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Four Banks Gave Up On The Effort To Evaluate Climate Targets

According to persons familiar with the situation, four significant banks, including Standard Chartered Plc (STAN.L) and HSBC Plc (HSBA.L), have left an initiative supported by the UN to examine the climate targets established by businesses.

Finance Fossil Fuel

According to the sources, the lenders gave up on the Science Based Targets Initiative (SBTi) because they were afraid it would make it more difficult for them to finance fossil fuels in the future.

According to the sources, some banks, including Societe Generale SA (SOGN.PA) and ABN Amro Bank NV (ABNd.AS), have expressed worries about how difficult it will be to achieve SBTi’s requirements for setting greenhouse gas emissions targets.

Several banks used their membership in the Net-Zero Banking Alliance (NZBA), an organization supported by the UN that is less restrictive and permits lenders to keep funding fossil fuels as long as they achieve progress on their emissions, as justification for their separate and annual departures. According to a lot of lenders, fossil fuels should be financed as long as economies rely on them.

Withdrawal Of Four Banks


(Photo: Wikipedia)

The global benchmark for reducing greenhouse gas emissions that is most broadly embraced is under threat due to the withdrawal of the four banks.

Since its founding as a nonprofit organization, SBTi has verified that the emissions goals of around 4,000 businesses worldwide are in line with the intergovernmental Paris Agreement, which aims to keep global warming to 1.5 degrees Celsius.

This year, SBTi revealed plans for a new standard that will only apply to financial institutions starting in 2024. Banks and asset managers will have to refrain from funding any new fossil fuel initiatives.

For Standard Chartered, which wishes to carry on with this business in new regions, this proved to be too much. A bank representative acknowledged that the bank had withdrawn from the validation process and claimed that “the transition (away from fossil fuels) of our clients and markets” was not sufficiently taken into account in SBTi’s proposed standard.

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