'Climate conscious' banks lend more to polluters; Denmark wants 90% cut by 2040
by AFP Staff Writers
Frankfurt, Germany (AFP) Dec 6, 2023

Eurozone banks that portray themselves as more conscious about environmental issues lend more than others to polluting industries, a group of European Central Bank economists said on Wednesday.

Banks have a key role in financing the green transition, and their lending practices and environmental standards are under growing scrutiny.

The four ECB economists looked at investor reports and releases from major banks in the single currency area over the period from 2014 to 2020.

Their research highlighted a "discrepancy about how banks talk about environmental intentions, and how they lend," they said in a blog post, released to coincide with the COP28 climate talks in Dubai.

It found that banks with high levels of "environmental disclosures" tend to be specialised in extending credit to so-called "brown industries" -- those that are highly polluting.

This fits in with the notion that lenders with greater exposure to polluting industries are under greater pressure to disclose environmental strategies and plans for decarbonisation, they said in the blog.

But they also found that firms with large carbon footprints that obtain loans from such banks do not ultimately decrease their emissions or commit to voluntary emission targets.

In addition, lenders who portray themselves as more climate friendly also appeared reluctant to lend to young firms in polluting sectors -- precisely the sort of companies that could drive innovation in clean technologies, the economists said.

Such a situation had arisen because banks were "reluctant to disrupt established lending relationships with larger carbon footprint borrowers," they said.

Denmark urges EU to cut emissions 90% by 2040
Copenhagen (AFP) Dec 6, 2023 - Denmark's climate minister on Wednesday called for the European Union to ramp-up its climate change ambitions and commit to slashing greenhouse gas emissions 90 percent by 2040.

"We are the first country to announce that the EU must reduce its CO2 emissions by at least 90 percent by 2040!" minister Lars Aagaard wrote on X, formerly known as Twitter.

"We hope that other EU countries will join us," he said from the sidelines of the COP28 climate talks in Dubai.

In April, the 27 EU member states committed to cutting planet-heating emissions by 55 percent -- compared to 1990 levels -- by the end of the decade.

Aagaard called for Denmark's European neighbours to revise the bloc's "ambitions upwards beyond 2030," according to comments cited by the Ritzau news agency.

In June, the European Scientific Advisory Board on Climate Change recommended that the EU adopt a target of reducing emissions 90 to 95 percent by 2040.

Brussels has to communicate its ambitions to reduce emissions at the start of next year.

The minister's call came as Europe's climate monitor confirmed on Wednesday that 2023 will be the hottest year on record.

This year has "now had six record-breaking months and two record-breaking seasons," said Samantha Burgess, deputy head of the EU's Copernicus Climate Change Service.

"The extraordinary global November temperatures, including two days warmer than 2C above pre-industrial (levels), mean that 2023 is the warmest year in recorded history," she said.

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