Climate change is the greatest challenge of this century, which is quite a statement when you consider we’ve just experienced a global pandemic. Mark Carney, former Governor of Bank of England, described the coronavirus pandemic as the ‘dress rehearsal for the climate crisis’, so it can be easy to feel alarmed by all the climate-related news that comes out. But it’s not all doom and gloom. If we start to act now, we can use this pivotal decade to make bold commitments and see our individual and collective roles in preventing further global temperature rises, enabling a future for generations to come.
Where do banks fit into all of this?
2021 is a critical year for developing awareness and action on climate change, particularly here in the UK as we prepare for the delayed COP26 climate summit in a few weeks. The government has just announced their Net Zero Strategy to decarbonise the whole UK economy, and we can expect the conference to focus on lobbying participants to commit to net zero targets too.
Mobilising finance to pay for this transition to net zero will also be a key aim of COP26. Banks and investors have a unique opportunity to make a difference, and we’ve often said financing and investments are where we can make the greatest impact in sustainability. Which is why at Handelsbanken we have committed to a firm but ambitious deadline of 2040 to achieve net zero emissions across our financing and investment portfolios, as well as our own operations.
We are also working with our banking industry peers on a number of initiatives, such as the Net Zero Banking Alliance, which we at Handelsbanken signed up to earlier this year in April and which seeks to reinforce, accelerate and support the implementation of decarbonisation strategies across the banking sector. We’re also a founding member of Bankers for Net Zero, a UK-focused initiative that brings together policymakers, parliamentarians and small number of UK banks to identify how banks can best support key sectors of the UK economy in transitioning to net zero.
What does climate change mean for our customers?
As we’ve seen climate-related risk is a big focus for the financial services industry currently, and is an area where we have already begun risk-assessing – for ourselves and our customers. We plan to measure and manage our own climate risks by helping customers see and address theirs, in a similar way to how we already help them manage their other financial risks.
Our credit approach will support this customer engagement. We’ll be introducing climate-related questions into the credit review and decision-making processes, as well as providing tools and training for employees to support good, mutually beneficial discussions. In parallel, we’ll also be working with branches to support initial discussions with both new and existing customers around climate change and how it’s likely to affect them.
Risk vs opportunity
It is important to remember that while climate change poses risks, it also presents opportunity. Property owners can make better decisions about energy efficiency improvements; firms can adapt their business models and operations so they can thrive in a green future; and as a bank, we can strengthen our relationships by meeting more of our customers’ needs. To implement these changes we plan to do what we do best and provide tailored solutions to meet the specific needs of each of our customers. To this end, new green financing options will be required, and we are developing these currently.
On the wealth and investment management side of our business, we’ve already seen a great deal of interest in our sustainable funds and expect more and more customers to choose to invest in line with a sustainable future, particularly when it comes to environmental concerns. At Handelsbanken Wealth and Asset Management we plan to keep improving our investment options and advice in this area in order to support this growing customer demand. To read about our sustainable fund offering and your options to invest, click on the link below.
To find out more about what we’re doing on climate transition and sustainability please visit.
This article was first published as part of our 'Viewpoint' newsletter in June 2021.