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    ShareAction Targets Banks and Chemicals

    Stockholm (NordSIP) – At the start of September, ShareAction took aim at the chemicals and the banking sectors for their role in the efforts to decarbonise the global economy.

    Banking

    ShareAction’s report on the banking sector, reviews the progress that European banks have made in terms of their commitment to net-zero greenhouse gas emissions and disclosures, as well as their coal, oil and gas, biomass, biodiversity and remuneration policies.

    “Our research shows that there is a large disparity between the credentials of leaders and laggards on each environmental issue,” Xavier Lerin, Senior Banking Analyst and an author of the report said. The author also remarked that “no bank demonstrates leading practice on all issues. As such, there is a huge amount that all banks can do right now to address their environmental impacts and we call on them to publish credible climate and biodiversity strategies ahead of COP26.”

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    Regarding European bank’s net-zero targets and alignment, Shareaction found that “many are showing up on the starting line, but few have started to run.” Out of the 25 banks analysed only five banks have set an overarching interim target, of which three have committed to halving their financed emissions by 2030 to stay on track to meet their 2050 target.

    The only Nordic bank among these top 3 performers is Nordea, which has set interim targets of reducing emissions from its lending portfolio by 40% to 50% by 2030. Only one other Nordic institution, Danske Bank, is included in the analysis of the remaining 22 banks. According to the report, the Danish bank has not set up bank-wide net-zero 2050 targets. It has set an interim target of 2030-2040 for coal power and mining and has disclosed its alignment and loan book for shipping.

    The ShareAction report, in its review of the quality of bank’s disclosures regarding their exposure to high carbon or climate-sensitive sectors, does suggest Danske Bank’s disclosures are superior to Nordea’s on account of its breakdown of fossil fuel assets provided.

    Chemicals

    In another report, ShareAction also highlighted the fact that the Chemicals sector has largely been ignored by the efforts to decarbonise the global economy, mainly due to the perception that it would be too complicated to do so. As a result, investors have tended to focus on lower hanging fruit in the energy and transport sectors.

    However, the report suggests it is both technically and economically feasible to fully decarbonise the production of chemicals by 2050. According to the research, two-thirds of the sector’s energy use comes from petrochemicals, which are used in energy consumption and as an input into the chemical reactions, as “feedstock”. The emissions could be eliminated through the electrification of energy processes using only renewable energy and replacing fossil feedstock with green hydrogen or green methanol 

      “In our view 2021 will be seen as a tipping point for investor engagement on climate action, with greater focus shifting towards neglected sectors such as chemicals, which is vital to accelerate company progress on the climate transition,” Joanne Beatty, Engager and chemicals sector lead, EOS at Federated Hermes, said.

     The report provides a shortlist of European corporate targets for engagement based on their market capitalization and footprint in the chemicals and end products covered in this report. This list includes household names such as Germany’s BASF, France#s L#Air Liquide and Belgium’s Solvay, as well as Yara International, a Norwegian chemical company that produces nitrogen fertilizers well as nitrates, ammonia, urea and other nitrogen-based chemicals.

     

    Filipe Wallin Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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