Investors with assets totalling nearly $2 trillion (£1.5 trillion) have today called on the world's largest banks to reveal how they will deal with climate change.
The 100 investors, which include names such as Aviva, Royal London and Jupiter Asset Management, are demanding enhanced disclosure from the chief executives of banks of their climate-related risks and opportunities.
They have issued their demands via letters, coordinated by responsible investment non-profit group ShareAction and Boston Common Asset Management, to institutions such as Bank of America, HSBC and JP Morgan.
“As a result of climate change and the low-carbon transition, banks now face risks and opportunities that are real, wide-ranging, and material to investors,” said Isabelle Cabie of Candriam Investors Group, one of the signatories to the letter.
“As long-term investors, better disclosure of climate risk allows us to judge how specific banks are performing compared to their peers, and so we ask that banks pay heed to this important call from the investor community.”
Recent recommendations were issued by the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD) to compel banks to disclose more on their climate change strategies.
However, the recommendations are non-binding and, according to ShareAction, depend on investors applying pressure.
“Limiting global warming to less than a two degrees Celsius rise requires a major shift in the way we operate financially and economically,” said Lauren Compere of Boston Common Asset Management.
“As climate risk becomes recognised as critical to banks, investors want to know whether this risk is being managed well and at the highest levels of the organisation.”
As providers of capital, banks will have a role to play in the Paris Agreement's goal of “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”.
According to ShareAction, $93 trillion of investment is required by 2030 to limit global warming to two degrees and the private financial sector has a “pivotal role” to play in enabling the transition to a low-carbon future.