John Sauven, said: “Finance is the UK’s dirty little secret. Banks and investors are responsible for more emissions than most nations and the UK Government is giving them a free pass.
“As the host of this year’s pivotal global climate summit, the Government can no longer turn a blind eye.
“Rather than relying on self-regulation, we need legislation that forces all banks and asset managers to align all financing activities with the goals of the Paris Agreement. That would be genuine climate leadership.”
WWF UK’s chief executive, Tanya Steele, said: “Trying to set a path to net-zero emissions without tackling the UK financial sector is like sticking a plaster when the patient needs open heart surgery.
“Despite seeing ambitious commitments to tackle the climate emergency, our finance sector is still driving global investment towards the old, destructive ways of doing business that are destroying our one shared home.
“The UK financial sector could be the first in the world to be aligned with the Paris Agreement targets – and reap the rewards as global business shifts towards clean, green investments.”
But she said voluntary pledges by the sector “aren’t getting the job done” and the Government must commit to mandating all financial institutions to have net transition plans that cover their investments around the world.
The analysis, carried out by climate solutions and project developer, South Pole, used carbon accounting methodology to calculate the carbon emissions associated with the lending and investment activities of the UK’s financial sector, based on the indicative sample.