Pressured from almost all directions, banks all over the world are turning to sustainable initiatives to save their good reputation. The banks are taking on responsibility and have set up targets to help meet the Sustainable Development Goals (SDGs) set up by the United Nations.
, and the UN targets, refers to environmental, economic, and social issues, and due to the current importance of the issue, various providers have come up with
according to environmental, social, and governance (ESG) criteria. The scores, however, may differ markedly for one and the same company depending on which provider’s score is being observed. Measuring sustainability is not an easy task: the divergence of the measures is just one example showing the complexity of the topic.
What is green banking?
Green banking refers to sustainable banking specifically with regards to the environment, which is also the sustainability – or ESG - factor that banks tend to pay a little extra attention to, and
climate change is the most common goal included in banks’ sustainability strategy. Banks are applying this through integration of environmental sustainability factors into their services such as lending, investment, and portfolios, more specifically by
financing green energy projects or
issuing green bonds. This approach does not mean that banks are giving up profit maximization, but rather they are trying to maximize profit while prioritizing environmental sustainability.
Emission targets of banks
Another action taken by many banks to be greener is to set targets to reduce their greenhouse gas (carbon dioxide) emissions, and while doing so also
report their emissions based on
different scopes. Another effort to help achieve decreasing greenhouse gas emissions of banks, is the United Nations' “Net-Zero Banking Alliance”. Launched in spring 2021, the alliance brings together banks to reach the ambitious target of net-zero emissions by 2050. As of December 2021,
the alliance had a total of 98 signatory banks worldwide, although most of them were European.
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