15 September 2017: In a letter sent to the top leadership of banks, including HSBC, Lloyds, Deutsche Bank, Bank of America, Morgan Stanley and JPMorgan Chase, a group of over 100 institutional investors, with almost US$2 trillion in assets, has called for the world’s largest banks to take action to manage climate risk.

In their letter, the investors demand the disclosure of banks’ climate-related risks and details of their plans to support the transition to a low-carbon economy. Following the release of recommendations by the Task Force on Climate-related Financial Disclosures (TCFD) in June 2017, the investors point to the beginning of “a new phase in norms and expectations around disclosure”. The letter comes amongst increasing recognition of climate-related risks and opportunities faced by the private finance sector, and its “pivotal role” in enabling the transition to a low-carbon future.

The investors estimate that achieving the long-term temperature goal enshrined in the Paris Agreement of limiting global warming to “well below 2ºC” above preindustrial levels could require approximately US$90 trillion by 2030.

The investors estimate that achieving the long-term temperature goal enshrined in the Paris Agreement of limiting global warming to “well below 2ºC” above preindustrial levels could require approximately US$90 trillion by 2030. However, the costs of inaction are potentially much higher, with estimated permanent losses amounting to 5-20% of portfolio values over the next 10 years alone if no further action is taken to mitigate climate change.

Signatory to the letter Isabelle Cabie, Global Head of Responsible Development at Candriam Investors Group, underscored the risks and opportunities being faced by banks, noting that “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.”

The letter, coordinated by ShareAction and Boston Common Asset Management, calls for investors to be provided with more robust and relevant climate-related disclosure on four key areas: climate-relevant strategy and implementation; climate-related risk assessments and management; low-carbon banking products and services; and banks’ public policy engagements and collaboration with other actors on climate change. [UNFCCC Newsroom] [ShareAction Press Release]