“Since the European Commission adopted the first Action Plan on sustainable finance in 2018, rapid progress has been made in this field and the European banks have committed to becoming part of the initiative to mitigate the effects of climate change. In parallel to this ambitious action plan promoted by the European Commission, we need to take into account that the momentum provided by the ECB in order to promote sustainable finance, as well as the publication of the supervisory expectations linked to the risks arising from climate change, published at the end of last year. In the same way, the European Banking Authority plans to publish the results of the consultation launched last year on ESG criteria and the impact on risk management, supervision and disclosure, at the same time that it should also be laying the foundations for stress tests in European banks.
In this context, the role that banks have traditionally played as financers of the real economy, puts them in the front line in allocating private funds to the investment that is essential for the transition from the current economic model to a sustainable model that respects environmental, social and governance needs.
In order to play this role and lead the change, the Spanish banking sector has made a fundamental commitment to climate action by signing the Principles for Responsible Banking, which have gone from just a proposal, to become a key initiative in which profitability is as important as the way in which it is achieved.
Under this framework, the main Spanish banks took a further step and joined the signing of the Collective Agreement on Climate Action, with which they commit to align their portfolios with the climate objectives of limiting global warming to below 2 °C, and to make efforts to do so below 1.5 °C. In parallel, three European countries (the Netherlands, Spain and Germany) have joined this initiative by signing sectoral agreements in which their banks publicly endorse their commitments to climate action. The Spanish case is paradigmatic as, due to COP25 in December 2019, 95% of the sector joined this initiative.
The launch of the Centre for Sustainable and Responsible Finance (FinRESP), promoted by the entire Spanish financial system and linked to the global network of sustainable finance (FC4S) endorsed by UNEP-FI, has given new impetus in Spain to the development of sustainable finance by becoming a meeting point for all those agents committed to promoting private capital and responsible investments for the necessary transformation of the productive industry, and in particular, Spanish SMEs.
However, the level of ambition of Spanish banks does not stop there. By endorsing its commitment to establish paths that will lead the way to achieving the long-term objectives set, BBVA has declared that it is prepared to reduce its exposure to coal-related activities to zero, halting the financing of companies in this business by 2030 in developed countries and by 2040 in the rest of the countries in which it operates.
Santander’s ambition, for its part, is to achieve zero net emissions by 2050, which means no longer providing financial services to power generation customers with more than 10% of revenues dependent on thermal coal, and will eliminate all exposure to thermal coal mining worldwide from 2030.
As the Spanish banks have already highlighted, the involvement of the Board of Directors is required in order to achieve these goals. That is the only way to progress and integrate sustainability in risk management and in the strategic agenda of the institutions. Also, it is essential to work together with customers, supporting them in their transition to reduce carbon emissions with advice and with the offer of a wide range of sustainable products and services