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Governance

Investors call for climate risk disclosure from banks

A group of institutional investors and money managers are calling for enhanced disclosure of climate-related risks and opportunities from the world's largest banks.

Investors representing $1.85 trillion in assets want banks to also outline how these risks and opportunities are being managed by boards and senior executives.

The group has written to the CEOs of 62 banks, including Bank of America, Deutsche Bank, J.P. Morgan Chase, Wells Fargo and TD Bank, asking for more robust and relevant climate-related disclosure for investors. The letter has been coordinated by responsible investment organization ShareAction and Boston Common Asset Management.

“We are reaching out to a group of 62 global banks ... to assess whether there has been progress made since the Paris agreement on how climate risk is being managed at both the individual bank and industry level,” said the letter. The Paris agreement is a 2015 global pact on climate change that the U.S. recently pulled out of.

The letter focuses on four areas for enhanced disclosure: 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 entities, including policymakers, on climate change.

Investors are looking for explicit feedback on banks' current strategies and future plans to integrate these four key areas, said the letter. Regarding risk assessment and management, the letter calls for information on adjustments to policies and practices aimed at mitigating these risks, including exclusion and engagement policies. On strategy and implementation, the investors want a “companywide, forward-looking climate strategy supportive of the goals of the Paris agreement, outlining the structures in place to ensure it is well-governed.”

The letter also encourages the banks to disclose how they intend to “harness the business opportunities the low-carbon transition presents,” and finally asks for details of engagement with policymakers regarding the low-carbon transition.

“Millions of people have an interest in how these banks respond to climate change, whether as citizens affected by the frightening physical impacts we hear about almost daily now in the news, as pension savers whose funds invest in these banks, or indeed as customers of these banks,” said Catherine Howarth, CEO of ShareAction, in a news release by the organization.

Signatories include the £1.8 billion ($2.3 billion) National Employment Savings Trust, London; and the £3.3 billion Environment Agency Pension Fund, Bristol, England.

The letter calls for a response from banks by Oct. 10. Further details are available on the ShareAction website.