Multi-billionaire hedge fund manager Sir Chris Hohn has ramped up his latest campaign against the banking industry with a set of reforms aimed at quelling its financing of fossil fuel producers, and called on regulators to “immediately reduce” climate-related risk in the financial system.
Hohn, who paid himself £343m last year in what is believed to be the UK’s largest-ever annual pay packet, has lobbied the financial bodies via his Children’s Investment Fund (TCI).
In the letters, he wrote to the Bank of England (BoE), the European Central Bank, the European Banking Authority and the US Financial Stability Oversight Council to propose a series of “immediate steps”.
Steps recommended to the BoE’s Andrew Bailey include requiring banks to share more detail of the “absolute carbon emissions” in the climate disclosures of their loan books, and setting stricter capital requirements for lending to fossil fuel projects.
“Not only are UK banks continuing to channel financing to fossil fuels, they are failing to provide basic levels of transparency about the extent of the emissions they are financing,” Hohn wrote in the letter to the BoE.
Hohn’s previous activist investment efforts have been met with varied success. Most recently, through the TCI Fund, he founded the “Say on Climate” campaign and succeeded in enlisting global investors to pile pressure on various companies that have subsequently set out their plans for reducing emissions.
But in a previous interaction with Andrew Bailey – then FCA chief – four years ago, Hohn had his calls for the immediate resignation of the London Stock Exchange chairman Donald Brydon dismissed, with Bailey preferring an “orderly succession process.”
This time round, however, Hohn’s efforts capture the zeitgeist as the financial sector comes under more pressure than ever from shareholders, activists and policymakers to ensure their operations and investments minimise damage to the environment, and set out clear plans for reducing emissions related to their portfolios.
In the lobbying letters, Hohn slams current initiatives such as the UN Principles for Responsible Banking and the newly
established Net Zero Banking alliance for not covering all banks and falling short of mandating “full disclosure”, “credible action plans” and an “end to risky fossil fuel lending.”
He proposes lenders create a five-year emissions reduction plan, as “2050 Net Zero commitments alone are meaningless.”